17 ANNUAL REPORT 2013-14 - :!:-- Sankhya Infotech ... Annual Report 2013 - 2014 innovations for a...

17th Annual Report 2013 - 2014

innovations for a Smart future 1

SANKHYA INFOTECH LTD.

17th ANNUAL REPORT

2013-14

SANKHYA INFOTECH LTD.Regd. Office : #405 NSIC Business Park,

ECIL PO, Hyderabad-500 062.Phone : +91-40-3024 6300Fax : +91-40-2713 6343Email : [email protected] : www.sankhya.net




CONTENTS

Sl. No. Particulars Page No.

1 Company Information 3

2 Notice 4

3 Financial Data and Analysis 8

4 Director’s Report 9

5 Annexure - 1 Subsidiary Companies Details 11

6 Annexure - 2 Management Discussion and Analysis 11

7 Annexure - 3 Report on Corporate Governance 12

8 Annexure - 4 Auditor’s Certificate on Corporate Governance 18

9 Annexure - 5 CEO’s Declaration 18

10 Auditor’s Report on Financial Statements 19

11 Balance Sheet 23

12 Profit and Loss Account 24

13 Cash flow statement 25

14 Significant Accounting Policies and Notes on Accounts 26

15 Notes to Financial Statements 29

16 Balance Sheet Abstract and Company’s General Business Profile 40

17 Auditors’ Report on Consolidated Financial Statements 41

18 Consolidated Balance Sheet 42

19 Consolidated Profit and Loss Account 43

20 Consolidated Cash Flow Statement 44

21 Significant Account Policies and Notes to Consolidated Accounts 45

22 Attendance Slip and Proxy form 60




COMPANY INFORMATION

BOARD OF DIRECTORS

Mr. N. Sridhar : Chairman & Managing DirectorMr. N. Srinivas : Vice ChairmanDr. J. V. Rao : Independent DirectorCA. Ch. Anand : Independent Director

BANKERSIDBI BANK Ltd.

CBG – Specialized Corporate Branch#5 -9-89/1 & 2, Chapel Road, Hyderabad - 500 001.

STATUTORY AUDITORST.R. Chadha & Co., Chartered Accountants,

Office No.2, 2nd Floor, 6-3-1092/S/3 - Shanti Shikara Complex,Block A, Rajbhavan Road, Somajiguda,

Hyderabad - 500 082, INDIA.

REGISTRARS & TRANSFER AGENTSCANBANK COMPUTER SERVICES LTD.

JP ROYALE, 1st FLOOR,#218, 2nd Main,Sampige Road, (Near 14th Cross),Malleswaram, Benguluru-560003

Tel:91-80-23469661/62, 23469664/65Fax: 91-80-23469667/668

Email Id: [email protected]: www.canbankrta.com




NOTICE

Notice is hereby given that the 17th Annual General Meetingof the Members of SANKHYA INFOTECH LTD. will beheld on Saturday, the 27th September 2014 at 11.00 A.M atits registered office situated at #405, NSIC Business Park,ECIL PO, Hyderabad-500062 to transact the followingbusiness.

Ordinary Business

1. To receive, consider and adopt the Audited BalanceSheet as at 31st March 2014 and Statement of Profit &Loss for the year ended on that date together with Notesthereto and the Reports of Board of Directors’ andAuditors’ thereon.

2. To appoint a director in the place of Mr. N. Srinivas whoretires by rotation, and being eligible, offers himselffor re appointment.

3. To appoint M/s.T.R. Chadha & Co. Chartered Accountantsas Statutory Auditors of the Company and fix theirremuneration and in this regard to consider and ifthought fit, to pass, with or without modifications(s),the following resolution as an Ordinary resolution:

“RESOLVED THAT pursuant to the provisions of Section139 and other applicable provisions, if any, of theCompanies Act, 2013 and the Rules made there under,including any statutory modifications and re-enactmentsthereof from time to time, M/s. T.R. Chadha & Co.,Chartered Accountants, (Firm Reg. No. 006711N) beand is hereby appointed as Auditors of the Company,to hold office from the conclusion of this Annual GeneralMeeting (AGM) till the conclusion of next AGM of thecompany on such remuneration as shall be fixed by theBoard of Directors.

Special Business

4. Appointment of Dr. J. Venkateswara Rao, as anIndependent Director of the Company.

To consider and if thought fit to pass with or withoutmodification(s) the following resolution as an OrdinaryResolution:

“RESOLVED that pursuant to the provisions of sections149, 152 and other applicable provisions, if any, of theCompanies Act, 2013 (Act) and the Rules framed thereunder, read with Schedule IV to the Act, as amendedfrom time to time, Dr. J.Venkateswara Rao (DIN06758800), a non-executive Director of the Company,who has submitted a declaration that he meets thecriteria for independence as provided in section 149(6) of the Act and in respect of whom the Company hasreceived a notice in writing from a member, underSection 160 of the Companies Act, 2013, proposing his

candidature for the office of Director, be and is herebyappointed as an Independent Director of the Companywith effect from 27th September, 2014 up to 26thSeptember, 2019.”

NOTES:

1. The relative Explanatory Statement pursuant to section102 of the Companies Act, 2013 (Act) in respect of thebusiness under Item No. 4 of the Notice, is annexedhereto. The relevant details as required under clause49 of the Listing Agreements entered into with the StockExchanges, of persons seeking appointment/re-appointment as Directors under Item No. 4 of the Notice,are also annexed.

2. A Member entitled to attend and vote at the annualgeneral meeting is entitled to appoint a proxy or proxies,to attend and vote on poll, instead of himself and theproxy need not be a member of the company. Theinstrument appointing proxy should, however, bedeposited at the registered office of the Company notlater than 48 hours before the scheduledcommencement of the meeting.

3. Corporate members are requested to send a dulycertified copy of the Board Resolution authorizing theirrepresentative to attend and vote at the Annual GeneralMeeting.

4. The Register of Members and Share Transfer Books ofthe Company will be closed from 20th Sept. 2014 to27th Sept. 2014 (both days inclusive).

Members are requested to intimate immediately anychange in their address to the Share Transfer AgentsAddress: M/s. Canbank Computer Services Ltd.,(A Subsidiary of Canara Bank), JP Royale, 1st Floor,# 218, 2nd Main Sampige Road, (Near 14th Cross),Malleswaram, BENGULURU – 560003. Tel: +91 8023469661/62, 2349664/65 Fax:+91 802 3469667/68 andin case their shares are held in dematerialized form,this information should be passed on to their respectiveDepository Participants without any delay.

5. Members / Proxies are requested to bring theAttendance slip duly filled in.

6. Members holding shares in electronic form are herebyinformed that bank particulars registered against theirrespective depository accounts will be used by theCompany for payment of dividend. The Company or itsRegistrars cannot act on any request received directlyfrom the Members holding shares in electronic form forany change of bank particulars or bank mandates. Suchchanges are to be advised only to the DepositoryParticipant of the Members.

7. We wish to inform you that our Company shares havealready been admitted in both M/s National Securities




Depository Ltd. (NSDL) and Central Depository ServicesIndia Ltd. (CDSL) for the purpose of holding and tradingof the shares in electronic mode. The ISIN allotted toM/s. Sankhya Infotech Ltd. is INE877A01013.Members who are holding shares in physical form areadvised in their own interest to immediately apply forDematerialization of their shares to hold the same inan electronic form, In order to dematerialize your sharesand convert them into the electronic form, you arerequested to open a Beneficiary Account with aDepository Participant (DP) and submit adematerialization request along with the original sharecertificate(s) to a DP with whom you open a BeneficiaryAccount. The DP in turn wi l l send your sharecertificate(s) to M/s. Canbank Computer Services Ltd.,(A Subsidiary of Canara Bank), JP Royale, 1st Floor,# 218, 2nd Main Sampige Road, (Near 14th Cross),Malleswaram, BENGULURU – 560003. Tel: +91 8023469661 / 62, 2349664/65 Fax:+91 802 3469667/68for dematerialization of shares. Thereafter, you willreceive a confirmation from the DP that the shares havebeen dematerialized and held in the electronic form,subject to meeting the entire statutory requirement forconversion from physical mode to the electronic mode.

8. The Notice of the AGM along with the Annual Report2013-14 is being sent by electronic mode to thoseMembers whose e-mail addresses are registered withthe Company/Depositories, unless any member hasrequested for a physical copy of the same. Formembers who have not registered their e-mailaddresses, physical copies are being sent by thepermitted mode.

To support the “Green Initiative’ the Members whohave not registered their email addresses arerequested to register the same with Company’sRegistrar and Transfer Agent as per the details givenhereunder..

For further clarification, if any, please feel free to writeto our Registrar & Share Transfer Agent at the followingaddress:

CANBANK COMPUTER SERVICES LTD.,Unit: M/s. Sankhya Infotech Ltd.J P ROYALE, 1st. FLOOR, # 218, 2nd Main, SampigeRoad, (Near 14th Cross)Malleswaram, Benguluru – 560 003.Tel : 91-80-23469661/62, 23469664/ 65Fax : 91-80-23469667 / 668Email Id :[email protected]: www.canbankrta.com

9. The Securities and Exchange Board of India (SEBI)has mandated the submission of Permanent AccountNumber (PAN) by every participant in securities

market. Members holding shares in electronic formare, therefore, requested to submit their PAN to theirDepository Participants with whom they aremaintaining their demat accounts. Members holdingshares in physical form can submit their PAN detailsto the Company / Canbank Computer Services Ltd.

10. In Compliance with the provisions of Section 108 ofthe Act and the Rules framed there under, the membersare provided with the facility to cast their voteelectronically, through the e-voting services providedby NSDL, on all resolutions set forth in this Notice. Itmay be noted that this e-voting facility is optional.

The Instructions for e-voting are as under:

A. In case a Member receives an e-mail from NSDL (forMembers whose e-mail addresses are registered withthe Company/Depositories):

i. Open the e-mail and also open PDF file namely“Sankhya e-voting.pdf” with your Client ID or FolioNo. as password. The said PDF file contains youruser ID and password for e-voting. Please notethat the password is an initial password.

ii. Open the internet browser and type thefollowing URL:https://www.evoting.nsdl.com.

iii. Click on Shareholder – Login.

iv. If you are already registered with NSDL fore-voting then you can use your existing user IDand password.

v. If you are logging in for the first time, please enterthe user ID and password provided in the PDF fileattached with the e-mail as initial password.

vi. The Password Change Menu will appear on yourscreen. Change to a new password of your choice,making sure that it contains a minimum of 8 digitsor characters or a combination of both. Please takeutmost care to keep your password confidential.

vii. Once the e-voting home page opens, click one-voting> Active Voting Cycles.

viii. Select “EVEN” (E-Voting Event Number) ofSankhya InfoTech Ltd. (The number is providedin this Document). Once you enter the number,the cast vote page will open. Now you are readyfor e-voting.

ix. Cast your vote by selecting appropriate option andcl ick on “Submit” and also “Confi rm” whenprompted.

x. Upon confirmation, the message “Vote castsuccessfully” will be displayed.




xi. Once the vote on the resolution is cast, the Membershall not be allowed to change it subsequently.

xii. Insti tutional shareholders ( i .e. other thanindividuals, HUF, NRI, etc.) are required to sendscanned copy (PDF/JPG format) of the relevantBoard Resolution/Authority letter, etc., togetherwith attested specimen signature of the dulyauthorized signatory (ies) who are authorized tovote, to the Scrutinizer through e-mail [email protected], with a copy marked [email protected].

xiii. In case of any queries, you may refer the FrequentlyAsked Questions (FAQs) -Shareholders and E-votinguser manual -Shareholders, available at thedownload section of www.evoting.nsdl.com.

B. In case a Member receives physical copy of the Noticeof AGM (for Members whose email addresses are notregistered with the Company/Depositories):

i. Initial password is provided in the enclosed ballotform: EVEN (E-Voting Event Number), User ID andpassword.

ii. Please follow all steps from Sl. No. (ii) to Sl. No.(xiii) above, to cast vote.

C. Other Instructions:

i. The e-voting period commences on Monday,September 22, 2014 (9.00 a.m. IST) and ends onTuesday, September 23, 2014 (6.00 p.m. IST). Duringthis period, Members of the Company, holding shareseither in physical form or in dematerialized form, ason August 22nd, 2014, may cast their voteelectronically. The e-voting module shall be disabledby NSDL for voting thereafter. Once the vote on aresolution is cast by the Member, he shall not beallowed to change it subsequently.

ii. The voting rights of Members shall be in proportionto their shares of the paid up equity share capital ofthe Company as on August 22nd, 2014.

iii.Ms. Rekha Gadwal, Practicing Company Secretary(Membership No. ACS 28335), has been appointedas the Scrutinizer to scrutinize the e-voting process(including the Ballot Form received from the Memberswho do not have access to the e-voting process) in afair and transparent manner.

iv.The Scrutinizer shall, within a period not exceedingthree working days from the conclusion of the e-voting period, unblock the votes in the presence ofat least two witnesses not in the employment of theCompany and make a Scrutinizer’s Report of the votescast in favour or against, if any, forthwith to theChairman of the Company.

v. Members who do not have access to e-voting facilitymay send duly completed Ballot Form (enclosed withthe Annual Report) so as to reach the Scrutinizerappointed by the Board of Directors of the Company,Ms. Rekha Gadwal Practicing Company Secretary,(Membership No.ACS 28335), at the Registered Officeof the Company not later than Tuesday, Sept., 23rd,2014 (6.00 p.m. IST).

vi.Members have the option to request for physical copyof the Bal lot Form by sending an e-mai l [email protected] by mentioning theirFolio / DP ID and Client ID No. However, the dulycompleted Ballot Form should reach the RegisteredOffice of the Company not later than Tuesday, Sept.,23rd, 2014 (6.00 p.m. IST).

Ballot Form received after this date will be treatedas invalid.

A Member can opt for only one mode of voting i.e.either through e-voting or by Ballot. If a Member castsvote by both modes, then voting done through e-voting shall prevail and Ballot shall be treated asinvalid.

vii.The results declared along with the Scrutinizer’sReport shall be placed on the Company’s websitewww.sankhya.net and on the website of NSDLwww.evoting.nsdl.com within two days of the passingof the resolutions at the Seventeenth AGM of theCompany on Sept. 27th 2014 and communicated tothe BSE Limited, where the shares of the Companyare listed.

Date : 14.08.2014Place : Hyderabad

N. SridharChairman & Managing Director




EXPLANATORY STATEMENT(Pursuant to Section 102 of the Companies Act, 2013)

As required by section 102 of the Companies Act, 2013 (Act), the following explanatory statement sets out all materialfacts relating to the business mentioned under Item Nos. 4 of the accompanying Notice:

Item No. 4 :

The Company had, pursuant to the provisions of clause 49 of the Listing Agreements entered with the Stock Exchanges,appointed Dr. J. Venkateswara Rao, as Independent Director in compliance with the requirements of the clause.

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

In the opinion of the Board, each of these directors fulfill the conditions specified in the Act and the Rules framed thereunder for appointment as Independent Director and they are independent of the management.

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

The terms and conditions of appointment of the above Directors shall be open for inspection by the Members at theRegistered Office of the Company during normal business hours on any working day, excluding Saturday.

Except Dr. J. Venkateswara Rao, none of the Directors and key managerial personnel of the Company or their respectiverelatives is concerned or interested in the Resolution mentioned at Item No. 4 of the Notice.

Particulars Dr. J. Venkateswara Rao N. Srinivas

Date of birth 23-02-1954 02.02.1959

Date of Appointment 01.12.2013 21.07.1997

Qualifications M.Sc, Phd. M.COM, ICWA

Expertise in specific functional areas Strategic Planning and Advisory in IT, Entrepreneur, Accounts andTelecom and Financial Sectors Business Development

Directorships held in other companies Nil 3(excluding foreigncompanies)

Memberships/Chairmanshipsof Nil Nilcommittees of other companies(includes only Audit Committee andShareholders/ InvestorsGrievance Committee)

Number of shares held in the company 12,000 8,21,953

Details of Directors seeking appointment/re-appointment at the Annual General Meeting




FINANCIAL DATA & ANALYSIS

Particulars Actuals Actuals Actuals

FY 2011-12 FY 2012-13 FY 2013-14

Revenues 7,654 10,571 13,881

Growth % of Revenue 47 38 39

Employee Cost 5,000 6,493 8,624

% of sales 65 61 62

Other Expenses 1,905 2,855 4,529

% of sales 25 27 33

EBITDA 749 1,223 728

EBITDA Margin% 10 12 5

Depreciation 346 480 471

PBIT 403 743 257

Interest Expenses 298 401 458

PBT from Operations 105 342 (201)

Other Non Operating Income 49 (53) 647

PBT from Operations 154 289 445

PBT Margin% 2 3 3

Provision for Tax 81 6 137

other provision - 277 219

PAT 73 6 90

Adj for Extraordinary items - - -

Adjusted PAT 73 6 90

Net profit Margin% 1 0 1

Comparative Income Statement (Rs. In Lacs ) Particulars Actuals Actuals Actuals

FY 2011-12 FY 2012-13 FY 2013-14

Share Capital 1,125 1,125 1,125

Reserves 5,683 5,689 5,778

Share applicatin money allotment - - -

Shareholders fund 6,807 6,813 6,903

Long term Debt 725 888 784

Other Long Term Liabilities 50 62 181

Shor term debt 2,000 2,161 2,200

short term loan

Other Short Term Liabilites 695 628 916

Total Capital Employed 10,277 10,553 10,984

Non current Assets

Fixed Assests

Tangible 78 65 53

Intangible 4,247 4,368 4,848 Net Fixed Assets/Net Block after accumalated dep 4,325 4,434 4,902

Capital work in progress 696 696 696

Non- current Investments 58 58 58

Long Term Loans and Advances 598 605 601

1,352 1,359 1,355

Current Assets

Debtors 3,404 3,980 4,091

Cash & Bank Balances 265 23 15

Other Current Assets 836 753 578

Short term loans and advances 95 4 44

Total Assets 10,277 10,553 10,984

Comparative Balance Sheet (Rs. In Lacs )


FY 2011-12 FY 2012-13 FY 2013-14

Cash flow from operations

Profit after tax 73.31 6.05 89.59

Depreciation 345.97 479.89 471.21

interest expenses 298.34 385.02 458.29

OP profit before WC changes 717.62 870.96 1,019.09

Working capital adjustment (260.67) (464.21) 474.48

Cash from operations 456.95 406.74 1,493.57

Cash flow from investing

capex (1,206.58) (588.56) (939.60)

CWIP (62.69) -

Cash from investment (1,269.27) (588.56) (939.60)

Cash flow from financing

interest paid (298.34) (385.02) (458.29)

other financing 1,223.60 324.67 (103.81)

Increase in share capital

cash from financing activities 925.27 (60.35) (562.10)

Opening Cash & cash equivalents 152.19 265.14 22.97

Net cash increase/dec 112.94 (242.16) (8.12)

Closing cash & Cash Equivalents 265.14 22.97 14.85

Comparative Cash flow from operations (Rs. In Lacs ) Comparative Key Ratios


FY 2011-12 FY 2012-13 FY 2013-14

Margin Ratios(%)

EBIDTA Margin 9.79 11.57 5.25

PBIT Margin 5.27 7.03 1.85

PBT Margin 2.01 2.74 3.21

PAT Margin 0.96 0.06 0.65

Growth Ratios(%)

Revenues 47.00 38.00 39.00

Return Ratios(%)

ROCE 7.29 11.59 6.63

ROIC 6.50 11.53 5.39

Reported EPS 0.65 0.05 0.80

Liquid AnalysisCurrent Ratio 1.39 1.42 1.36

Quick Ratio 1.10 1.19 1.20

Solvency Ratios

Total Debt/Equity% 0.1 0.1 0.1

application money allotment

Liabilities

Assets

accumulated depreciation

decrease

short term debt




DIRECTOR’S REPORTDear Shareholders,

Your directors are pleased to present the 17th Annual Reportand Audited accounts for the financial year ending2013-14. Focus in this financial year was to achieveimprovement in margins. The key success has been thatthe company has started to bring back works from Onsiteto offshore. This process will continue with an aim to bringover 60% of onsite jobs to offshore that would have a goodimpact on the margins. This year sales recorded 39%growth.

FINANCIAL HIGHLIGHTS 2013-14

BUSINESS OPERATIONSThe company has successfully completed the execution ofthe prestigious Mumbai Rail Vikas Corporation Simulationproject. Dubbed as the most complex rail network in theworld Sankhya successfully completed the simulation projectfor MRVC that would help the corporation prepare trainschedules for improved productivity and efficiency of railassets utilization. Won against stiff international competitionthis World Bank project has been completed in a recordtime.

The company has also won another prestigious contractfrom Delhi Metro Rail Corporation for Simulation of the railtrack maintenance. The company is scheduled to completethe execution of this project within the time.

Your company has won the CBSE online education projectthat aims to provide online education to over 11.5 millionstudents.

Management focus this year has been in improving margin,therefore the company focused on bringing the onsite jobsback to offshore, and this process has been successfullystarted.

OUTLOOK

Your company has collaborated with Microsoft and portedits applications on Windows AZURE platform, the companyhas won its first customer for its online delivery model.This is a significant development and paves way for atremendous growth in the future.

Your company has excellent order book that got better withthe CBSE contract and the company aims to both achieve atarget growth of above 20% and substantially improvedmargins.

Your Company aims to bring over 60% of the jobs fromonsite to offshore. This would substantially improve themargins of the company.

SUBSIDIARY COMPANIES

The financial details of the subsidiary companies as well asthe extent of holding therein are provided in a separatesection of the Annual Report at Annexure 1:

Under section 212(8) of the Companies Act, 1956 theministry of Corporate Affairs has exempted from attachinga copy of the Balance Sheet, Profit and loss accounts andNotes thereof, Director’s Report and Auditors Report of thesubsidiary companies and other documents required to beattached under section 212(1) of the act to the balancesheet of the company. Accordingly the said documents arenot attached with the Balance Sheet of the Company. TheAnnual Accounts of the subsidiary Companies are availablefor inspection by any member / investor and the Companywill make available these documents / details upon requestby any member of the Company or its subsidiaries interestedin obtaining the same. However the data of the subsidiarieshas been furnished along with the statement pursuant toSection 212 of the Companies Act, 1956 forming part ofthe Annual Report. Further pursuant to Accounting Standard(AS)-21 issued by the Institute of Chartered Accountantsof India, your company has presented the ConsolidatedFinancial Statements which include financial informationrelating to its subsidiaries and forms part of the AnnualReport.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements have been preparedby your Company in accordance with the requirements ofthe Accounting Standards 21, issued by the Institute ofChartered Accountants of India. The Audited ConsolidatedFinancial Statements together with Auditors’ Report thereonforms part of the Annual Report.

DEPOSITS

The Company has not accepted any Deposits from the Publicduring the year pursuant to Section 58A of the CompaniesAct, 1956.




DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956,with respect to the Directors’ Responsibility Statement, it ishereby confirmed that:

1. In the preparation of Annual Accounts, the applicableAccounting Standards have been followed and thatthere are no material departures from the same.

2. Directors have selected the appropriate AccountingPolicies and applied consistently and have madejudgments and estimates that are reasonable andprudent so as to give a true and fair view of the stateof affairs of the Company as at 31st March 2014, andof the profit of the Company for that period.

3. Proper and sufficient care has been taken for themaintenance of adequate accounting records inaccordance with the provisions of the Companies Act,1956 for safeguarding the assets of the Company andfor preventing and detecting fraud and otherirregularities.

4. The Annual Accounts have been prepared on a goingconcern basis.

THE BOARD OF DIRECTORS

The Company had, pursuant to the provisions of clause 49of the Listing Agreements entered into with Stock Exchange,appointed Dr. J. Venkateswara Rao as Independent Directorof the Company.

Mr. N Srinivas is retiring by rotation at the AGM and isoffering himself for re-appointment.

AUDITORS

The Company’s auditors M/s. T.R. Chadha & Co., CharteredAccountants retire at the ensuing Annual General Meetingand expressed their willingness to continue as Auditors ofthe Company.

CONSERVATION OF ENERGY & ABSORPTION.

Your company’s operations are software oriented and notenergy intensive. Adequate measures are taken to conserveenergy wherever possible.

MANAGEMENT DISCUSSION & ANALYSIS

Pursuant to the provision of clause 49 of the listingagreement, a report on Management Discussion & Analysisis enclosed as Annexure 2 to this report.

CORPORATE GOVERNANCE

As per clause 49 of the listing agreement with the stockexchanges, a separate report on Corporate Governance isenclosed as Annexure 3 forming part of the Annual Report

A certificate from a firm of Chartered Accountant in wholetime practice confirming compliance with the conditions ofCorporate Governance as stipulated under clause 49 of theListing Agreement is annexed to this report as Annexure4.

CMD’s DECLARATION

Pursuant to the provision of clause 49 (I) (D) (ii) of theListing Agreement, a declaration by the Chairman &Managing Director of the company declaring that all themembers of the Board and the senior Managementpersonnel of the company have affirmed compliance withthe code of conduct of the company, is enclosed asAnnexure 5 of this report.

PARTICULARS OF EMPLOYEES

“No Employee of the company was in receipt ofremuneration during the financial year 2013-14 in excessof the sum prescribed under section 217(2A) of thecompanies Act, 1956 read with the companies (Particularsof Employees) Rule, 1975.”

INDUSTRIAL RELATIONS

Your company enjoys cordial employee relations, markedby empowerment and delegation.

ACKNOWLEDGEMENTS

Your Directors gratefully acknowledge the unstinted supportextended by the esteemed Customers, Bankers andInstitutions.

Your Directors also are pleased to record their appreciationfor the services rendered by the employees at all levels inbringing about a better performance.

Your directors express thanks to the Company’sShareholders, and the Investors for their sustainedconfidence in the Management of the Company.

By Order of the BoardN.Sridhar

Chairman & Managing Director

Place : HyderabadDate : 14.08.2014




ANNEXURE: 2

MANAGEMENT’s DISCUSSION & ANALYSIS

BUSINESS OUTLOOK

Your company has made improving margins as its primefocus as, low margins have hit the performance of thecompany very hard both in terms of managing cashflowsand also improving business.

Efforts in bringing the onsite works that had to move fromoffshore two years ago due to geo-economics reasons havestarted to flow back to India. Your company is continuingto work in this direction and is confident of bringing backmore than 60% of the work to offshore in India.

The company has successfully completed the execution ofthe prestigious Mumbai Rail Vikas Corporation Simulationproject. Dubbed as the most complex rail network in theworld Sankhya successfully completed the simulation projectfor MRVC that would help the corporation prepare trainschedules for improved productivity and efficiency of railassets utilization. Won against stiff international competitionthis World Bank project has been completed in a recordtime.

The company has also won another prestigious contractfrom Delhi Metro Rail Corporation for Simulation of the railtrack maintenance. The company is scheduled to completethe execution of this project within the time.

Your company has won the CBSE online education projectthat aims to provide online education to over 11.5 millionstudents. On a conservative estimates the CBSE project islikely to generate Rs.50 crores in three years of execution.

Your company has also embarked on providing onlineeducation for overseas customers using its LMS and onlineexamination software.

Your company is poised to implement some of the innovativetechnology initiatives for BFSI segment such as mobilelessons and eNuggets that improve the just in time,anywhere and at any time delivery of online education forBFSI employees.

AWARDS & RECOGNITIONSYour company won against stiff International competitiona prestigious World Bank contract from Mumbai Rail VikasCorporation and has successfully executed the same in arecord time.




RISKRisk of high fluctuations in forex markets could adverselyaffect the company profitability.

Risk of delay of payments from Government Contracts thatforms around 25% of the revenue is considered.

COMPETITIONYour company has faced stiff international competition andwon several prestigious contracts that are awarded byinternational organizations including World Bank. Yourcompany’s products and services are recognized as the bestand form industry standard to manage training needs ofany organization.

INTERNAL CONTROLSThe Company has adequate internal control mechanism atall levels of the organization.

HUMAN RESOURCESYour company has added several highly quali f iedprofessionals who have worked in prestigious organizationaround the world. The Board conveys its sincere appreciationfor the excellent efforts put in by the employees despitethe challenges faced by the Company.

ANNEXURE : 3REPORT ON CORPORATE GOVERNANCE(A) COMPANY’S PHILOSOPHY ON CODE OFGOVERNANCEAt Sankhya, corporate governance practices are based onthe principles of integri ty, transparency, fairness,independent monitoring and adequate disclosure of the stateof affairs of the company. Adoption of such governancepractice ensures accountability of the person in charge ofthe Company at the highest levels and benefits not just theinvestors, but also the Company’s customers, creditors,employees and society at large. It is the Company’sphilosophy and strong belief that adhering to such high levelof corporate governance practices go a long way inestablishing the credibility of the Company and createssignificant long term value for its stakeholders.

The company’s activities are carried out in accordance withgood corporate practices and the company is constantlystriving to better them and adopt the best practices. It isfirmly believed that good corporate governance practiceswould ensure efficient conduct of the affairs of the companyand help the company, achieve its goal of maximizing valuefor all its stakeholders. The Company strives to maintainhighest business ethics and compliance, and wherenecessary will transparently make adequate disclosures forproviding transparency to stakeholders.

In India, Corporate Governance standards for listedcompanies are regulated by Securities and Exchange boardof India through clause 49 of the listing agreement of theStock Exchange. The Company is in compliance with all the

requirements of the corporate governance code as enshrinedin Clause 49 of the listing agreement. All the relevantstandards have been fully adhered to.

(B) BOARD OF DIRECTORSThe company is managed by the Board of Directors, whoformulates strategies, policies and reviews its performanceperiodically and manages the business of the company. TheBoard of Directors of the Company promotes the successof the company for the benefit of its members as a wholeand a director regards in fulfilling the duty to promotesuccess. The directors monitors the likely consequences ofany decision in the long term in the interest of the company’semployees, suppliers, customers, shareholders and otherto foster the company’s business relationships with themand impact of the company’s operations on the communityand the environment with the desirability of the companymaintain a reputation for high standards of businessconduct, and the need to act fairly as between members ofa company.Mr. N. Sridhar CMD of the Company and Mr. N. Srinivas,Vice-Chairman, Executive Directors of the Company, arefully dedicated to ensure growth of the company.

Ms. Kavitha Prasad, Non-Executive and Independent Directorof the Company, has resigned with effect from 1st December,2013 and Dr. J. Venkateswara Rao, was appointed as Non-Executive and Independent Director of the Company witheffect from 01st December, 2013.

Appointment of a woman Independent board of Directorshas been initiated and we hope to complete the process inOct, 2014.

COMPOSITION OF THE BOARD

The composition of the Board is in conformity with Clause49 of the listing Agreement, as amended from time to time.The Executive Chairman of the Company is a promoter andthe number of Non-Executive Independent Director is morethan one-half of the total number of Directors.

Currently, the Company’s Board comprises of four Directorsincluding the Managing Director. The Chairman is anExecutive Director and is a professional Director in hisindividual capacity. There are two Independent, Non -Executive Directors and professionals, with expertise andexperience in their individual allied fields.

FOUR (4) Board Meetings were held during the year 2013-14 (i.e., from 1st April, 2013 to 31st March, 2014) (1) 29th

May, 2013 (2) 12th August, 2013 (3) 30th Nov, 2013 (4) 8th

Feb, 2014.

The names and categories of the Directors on the Board,their attendance at Board Meetings held during the yearand the number of Directorships and CommitteeChairmanships/Memberships held by them in othercompanies are given herein below:




NED–Non Executive Director, WTD–Whole Time Director, NED-I–Non Executive Director– Independent.

NOTES:

(i) The directorships held by the directors, as mentionedabove do not include the directorships held in foreigncompanies and companies under Section-25 of theCompanies Act, 1956.

(ii) The committees considered for the purpose are thoseprescribed under Clause 49(I)(C)(ii) of the ListingAgreement(s) viz. audit committee and shareholders/investors grievance committee of public limitedcompanies and private limited companies which arepublic limited companies in terms of section 3(1)(iv)(c)of the Companies Act, 1956

(iii) Except Mr. N. Sridhar and Mr. N. Srinivas, who arerelatives (Mr. N. Sridhar is Brother of Mr. N. Srinivas)and promoter directors, none of the directors arerelatives of any other director.

BOARD PROCEDURE

A detailed agenda folder is sent to each Director in advanceof Board and Committee Meetings. To enable the Board todischarge its responsibilities effectively, The ManagingDirector apprises the Board at every meeting of the overallperformance of the Company. A detailed functional reportis also placed at Board Meetings.

The Board reviews strategy and business plans, annualoperating and capital expenditure budgets, investment andexposure limits, compliance reports of all laws applicableto the Company, as well as steps taken by the Company torectify instances of non-compliances, if any. The Board alsoreviews major legal issues, minutes of the Board Meetingsof the Company’s subsidiary companies, significant

transactions and arrangements entered into by thesubsidiary companies, adoption of financial results,transactions pertaining to purchase or disposal of properties,major accounting provisions and write-offs, corporaterestructuring, minutes of meetings of the Audit and otherCommittees of the Board, and information on recruitmentof officers just below the Board level, including the CompanySecretary and the Compliance Officer.

PROMOTERS AND BOARD OF DIRECTORS PROFILE

Mr. N. Sridhar, Chairman and Managing Director:Technocrat graduate in Computer Science and 29 years ofexperience in the Software Industry, Mr. Sridhar has beenone of the founding members of Sankhya InfoTech Ltd.

Mr. N. Srinivas, Vice Chairman: He is one of the foundingmembers of Sankhya with a Master’s degree in Commerceand a professional qualification of ICWA, and an overallExperience of 31 years in industry of which 27 years in theSoftware Industry.

Independent Board of Directors:

CA. Ch. Anand: He holds a Bachelor Degree from OsmaniaUniversity. He is a practicing Chartered Accountant for thelast 22 years with extensive experience in the fields of Audit,Taxation and Finance.

Dr. J. Venkateswara Rao : Dr. J Venkateswara Rao holdsPh. D. in Physics from National Institute of Technology (NIT),Warangal, India, is a Strategy & Management Consultant -Offering Professional Consulting & Advisory Services. He ison the Advisory board of Invest Suisse, Dubai who areassociated with Private Equity and financial advisory services.He was with ETISALAT, UAE for 18 years in many leadership




positions in the functional areas of IT & Telecom infrastructureplanning, Service Portfolio Development, OperationsManagement; and Marketing & Commercial operations.

CODE OF CONDUCT

The Company has established a Code of Conduct for itsBoard Members and Senior Management personnel. TheCode of Conduct for the Board Members and SeniorManagement personnel is posted on the Company’s Websitewww.sankhya.net. The Board Members and SeniorManagement personnel have complied with the same.

(C) AUDIT COMMITTEE

The Board of Directors of the Company has re- constitutedthe Audit Committee on 1st October 2010. The Terms ofreference of the Audit Committee covers the mattersspecified for Audit Committees under clause 49 of the Listingagreement and also as required under Section 292A of theCompanies Act, 1956.The Audit Committee comprises ofthe following members

1. CA. Ch. Anand - Independent Director & Chairman2. Dr. J. V. Rao - Independent Director & Member3. Mr.N. Srinivas - Member4. Ms. Kavita Prasad - Member (upto 30.11.2013)

The Statutory Auditors are also the invitee to the meetings.During the year under review (i.e., from 1st April, 2013 to31st March, 2014), the Committee met 4 times on 29th May2013, 12th Aug, 2013, 30th Nov, 2013 & 8th Feb, 2014.

All the Members of the Committee possess strong accountingand financial management knowledge. The terms ofreference of this Committee are very wide. Besides havingaccess to all the required information from within theCompany, the Committee can obtain external professionaladvice whenever required. The Committee acts as a linkbetween the Statutory Auditors and the Board of Directorsof the Company. It is authorized to select and establishaccounting policies, review reports of the Statutory Auditorsand meet with them to discuss their findings, suggestionsand other related matters. The Committee is empoweredto inter alia review the remuneration payable to the StatutoryAuditors and to recommend a change in Auditors, if feltnecessary. It is also empowered to review FinancialStatements and investments of unlisted subsidiarycompanies, Management Discussion & Analysis, materialindividual transactions with related parties not in normalcourse of business or which are not on an arm’s lengthbasis. Generally all items listed in Clause 49 II (D) of theListing Agreement are covered in the terms of reference.The Audit Committee has been granted powers as prescribedunder Clause 49 II (C). The Meetings of the Audit Committeeare also attended by the Chairman & Managing Director.

SUBSIDIARY COMPANIES

The Company has following subsidiaries:

1. Sankhya SARL, France.

2. Sankhya US Corporation, USA;

3. Mahasena Info Technologies (India) Private Limited

The Audit Committee reviews the financial statements ofthe Subsidiaries M/s Sankhya SARL, France, M/s SankhyaUS Corporation and M/s Mahasena Info Technologies (India)Pvt Ltd.

(D) REMUNERATION COMMITTEE

REMUNERATION POLICY

While deciding on the remuneration for Directors, the Board,and Remuneration Committee (Committee) considers theperformance of the Company, the current trends in industry,the qualification of the appointee(s), their experience, pastperformance and other relevant factors. The Board /Committee regularly keep track of the market trends in termsof compensation levels and practices in relevant industriesthrough participation in structured surveys. This informationis used to review the Company’s remuneration policies.

The Company pays remuneration by way of salary, benefits,perquisites and allowances (fixed component) to itsManaging Director and Executive Directors. Annualincrements are decided by the Remuneration Committeewithin the salary scale approved by the Members and areeffective April 1, each year. The Remuneration Committeedecides on the commission payable to the Managing Directorand the Executive Directors out of the profits for the financialyear and within the ceilings prescribed under the CompaniesAct, 1956, based on the performance of the Company aswell as that of the Managing Director and each ExecutiveDirector.

During the year, 2013-14, the Company paid Sitting Fees ofRupees fifty thousand only to its Non-Executive Directorsfor attending meetings of the Board and meetings ofCommittees of the Board. The Company also reimbursesthe out-of-pocket expenses incurred by the Directors forattending meetings.

COMPOSITION OF REMUNERATION COMMITTEE

The Company reconstituted the Remuneration Committeeon 1st October 2010 consisting of the following IndependentNon-Executive Directors:

1. Dr. J. Venkateswara Rao - Chairman

2. CA. Ch. Anand - Member

3. A woman independent director is joining theboard in Oct, 2014 would be the third member ofthe remuneration committee.




For Non-Executive Directors:Sitting fee is paid to all Non –Executive Directors.

(E) SHAREHOLDERS / INVESTORS GRIEVANCE COMMITTE

TERMS OF REFERENCE

The Committee, inter alia, approves issue of duplicate certificates and oversees and reviews all matters connected withtransfer of securities of the Company. The Committee also looks into redressal of shareholders’/ investors ‘complaintsrelated to transfer of shares, non-receipt of Balance Sheet, non- receipt of declared dividend, etc. The Committee overseesperformance of the Registrar and Transfer Agents of the Company and recommends measures for overall improvement inthe quality of investor services.

COMPOSITION, MEETINGS AND ATTENDANCE

In compliance with the Listing Agreement requirements and provisions of the Companies Act, 1956, the Company hasconstituted an Investor Grievance Committee consisting of majority of Non-Executive Independent Directors. Committeeconsists of three members comprising of:

During the year, three complaints were received from the shareholders. As on 31st March, 2014, there are no pendinggrievances of the shareholder or investors.

(Rs. in Lacs)

Ms. Kavita Prasad 0.20

CA. Ch. Anand 0.30

Total 0.50

Name Designation & Category

Dr. J. Venkateswara Rao Independent Director & Memberw.e.f. 1st December 2013

CA. Ch. Anand Independent Director & Member

Mr. N. Srinivas Director & Member

Directors during the year 2013-14




Financial Year Location Date of AGM Time of AGM held

2012-13 Registered office NSIC Hyderabad 28th- Sept-2013 11.00 AM

2011-12 Registered office NSIC Hyderabad 29th -Sept-2012 11:00 AM

2010-11 Registered office NSIC Hyderabad 30th-Sept-2011 11:00 AM

(F) GENERAL BODY MEETINGS

The particulars of the Annual General Meetings of the Company for the last three financial years are as follows:

(F) DISCLOSURESDisclosures of transactions with Related PartiesThere were no materially significant related party transactions made by the Company with its Promoters, Directors orrelatives or the Management, their subsidiaries etc., which have potential conflict with the interests of the Company atlarge. The Register of Contracts containing the transactions in which Directors are interested, if any, is placed before theBoard at every Board Meeting for approval. Transactions with related parties are disclosed in Notes to the Accounts in theAnnual Report.

Disclosure of Accounting Treatment in preparation of Financial StatementsThe Company has followed the guidelines of Accounting Standards laid down by The Institute of Chartered Accountants ofIndia (ICAI) and the Companies (Accounting Standards) Rules, 2006 in preparation of its financial statements.

Details of non-compliance with regard to Capital MarketThere were no instances of non-compliances by the Company on any matter related to capital markets. The Company hascomplied with the requirements of listing agreement as well as the regulations and guidelines prescribed by the Securitiesand Exchange Board of India (SEBI). The Company has paid listing fees to the stock exchanges and annual custodial feesto the depositories for the financial year 2013-14 in terms of Clause 38 of listing agreement. There were no penaltiesimposed nor strictures passed on the Company by the Stock Exchanges, SEBI or any other statutory authority on anymatter related to capital markets, during last three years.SECRETARIAL AUDIT FOR RECONCILIATION OF CAPITAL.A qualified practicing Company Secretary carried out quarterly Secretarial Audit to reconcile the total admitted capital withNational Securities Depositary Limited (NSDL) and Central Depositary Services (India) Limited and the total issued andlisted capital. The audit confirmed that the total issued / paid up capital was in agreement with the aggregate of the totalnumber of shares in physical form and the total number of dematerialized shares held with NSDL and CDSL.

MEANS OF COMMUNICATIONa. The Quarterly, Half yearly un-audited financial results are generally published in widely circulating national and local

newspapers. These results are also published in the website of the Company www.sankhya.net and sent to stockexchanges.

b. The Management Discussion & Analysis Report forms part of this Annual Report.

(G) GENERAL SHAREHOLDERS INFORMATIONAnnual General MeetingDay, date and time : Saturday, 27th Sept, 2014 11.00 AM

Venue : NSIC Business Park, Near Radhika Theatre,ECIL Post, Hyderabad - 500 062.

Financial Calendar1. First Quarter results : 2nd Week of August, 2014

2. Half yearly results : 2nd Week of November, 2014

3. Third Quarter results : 1st Week of February, 20154. Last Quarter results / Results for the year

Ending 31st March 2015 : Last Week of May, 2015 (audited)

5. Book Closure Date (Both days inclusive) : from 20-09-2014 to 27-09-2014

6. Listing of Equity shares on : Bombay Stock Exchange Limited (BSE)

Stock Exchanges and Stock : Scrip Id: SANKHYAINCode : Stock Code: 532972




Month Open High Low Close No.of Total Turnover * SpreadPrice Price Price Price Shares Rs. H-L Close Open

Apr-13 6.66 8.47 5.41 6.8 16,510 116,858 3.06 0.14

May-13 7 8.45 6.49 8.2 20,195 150,422 1.96 1.2

Jun-13 7.8 7.8 6.37 6.37 7,800 54,805 1.43 -1.43

Jul-13 6.68 8.03 5.97 6.5 18,521 122,172 2.06 -0.18Aug-13 6.8 6.82 5.24 5.95 13,913 86,072 1.58 -0.85

Sep-13 5.75 5.76 4.87 5.61 16,853 90,176 0.89 -0.14

Oct-13 5.89 6.82 5.25 5.55 15,149 94,518 1.57 -0.34

Nov-13 5.28 5.75 5.06 5.31 17,387 94,693 0.69 0.03

Dec-13 5.57 10.96 5.57 10.14 31,599 280,219 5.39 4.57

Jan-14 9.94 9.94 7.62 7.62 37,953 355,424 2.32 -2.32

Feb-14 7.6 7.6 6.44 6.44 31,857 218,409 1.16 -1.16

Mar-14 6.51 8.22 6.38 7.49 45,007 322,288 1.84 0.98

Listing fees has been paid to Bombay Stock Exchange for the financial year 2013-14

7. Demat ISIN for NSDL & CDSL : INE877A01013

a) 10,981,762 Equity shares, representing 97.65 % of the total Equity Capital are held in dematerialized formas on 31st March 2014.

b) Market price data (High / Low) on BSE during the each month

Registrar & Share Transfer Agent:

CANBANK COMPUTER SERVICES LTD.,Unit: M/s. Sankhya Infotech LtdJ P ROYALE, 1ST FLOOR, # 218, 2nd Main, Sampige Road, (Near 14th Cross) ,Malleswaram, Benguluru – 560 003. Tel: 91-80-23469661 / 62, 23469664 / 65Fax: 91-80-23469667 / 668Email Id: [email protected] URL: www.canbankrta.com

Share Transfer System:

Presently the share transfers which are received in physical form are processed by the Registrar and Share Transfer Agentand approved by the Compliance Officer and the share certificates are returned within 15 days from the date of lodgment,subject to the transfer instruments being valid and complete in all respects.

Shareholding Pattern of the Company as on March 31, 2014 was as follows:-

Category % age of total CapitalPromoters Holding 37.68

Non-Promoter Holding

Financial Institutions/Banks 0.03

Corporate Bodies 23.04

Indian Public 37.17

NRIs/ OCBs 0.32

Clearing Member 0.01

HUF 1.75TOTAL 100

Dematerialization of shares and liquidityThe shares of the Company are in compulsory demat segment and are available for trading in the depositary systems of bothNSDL & CDSL. As on March 31, 2014 98% of the shares are in the dematerialized form. Consequent to the listing of Company’sequity shares at BSE there has been regular trading at BSE in the Company’s scrip.




Unclaimed Dividends

Dividend History & transfer of Unclaimed Dividend to Investor Education & Protection Fund (IEPF)

Sl. Financial Interim Date of Rate of Dividend Dividend Amount Due date ofNo year / Final declaration dividend amount distribution remaining transfer to

Excluding Tax Tax unclaimed as IEPF on 31.03.2014

1 2006-07 Final 28-09-2007 10% 99,44,156 14,4,151 3,13,227.00 28-09-2014

2 2007-08 Final 29-12-2008 12% 1,02,00,006 17,33,491 2,40,184.80 29-12-2015

For and on behalf of the Board of DirectorsMr. N. Sridhar

Chairman & Managing DirectorPlace : HyderabadDated : 14.08.2014

ANNEXURE - 4

AUDITOR’S CERTIFICATE ON CORPORATE GOVERNANCE

To,The Members,M/s SANKHYA INFOTECH LTD.

We have examined the compliance of conditions of Corporate Governance by M/s SANKHYA INFOTECH LTD., for theyear ended 31st-March-2014, as stipulated in clause 49 of the Listing Agreement of the said company with Stock Exchanges.

The Compliances of conditions of Corporate Governance is the responsibility of the Management. Our examination hasbeen limited to procedures and implementations thereof, adopted by the Company for ensuring compliance of the conditionsof the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statement of the company.

In our opinion and to the best of our information and according to the explanation given to us and based on therepresentations made by the Directors and the Management, we certify that the company has complied with the conditionsof the Corporate Governance as stipulated in clause 49 of the above mentioned Listing Agreement.

We state that no investor grievances were pending for a period of exceeding one month against the company as per therecords maintained by the Shareholders/Investor Grievance Committee.

We further state that such compliance in neither an assurance as to the future viability of the Company or of the efficiencyor effectiveness with which the management has conducted the affairs of the Company.

For M/s T.R Chadha & CoChartered AccountantsFirm Regd No: 006711N

Sd/-Pravin Kumar Jabade

PartnerMembership No. 107196


(Amount in Rs.)

ANNEXURE - 5

CEO’s Declaration

I, N. Sridhar, Chairman & Managing Director do hereby declare that pursuant to the provisions of clause 49 (I) (D) (ii) oflisting Agreement, all the members of the Board and senior Management Personnel of the Company have furnished thereaffirmation with the Code of Conduct of the Company.

Mr. N. SridharChairman & Managing Director





INDEPENDENT AUDITOR’S REPORT

The Members of SANKHYA INFOTECH LTD.

Report on the Financial Statements

We have audited the accompanying financial statements ofSankhya Infotech Ltd. (“the Company”), which comprisethe Balance Sheet as at March 31, 2014, and the Statementof Profit and Loss and Cash Flow Statement for the yearthen ended, and a summary of significant accounting poli-cies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of these fi-nancial statements that give a true and fair view of the fi-nancial position, financial performance and cash flows of theCompany in accordance with the Accounting Standards noti-fied under the companies Act, 1956 read with the GeneralCircular 15/2013 dated 13th September, 2013 of the Minis-try of Corporate Affairs in respect of Section 133 of the com-panies Act, 2013. This responsibility includes the design,implementation and maintenance of internal control relevantto the preparation and presentation of the financial state-ments that give a true and fair view and are free from mate-rial mis-statement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financialstatements based on our audit. We conducted our audit inaccordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India. Those Standardsrequire that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance aboutwhether the financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain auditevidence about the amounts and disclosures in the financialstatements. The procedures selected depend on the auditor’sjudgment, including the assessment of the risks of materialmisstatement of the financial statements, whether due tofraud or error. In making those risk assessments, the auditorconsiders internal control relevant to the Company’spreparation and fair presentation of the financial statementsin order to design audit procedures that are appropriate inthe circumstances, but not for the purpose of expressing anopinion on the effectiveness of the entity’s internal control.An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of theaccounting estimates made by management, as well asevaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our auditopinion.

Opinion

Basis of Qualified Opinion

a) Attention is invited to Note No.26.4 of FinancialStatements regarding balance confirmations fromunsecured loans and advances. (Impact notascertained).

b) Attention is invited to Note No.26.8 of FinancialStatements regarding making provisions towardsEmployee Benefits as per Actuarial Valuation Certificate.(Impact not ascertained).

c) Attention is invited to Note No.26.9 of FinancialStatements regarding making adequate provisionstowards Income Tax Demand raised by the Income TaxDepartment and accepted by the Company. Thecompany has not provided the additional demand ofRs.90.85 Lac. We report that had the provision beenmade, Loss after the provision for Income Tax wouldhave been Rs.1.26 Lac (as against the profit reportedat Rs.89.59 Lac), Reserves & Surplus would be atRs.5687.29 Lac (as against reported figure of 5778.14Lac) and .Short Term Provisions would be at Rs.111.97Lac (as against reported figure of 21.12 Lac)

Qualified Opinion

In our opinion and to the best of our information andaccording to the explanations given to us, except for theeffects of the matter described in the Basis of QualifiedOpinion paragraph above, the aforesaid financial statementsgive the information required by the Act in the manner sorequired and give a true and fair view in conformity with theaccounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairsof the Company as at March 31, 2014;

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

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

Emphasis of Matter

We draw attention to Note 14.ii in the financial statementswhich indicates that The company has given advances to itssubsidiary M/s Sankhya US Corp situated in United Statesof America and the same is pending since long time. TheManagement is of the view that these advances are inconnection execution of a signed contract fully recoverablein cash or in kind for value to be received in due course asoperations would be commenced fully in near future.

Our opinion is not qualified in this matter.

Report on Other Legal and Regulatory Requirements




1. As required by section 227(3) of the Companies Act,we report that:

a. We have obtained all the information and explanationswhich to the best of our knowledge and belief werenecessary for the purpose of our audit;

b. In our opinion, proper books of account as requiredby law have been kept by the Company so far asappears from our examination of those books, andproper returns adequate for the purposes of our audithave been received from branches not visited by us;

c. The Balance Sheet, Statement of Profit and loss, andCash Flow Statement dealt with by this Report are inagreement with the books of account and with thereturns received from the branches not visited by us;

d. in our opinion, the Balance Sheet, Statement of Profitand Loss, and Cash Flow Statement comply with theAccounting Standards notified under the companiesAct, 1956 read with the General Circular 15/2013dated 13th September, 2013 of the Ministry ofCorporate Affairs in respect of Section 133 of thecompanies Act, 2013;

e. Since the Central Government has not issued anynotification as to the rate at which the cess is to bepaid under section 441A of the Companies Act, 1956nor has it issued any Rules under the said section,prescribing the manner in which such cess is to bepaid, no cess is due and payable by the Company.

2. As required by the Companies (Auditor’s Report) Order,2003, as amended by the Companies (Auditor’s Report)(Amendment) Order 2004 (together the ‘Order’), issuedby the Central Government of India in terms of Section227 (4A) of the Companies Act, 1956, we enclose in theAnnexure a statement on the matters specified inparagraphs 4 and 5 of the said Order to the extentapplicable to the company.

3. On the basis of written representations received fromthe directors as on March 31, 2014, and taken on recordby the Board of Directors, none of the directors isdisqualified as on March 31, 2014, from being appointedas a director in terms of clause (g) of sub section (i) ofSection 274 of the Companies Act, 1956.

For T.R Chadha & Co.Chartered Accountants

Firm Regn. No: 006711N

Pravin Kumar Jabade(Partner) Membership Number: 107196


I. Fixed Assets

a) The Company has maintained proper records showingfull particulars including quantitative details and situationof Fixed Assets.

b) As explained to us, the fixed assets have been physicallyverified by the management at reasonable intervals andno material discrepancies between the books records andthe physical inventories have been noticed on suchverification

c) No substantial part of the fixed assets has been disposedoff during the year.

II. Inventories

The company during the year under audit does not havethe Inventory. As such no comments are required underclauses a to c of Para 4 (ii) of CARO, 2003.

III. Loans given / taken

a) The company has granted interest free unsecured loansto one wholly owned subsidiary covered in the registermaintained under Section 301 of the Companies Act,1956. The maximum amount involved during the yearand at the end of the year, balance of loans granted tosuch party are as follows:

SANKHYA INFOTECH LTD.Annexure to the Auditors’

Report for the year ended March 2014(Referred to in Paragraph 1 of our Report of even date)

b) According to the information and explanation given tous and according to our opinion, the terms andconditions of Interest Free Loans given to the partycovered in the register maintained under Section 302of the Act are not prima facie prejudicial to the interestof the Company.

c) As informed, the loans granted are repayable on demandand the company has not demanded repayment of anysuch loan during the year. Thus there has been nodefault on the part of the parties to whom the moneyhas been lent.

d) According to the information and explanation given tous, there is no overdue amount for more than Rs. OneLakh.

Name of the Party Maximum amount Year-end outstanding Balance during the year

Sankhya US 540.51 540.51Corporation

Harvest Holding 16.59 16.59Partners LLC, Dubai

(Rs. in Lacs)




Name of the Party Maximum Year-end amount Balance

outstandingduring the year

Mr. N. Srinivas 60.00 60.00

Mrs. N. Gayatri 94.65 91.42

Mr. N. Ramakrishna Rao 8.08 7.08

Mrs. N. Indira Ramani 132.81 123.70

Mrs. N. Parvata Vardhani 3.76 3.76

f) According to the information and explanation givento us and according to our opinion, the terms andconditions of Interest Free Loans taken from theparties covered in the register maintained underSection 302 of the Act are not prima facie prejudicialto the interest of the Company.

g) As informed, the loans granted are repayable ondemand and the company has repaid the amountdemanded during the year and there has been nodefault on the part of the company.

IV. Internal Control

In our opinion, there is an adequate internal controlsystem commensurate with the size of the Companyand nature of its business for the purchase ofinventory, fixed assets and for the sale of goods andservices. During the course of our audit, we haveneither observed nor have been informed of anycontinuing failure to correct major weakness ininternal control system.

V. Transactions under Section 301

In our opinion and according to the information andexplanations given to us ,the transactions made inpursuance of contracts or arrangement, that need tobe entered in the Registered maintained under section301 of the Companies Act 1956 have been so entered

VI. Public Deposit

The Company has not accepted any deposits fromthe public within the meaning of Section 58A and58AA of the Companies Act, 1956 and the rulesframed there under.

VII. Internal Audit System

e) The company has taken interest free unsecured loansfrom the parties covered in the register maintainedunder Section 301 of the Companies Act, 1956. Themaximum amount involved during the year and at theend of the year, balance of loans granted to such partyis as follows:

(Rs. in Lacs)

The Company has an internal audit system, incommensurate with the size and nature of itsbusiness.

VIII. Cost Records

As informed, the Central Government has notprescribed the maintenance of cost records undersection 209 (1) (d) of the Companies Act, 1956 forany products of the company.

IX. Statutory Dues

a) According to the books and records as producedand examined by us in accordance with generallyaccepted auditing practices in India, the Companyis not regular in depositing its undisputed statutorydues in respect of Provident Fund, Employees StateInsurance dues, Investor Education and ProtectionFund, Income Tax, Wealth Tax, Service Tax, CustomDuty, Excise Duty, Cess and other material statutorydues as applicable with the appropriate authoritiesin India during the year.

b) According to the information and explanationsgiven to us, there are some undisputed amountspayable in respect of Provident Fund, EmployeesState Insurance dues, Investor Education andProtection Fund, Income Tax, Wealth Tax, ServiceTax, Customs Duty, Excise Duty, Cess and othermaterial statutory dues were in arrears as at31.03.2014 for a period of more than six monthsfrom the date they became payable. The detailsare as follows:

Nature of dues Amount

Provident Fund 9.50ESI 1.03

TDS 95.15

Income Tax 77.37

Profession Tax 0.47

Service Tax 12.61

(Rs. in Lacs)

C) The details of dues of Income Tax / excise duty / SalesTax not deposited on account of dispute alongwiththe amounts involved and the forum where dispute ispending is given as under:

Nature Financial Amount Forum atYear Rs. in Lacs whichpending

Income Tax 2009-10 90.39 Appellate Tribunal




x) The Company has not incurred any cash lossesduring the financial year and in the immediatelypreceding year nor does it have any accumulatedlosses.

xi) Based on our audit procedures and as per theinformation and explanations given by themanagement, the Company has not defaulted inrepayment of dues to financial institutions, bankand debenture holders.

xii) According to information and explanations givento us, the Company has not granted any loans andadvances on the basis of any security by way ofpledge of shares, debentures and other securities.

xiii) In our opinion, considering the nature of activitiescarried on by the company, it is not a chit fund /nidhi / mutual benefit fund / society. Accordingly,the provisions of clauses 13 (a) to (d) of Para 4 ofthe Companies (Auditor’s Report) Order are notapplicable to the company.

xiv) In our opinion and according to information andexplanations given to us, the Company is notengaged in dealing or trading in shares, securities,debentures and other investments. However, theCompany is holding certain investments for whichthe records are properly maintained and the sameare held by the company in its own name.

xv) According to information and explanations givento us, during the year, the Company has not givenany guarantee for loans taken by others from Banksor Financial Institutions.

xvi) Based on our audit procedures and as per theinformation and explanations given by themanagement, no term loan received during theyear by the company.

xvii) According to the information and explanationsgiven to us and on overall examination of theBalance Sheet of the Company, we report that nofunds raised on short term basis have been usedfor long term investment.

xviii) The Company has not made preferential allotmentof shares during the year to parties and companiescovered in the register maintained under Section301 of Companies Act, 1956.

xix) The Company has not issued any Debenturesduring the year.

xx) The Company has not raised any money from thepublic during the year through public issue.

xxi) During the course of examination of the books ofaccount and records of the company as producedand examined by us in accordance with generallyaccepted auditing practices in India and accordingto the information and explanations given to us,we have not come across any fraud on or by theCompany, noticed or reported during the year, norhave we been informed of any such case by theManagement.

For T.R. Chadha & Co.Chartered Accountants


Pravin Kumar Jabade(Partner)

Membership Number: 107196Place : HyderabadDate : 22.05.2014




Notes referred to above form an Integral part of the Balance Sheet and should be read in conjunction therewithAS PER OUR REPORT OF EVEN DATE

For T.R Chadha & Co., For SANKHYA INFOTECH LIMITEDChartered AccountantsFirm Registration No: 006711N

Pravin Kumar Jabade N. Sridhar N. SrinivasPartner Chairman & Managing Director Vice ChairmanM.No. 107196

Place : Hyderabad Place : Hyderabad Place : HyderabadDate : 22.05.2014 Date : 22.05.2014 Date : 22.05.2014

A s at 31st -Mar-2014 A s at 31st-Mar-2013

Rs in Lacs Rs in Lacs

I. EQUITY A ND LIA BILITIES

(1) Shareholder's Funds

(a) Share Capital 3 1,124.52 1,124.52

(b) Reserves and Surplus 4 5,778.14 5,688.55

(2) Non-Current Liabilities

(a) Long-term Borrow ings 5 784.26 888.07

(b) Defferred Tax Liabilities (Net) 6 141.83 53.76

(c ) Long term provis ions 7 39.14 8.50

(4) Current Liabilities

(a) Short-Term Borrow ings 8 2,199.93 2,161.22

(b) Trade Payables 9 504.17 297.79

(c) Other Current Liabilities 10 390.63 330.43

(d) Short -Term Provis ions 11 21.13 2.30

Total 10,983.76 10,555.14

II.A ssets

(1) Non-Current A ssets

(a) Fixed Assets

(i) Tangible Assets 12 53.48 65.40

(ii) Intangible Assets 12 4,848.47 4,368.16

(iii) Capital Work-in-Progress 695.90 695.90

(b) Non-Current Investments 13 58.45 58.45

(c) Long Term Loans and Advances 14 600.58 604.59

(2) Current A ssets

(a) Trade Receivables 15 4,090.87 3,980.26

(b) Cash and Cash Equivalents 16 14.85 22.97

(c) S hort-Term Loans and Advances 17 43.56 3.98

(d) Other Current Assets 18 577.60 755.43

Total 10,983.76 10,555.14

Company Information 1

Summary of Significant A ccount ing Policies 2A dditional Notes forming part of Financial Statement 26

SANKHY A INFOTECH LIMITED

Particulars Note No

Balance Sheet as at 3 1st March, 2014

#405, NSIC BUSINESS PARK, ECIL POST HY DERABAD -500062 INDIA




Notes referred to above form an Integral part of the Statement of Profit and Loss and should be read in conjunctiontherewith

AS PER OUR REPORT OF EVEN DATE




For the Year Ending 31st Mar

2014


2013Rs Rs

I. Revenue From Operations 19 13,881.37 10,571.08

II. Other Income 20 646.56 (52.84)

III. Total Revenue (I +II) 14,527.93 10,518.24 IV. Expenses:

Employee Benefit Expenses 21 8,624.24 5,965.00

Other Operating Expenses 22 1,159.09 524.97

Administrative Expenses 23 2,000.05 1,375.95

Finance Costs 24 458.29 401.09

Depreciation and Amortization Expense 12 471.21 479.89

Other Expenses 25 1,588.84 1,759.25

IV. Total Expenses 14,301.72 10,506.15

V. Profit Before Exceptional and Extraordinary Items and Tax ( III - IV) 226.21 12.09

VI. Extraordinary Items

VII. Profit before tax (V-VI) 226.21 12.09

VIII. Tax expense:

(1) Current tax 48.54 2.30

(2) Deferred tax 88.07 3.74

IX. Profit/(Loss) for the period (VII-VIII) 89.59 6.05

X. Earning per equity share:

Basic and Diluted Earnings per Share (Rs.) 26 0.80 0.05 Summary of Significant Accounting Policies

Additional Notes forming part of Financial Statement

SANKHYA INFOTECH LIMITED

audited Profit and Loss statement for the year ended 31st March, 2014

Particulars Note No

#405, NSIC BUSINESS PARK, ECIL POST HYDERABAD -500062 INDIA

Profit and Loss statement for the year ended 31st March, 2014

26








Particulars A s at 31-03-2014 A s at 31.03.2013

A . CA SH FROM OPERA TING A CTIVITIES

Net Profit/(Loss) Before Tax 226.21 12.09

Adjustment for:

Depreciation 471.21 479.89

Interest Expenses 458.29 401.09

Operating Profit Before Working Capital Changes 1,155.71 893.07 Adjustment for:

Decrease/(Increase) in Trade Rece ivables (110.61) (575.91)

Decrease/(Increase) in Short Term Loans & Advances (39.58) 90.92

Decrease/ (Increase) in Other Current Assets 175.53 80.15

Increase/(Decrease) in Short term Borrow ings 38.71 161.22

Increase/(Decrease) in Trade Payables 206.38 (3.14)

Increase/(Decrease) in Other Current Liabilities 60.20 (58.42)

Increase/(Decrease in Long term provision 30.64 3.00

Decrease/(Increase) in Long Term Loans & Advances 4.01 (6.85)

Netoff of Tax (27.42)

Net Cash Flow from Operating A ctiv it ies A 1,493.57 584.04

B. CA SH FLOW FROM INVESTING A CTIVITIESPurchase of Fixed Assets (939.60) (588.56)

Increase in Capital W ork in process - -

(Increase) / Decrease in Investments - -

Net Cash from/(Used) in Investing A ctiv it ies B (939.60) (588.56)

C. CA SH FLOW FROM FINA NCING A CTIVITIES Increase in Equity Share Capital - - Increase/(Decrease) in Long term borrow ings (103.81) 163.45

Increase/(Decrease) in Capital Reserve - -

Increase/(Decrease) in Share W arrants Application Money - -

Increase/(Decrease) in equity share premium - -

Interest Paid (458.29) (401.09)

Net Cash from/(Used) in Financing A ctiv it ies C (562.10) (237.64) Net increase in Cash and Cash Equiva lents ( A+B+C ) (8.13) (242.16) Opening Cash and Cash Equivalents 22.97 265.14 Closing Cash and Cash Equivalents 14.85 22.97

SA NKHYA INFOTECH LIMITED

#405, NSIC BUSINESS PA RK, ECIL POST HYDERA BA D -500062 INDIA

Cash Flow Statement as at 31st March, 2014




Note No 1 – Company Information

Sankhya is a leading software products and services companyserving the rapidly growing niche markets of Training,Education, Modeling and Simulation. The company hasdeveloped several Software products targeted in the area ofEducation, Training and Learning and owns 100% of the“Intellectual Property” in them. The company’s services includesoftware services around the products, development ofSimulation software for specific customer needs, courseware,besides providing consulting support to customers. Thecompany has established operations in France and UAE. Thecompany has diverse clients from across several continents,and is a well-established name in the field of education andtraining.

Note No. 2

Significant Accounting Policies

1. Basis of preparation of financial statements

The financial statements have been prepared as per historicalcost convention and in accordance with Generally AcceptedAccounting Principles in India, the provisions of the CompaniesAct, 1956, and the applicable Accounting Standards referredto in Section 211 (3C) of the Companies Act, 1956 and relevantguidelines issued by Securities Exchange Board of India asissued from time to time. All Income and Expenditure havingmaterial bearing on the financial statements are recognizedon accrual basis.

2. Use of estimates

The preparation of the financial statements in conformity withGenerally Accepted Accounting Practi ces requi resManagement to make estimates and assumptions thataffect the reported Assets and Liabilities and disclosuresrelating to contingent assets and liabilities as at the date ofthe Financial Statements and reported amounts of Incomeand Expenses during the period. Although these estimatesare based upon management’s best knowledge of currentevents and actions, actual results could differ from theseestimates.

3. Revenue recognition

Revenue is recognized to the extent that it is probable thatthe economic benefits will flow to the Company and therevenue can reliably be measured.

Revenue from Services:

· Time and material contracts – Revenues are recognizedon the basis of time spent duly approved by the respectivecustomers.

· Fixed price contracts – Revenues are recognized on thebasis of approval received from the respective customersin accordance with the “Percentage of Completion”method.

· Internal timesheets or timesheets submitted by vendorsfor time and material contracts and for fixed pricecontracts based upon assessment of work done.

· Other Income - In other income such as income frominterest is recognized using the time proportion method,based on rates implicit in the transaction.

4. Expenditure

All software development and services purchased arecharged to cost of revenue in at which they were initiallyrecorded during the year, or reported in previous financialstatements, are recognized as income or as expenses inthe year in which they arise the year of acquisition. Provisionsare made for all known losses and liabilities. Where everapplicable leave encashment liability is provided on thebasis of actuarial valuation.

5. Fixed assets, intangible assets and Capitalwork in progress.

Tangible Fixed Assets and Depreciation:

Fixed assets are stated at cost less accumulateddepreciation. Direct costs are capitalized until fixed assetsare ready for use. “Cost means” cost of bringing the asset toits working condition for its intended use. Fixed assets arecapitalized as per the statement issued by the Institute ofChartered Accountants of India. Capital work in progresscomprises of the expenditure incurred in the process ofdeveloping the intangible assets for the time being and theassets are not yet ready for their intended use as at the dateof Balance sheet.

Depreciation on tangible fixed assets is applied on the writtendown value method by following the rates prescribed inSchedule XIV of the Companies Act, 1956. Depreciationon addition to fixed assets is provided on pro-rata basisfrom the date the assets are put to use. Depreciation onsale/deduction from fixed assets is provided for up to thedate of sale, deduction, discardment as the case may be.Individual low cost assets (acquired for less than Rs.5000/-) are entirely depreciated in the year of acquisition.

Intangible Fixed Assets and amortization

Intangible assets other than goodwill are valued at costless amortization.




These generally comprise of costs incurred to acquirecomputer software licenses and implement the softwarefor internal use (including software coding, installation,testing and certain data conversion) as well as costs paidto acquire studies for obtaining approvals from registrationauthorities of products having proven technical feasibility.Research costs are charged to earnings as they arise. Costsincurred for applying research results or other knowledgeto develop new products, are capitalized to the extent thatthese products or registrations are expected to generatefuture financial benefits. Other development costs areexpensed as and when they arise. Intangible assets arereported at acquis it ion value with deductions foraccumulated amortization and any Impairment losses.Amortization is provided on a written down value basis overthe asset’s anticipated useful life. The useful life isdetermined based on the period of the underlying contractand the period of time over which the intangible asset isexpected to be used and generally does not exceed 10 years.An impairment test of intangible assets is conducted annuallyor more often if there is an indication of a decrease in value.The impairment loss, if any, is reported in the Statement ofProfit and Loss.

6. Impairment of assets

The carrying values of assets of the Company’s cash-generating units are reviewed for impairment annually ormore often if there is an indication of decline in value. Ifany indication of such impairment exists, the recoverableamounts of those assets are estimated and impairment lossis recognized, if the carrying amount of those assets exceedstheir recoverable amount. The recoverable amount is thegreater of the net selling price and their value in use. Valuein use is arrived at by discounting the estimated future cashflows to their present value based on an appropriate discountfactor.

7.Unbilled Revenue:

The work in progress is the unbilled amount for the contractsthat are in execution stage and the client deliverables are eitherin testing phase or certification/ acceptance stage, Thereforerevenue is not recognized. The same is accounted for at Cost.

8. Investments

Long Term Investments in wholly owned subsidiary are atcost less provision for other than temporary diminution invalue, if any. Current Investment are valued at the lowerof cost and fair value.

9. Research and development

Capital Expenditure incurred on research and developmentis depreciated over the estimated life of related assets andthe revenue expenditure is expensed as incurred.

10. Employee Benefits

Short term employee benefits are recognized as an expenseat the undiscounted amount expected to be paid over theperiod of services rendered by the employees to theCompany.

The Company has both defined-contribution and defined-benefit plans, of which some have assets in special fundsor securities. The plans are financed by the Company andin the case of some defined contribution plans by theCompany along with its employees. The contributions asspecified under the law are paid to the Provident Fund setup as irrevocable trust by the Company or to the RegionalProvident Fund Commissioner. The Company is generallyliable for annual contribution and any shortfall in the fundassets based on the government specified minimum ratesof return. Such contributions and shortfall, if any, arerecognized in the Statement of Profit and Loss as an expensein the year incurred.

Expenses for gratuity and supplemental payment plans arecalculated as at the balance sheet date by independentactuaries in a manner that distributes expenses over theemployee’s working life. These commitments are valued atthe present value of the expected future payments, withconsideration for Calculated future salary increases, usinga discount rate corresponding to the interest rate estimatedby the actuary having regard to the interest rate ongovernment bonds with a remaining term that is almostequivalent to the average balance working period ofemployees.

The contributions to Gratuity are made to fund administeredby the Life Insurance Corporation of India (LIC).

The employees of the Company are entitled to compensateabsence. The employees can carry-forward a portion of theunutilized accrued compensated absence and utilize it infuture periods or receive cash compensation at retirementor termination of employment for the unutilized accruedcompensated absence. The Company records an obligationfor compensated absences in the period in which theemployee renders the services that increase this entitlement.The Company measures the expected cost of compensatedabsence as the additional amount that the Company expectsto pay as a result of the unused entitlement that hasaccumulated at the balance sheet date. Long termcompensated absences is accrued based on actuarialvaluation at the balance sheet date carried out by anindependent actuary.

11. Foreign currency transactions InitialRecognition




Foreign currency transactions are recorded in the reportingcurrency, by applying to the foreign currency amount theexchange rate between the reporting currency and theforeign currency at the date of transaction.

Conversion

Foreign currency monetary items are reported using theclosing rate. Non-monetary items which are carried interms of historical cost denominated in a foreign currencyare reported using the exchange rate at the date of thetransaction; and non-monetary items which are carried atfair value or other similar valuation denominated in a foreigncurrency are reported using the exchange rates that existedwhen the values were determined.

Exchange Differences

Exchange differences arising on the settlement of monetaryitems at rates difference from those at which they were initiallyrecorded during the year, or reported in previous financialexpenses in the year in which they arise.

Exchange Contracts not intended for trading orspeculation purposes

The premium or discount arising at the inception of forwardexchange contracts is amortized as expense or income overthe life of the contract. Exchange differences on suchcontracts are recognized in the statement of profit and lossin the year in which the exchange rates change. Any profitor loss arising on cancellation or renewal of forwardexchange contract is recognized as income or as expensefor the year.

Translation of foreign branch

The financial statements of an integral foreign operation aretranslated as if the transactions of the foreign operation havebeen those of the company itself.

12. Income Tax

Provision for Income Tax, comprising current tax and deferredtax, is made on the basis of the results of the year.

In Accordance with Accounting Standard 22 Accountingfor Taxes on Income, issued by the Institute of CharteredAccountants of India, the deferred tax for timing differencesbetween the book and the tax profits for the year isaccounted for using the tax rates and laws that have beenenacted or substantively enacted as of the balance sheetdate.

Deferred tax assets arising from temporary timingdifferences are recognized to the extent there is a reasonablecertainty that the assets can be realized in the future.

13. Earnings per share

Basic earnings per share are calculated by dividing thenet profit or loss for the period attributable to equityshareholders by the weighted average number of equityshares outstanding during the year.

14. Cash flow statement

Cash flows are reported taking the indirect method, whereinnet profit before tax is adjusted for the transactions of non-cash nature and others or other accruals of past or futurereceipts and / or payments. The cash flows from regularrevenue generating, investing and financing activities of thecompany are segregated.

15. Segment Reporting

The accounting policies adopted for segment reporting arein line with the accounting policies of the Company.Segment Revenue, Segment Expenses, Segment Assets andSegment Liabilities have been identified to segments onthe basis of their relationship to the operating activities ofthe segment. Revenue, expenses, assets and liabilitieswhich relate to the Company as a whole and are notallocable to segments on reasonable basis, have beenincluded under “Unallocated Revenue / Expenses / Assets/ Liabilities”.

16. Provisions and Contingencies

A provision is recognized when the Company has a presentobligation as a result of a past event and it is probablethat an outflow of resources will be required to settle theobligation, in respect of which a reliable estimate can bemade. Provisions (excluding retirement benefits) are notdiscounted to their present value and are determined basedon best estimate required to settle the obligation at thebalance sheet date. These are reviewed at each balancesheet date and adjusted to reflect the current bestestimates. Contingent liabilities are not recognized but aredisclosed in the notes to the financial statements unlessthe possibility of an outflow of resources embodyingeconomic benefit is remote. A contingent asset is neitherrecognized nor disclosed.




No. of Shares Rs in Lac No. of shares Rs in Lac

a Share Capital ( For each class of capital )Authorised

15000000 Equity Shares of Rs. 10/- each 150.00 1,500.00 150.00 1,500.00 1,500.00 1,500.00

Issued, Subscribed and Paid up

1,12,45,205 Equity Shares of Rs.10/- each, fully paid 112.45 1,124.52 112.45 1,124.52

Total Equity Share capital 1,124.52 1,124.52

b A Reconciliation of the Number of Shares Outstanding at the Beginning and at the end of the Reporting Period:

Equity Shares of Rs.10Each, Fully paid up :

At the Beginning

Issued During the year - Cash Issue

Forfeited / Bought Back During the Year

At the End

c Details of Shareholder Holding more than 5% Shares of the Company:

Equity Shares of Rs. 10 each Held By No of Shares Percentage No of Shares Percentage

Srinivas N - 821,953 7.30% 821,953 7.30%

Sridhar N - 762,152 6.78% 762,152 6.78%

Parvatha Vardhani N - 854,600 7.60% 854,600 7.60%

Gayatri N - 776,109 6.90% 776,109 6.90%

As at 31st-Mar-2014

As at 31st-Mar-2013

Rs in Lac Rs in Lac

I RESERVES AND SURPLUS

a) Capital reserve As at the commencement of the year 84.03 84.03 Add: Additions during the year (forfeiture of share application money)

84.03 84.03 b) Securities Premium Reserve

As at the commencement of the year 1,521.88 1,521.88 Add: Additions during the year

1,521.88 1,521.88 c) General Reserves

As at the commencement of the year 37.40 37.40

37.40 37.40

d) Surpuls:

Opening Balance - Profit and Loss Account 4,045.24 4,039.19

Add: Transfer from Profit & Loss Account 89.59 6.05

4,134.83 4,045.24

Total Reserves and Surplus 5,778.14 5,688.55

NOTE NUMBERS TO BALANCE SHEET

As at 31st -Mar-2013ParticularsS.NO.

As at 31st -Mar-2014

NOTE NO. 3 : SHARE CAPITAL

Number of Shares

-

112.45

-

Number of Shares

-

-

112.45

112.45

S. No.

112.45

Particulars

NOTE NO.4 : RESERVES AND SURPLUS

% of Share Holding

Surplus:

Parvata Vardhani N




A s at 31st-Mar-2014


Rs in Lac Rs in LacI Long Term Borrowings

a) Term Loans:

From Banks:

Secured - Refer Note No. 5(i) 187.50 337.50

From Other Parties:

Secured - Refer Note No. 5(ii) 180.00 180.00

Interest accrued and due on above 25.32 7.59

b) Loans and Advances From Related Parties

Un Secured: - Refer Note No. 5(iii) 391.44 362.98

Notes :Note No.5(i): The term loan was taken from IDBI Bank Ltd which was secured by first charge on Fixed Assets of the Company and Second Charge on all current assets of the Company, Mortgage of land belongs to Mrs. N. Parvata Vardhani which is situated at Yadaram Village, Medchal and pledge of shares belonging to promoter Director in favour of IDBI Bank Ltd, Branch Hyderabad and it is further secured by personal guarantee of Promoter Director.

Note No.5(ii): The Loan was taken from Merlin Holdings Limited which was secured by pledge of share belonging to promoter Directors.

Note No5(iii) : The unsecured loan is taken from the shareholders of the company & others

Total Long Term Borrowings 784.26 888.07



Rs in Lac Rs in Lac

I Opening Deferred tax Liability 53.76 50.03 Add:Deferred Tax Liability for the Year 89.09 125.94 Less: Deferred Tax Assets on Expenditure disallowed u/s 40A(7) of Income Tax Act

1.02 - Less: Deferred Tax Assets on Depreciation Loss - 122.21

Deferred Tax Liability/ ( A sset ) - Net 141.83 53.76



Rs in Lac Rs in LacI Gratuity payable 11.50 8.50 2 Security Deposit (received from Vendor) 27.64 -

Note: Gratuity Provision of Rs.3 Lac for the year ended 31.3.2014 is made on Provisional Valuation Certificate obtained from the LIC Gratuity Fund Account. Independent Actuarial valuation certificate not obtained.

39.14 8.50

S.No.

NOTE NO.5 : LONG TERM BORROWINGS

NOTE NO.6 : DEFERRED TA X LIA BILITY ( NET )

S. No.

Particulars

Particulars

NOTE NO.7 : LONG TERM LIA BILITIES.

S. No. Particulars




A s a t31st-Ma r-2014

A s at31st-Mar-2013

Rs in La c Rs in LacI S hort Term Borrow ings

a) Loans Repayable on Dem and:

F rom Banks

S ecured Refer Note No. 8(i) 2,199.93 2,161.22

Notes :Note No.8(i): The W orking capita l loan w as taken from IDBI Bank Ltd w hichw as secured by first charge on All current assets of the Com pany and S econdcharge on all fixed Asse ts of the Company, Mortgage of land be longs to Mrs. N.Parvata Vardhani w hich is situated at Yadaram Village, Medchal and pledge ofshares belonging to promoter Director in fa vour of IDBI Bank Ltd, BranchHyde rabad and it is furthe r secured by persona l guarantee of PromoterDirector .

Tota l short term borrowings 2,199.93 2,161.22


A s at31st-Mar-2013

Rs in La c Rs in Lac

I a) Trade Payables

M icro , Sm all, Medium Enterpr ises - -

S undry C reditors 504.17 297.79

Total Tra de Pay ables 504.17 297.79


A s at31st-Mar-2013

Rs in La c Rs in Lac

I Sta tutory Liabilit ie s

Provision for Incom e Tax (Refer Note no.26 .9) 77 .37 143.53

S ervice T ax Payable 45.14 37.65

T DS Payable 139.43 76.34

ES I Payable 2 .01 0.19

PF Payable 16.96 1.60

PT Payable 1 .01 0.18

VAT & CST payable 2 .91 -

Othe r Prov isions

Provision for Dividend 5.52 5.52

InterestPayable & Interest Accrued 89.06 55.96

Other Provisions 11.22 9.45

Tota l Other Current Liabilit ie s 390.63 330.43


A s at31st-Mar-2013

Rs in La c Rs in LacI Mat Payable (Net off advance ta x current year 29.72 previous year Rs.2.30 Lac) 21 .13 2.30

Tota l Short Term Provisions 21.13 2.30

NOTE NO.11 : SHORT TERM PROV ISIONS

S. No. Part icula rs

Part icula rs

Part icula rs

NOTE NO. 9 : TRA DE PA YA BLES

S. No.

S. No.

NOTE NO. 10 : OTHER CURRENT LIA BILITIES

S. No.

Part icula rs

Note: Based on the Information available w ith the Company there are nosuppliers w ho are registered as M icro, S mall & Medium Ente rpr ise s under theM icro S mall Medium Enterprises Development Act 2006, as a t 31st March 2014or as at the end of previous year Enterpr ises Development Act 2006, as a t 31stMarch 2014 or as at the end of previous year Therefore the question of liablitytow a rds interest in terms of section 16 of M icro , Small & Medium Enterprisedevelopm ent act 2006 does not arise.

NOTE NO.8 : SHORT TERM BORROW INGS.




TAN

GIB

LE

INTA

NG

IBLE




A s at31st-Mar-2014

A s at31st-Mar-2013

Rs in Lac Rs in Lac

I Non- Current Investments

1) Investment in Subsidiaries

a) Equity Shares (Unquoted)

-Sankhya Sarl, France and 100% of holding 1.73 1.73

-Sankhya US Corporation, US and 100% of holding 46.72 46.72

-Mahasena Info Technologies (India) Pvt Ltd, and 100% of holding 10.00 10.00

Total Non - Current Assets ( Net ) 58.45 58.45

Footnote: Investments are valued at Cost less provision for diminution of temporary nature)

A s at31st-Mar-2014

A s at31st-Mar-2013

Rs in Lac Rs in Lac

I Long - Term Loans and Advances:

a) Security Deposit

Secured Refer Note 14(i) 60.07 64.08

b) Loans and Advances to Related Parties Refer Note 14(ii)

Unsecured (advance to Sankhya US (wos) 540.51 540.51

Total Long term loans & advances( net ) 600.58 604.59 Note No 14(i): EMD is provided for the various projects, and fixed deposit were kept with Central Excise, Electricity Department and for Rent

Note No 14(ii): These advances are pending since 31/03/2010. The Management is of the view that these advances are in connection execution of a signed contract fully recoverable in cash or in kind for value to be received in due course as operations would be commenced fully in near future.

A s at31st-Mar-2014

A s at31st-Mar-2013

Rs in Lac Rs in Lac

I Outstanding for a Period of less than 6 months Un Secured, Considered Good 4,080.76 3,687.53

Outstanding for a Period of more than 6 months Unsecured, Considered Good 10.11 292.73

Total Trade Receivables(net) 4,090.87 3,980.26

A s at31st-Mar-2014

A s at31st-Mar-2013

Rs in Lac Rs in LacI a) Cash and Cash Equivalents :

1) Balances with Banks in Current Accounts in India 1.25 0.74 2) Balances with Banks in Current Accounts outside India 8.07 16.69 3) Cash on Hand 0.01 0.02 Other Bank Balances

1) Un Paid Dividend Account 5.52 5.52

Total Cash and Cash Equivalents 14.85 22.97

S. No.

Particulars

NOTE NO. 15 : TRADE RECEIVA BLES

S. No. Particulars

NOTE NO. 16 : CASH A ND CA SH EQUIVALENTS

NOTE NO. 13 : NON- CURRENT INVESTMENTS

NOTE NO. 14 : LONG TERM LOANS A ND ADVANCES

S. No.

ParticularsS. No.

Particulars




As at31st-Mar-2014

As at31st-Mar-2013

Rs in Lac Rs in Lac

I Short -Term Loans and Advances:a) Other Loans and Advances (Unsecured)

Advance for Expenditure 26.97 3.98

Advance to Joint Venture Project 16.59 -

Total short term loans & advances( net ) 43.56 3.98

As at31st-Mar-2014

As at31st-Mar-2013

Rs in Lac Rs in Lac1 Unbilled Revenue Refer Note below 573.94 745.23 2 Advance Taxes (Net off provision current year Rs.29.72 Lakh, previous year 2.30 lakh) - 7.73 3 Other Current Assets 0.64 0.64 4 Interest Accrued 2.26 1.08 5 Vat (Refund) 0.76 0.76

Total Other Current Assets 577.60 755.43

Unbilled Revenue as at 31st March 2014 includes amount Rs.429.98 Lac relatingto Contract which has not been billed since 30.03.2012. The Management is ofthe view that the contract is entirely billable. The Company is in constantengagement with the client to get the work certified and bill the same.

NOTE NO.18 : OTHER CURRENT ASSETS

S.No. Particulars

S.No.

NOTE NO. 17 : SHORT TERM LOANS AND ADVANCES

Particulars

For the Year Ended 31st Mar -2014

For the Year Ended 31st March-2013

Rs in lacs Rs in lacsI Revenue from operations in respect of non-finance company

(a)Income from Services

Domestic Income 481.01 320.39 Export Income 13,400.36 10,250.69

Total Revenue From Operations 13,881.37 10,571.08



Rs in lacs Rs in lacs

I (a) Interest Income 1.96 5.38 (b) Net gain/loss on foreign currency translation and transaction 644.40 (58.22)

(c) Misc Income 0.20 -

Total Other Income 646.56 (52.84)

ParticularsS. No.

NOTE NUMBERS TO STA TEMENT OF PROFIT & LOSS

NOTE NO. 20 : OTHER INCOME

S. No. Particulars

NOTE NO. 19 : REVENUE FROM OPERATIONS






Rs in lacs Rs in lacsI (a) Salaries & Wages 8,612.72 5,950.74

(b) Contribution to Provident & Other Funds 10.40 12.41

(c) S taff Welfare Expenses 1.12 1.86

Total Employee Benefit Expenses 8,624.24 5,965.00



Rs in lacs Rs in lacsI (a) ComputerHardware & Accessories 85.39 91.70

(b) Technical Assistance 148.93 -

(c) S imulation Software Services 340.08 -

(d) Power & Fuel 37.72 26.74 (e) Rent 107.13 94.88

(f) Computer Repairs & Maintenance 188.39 174.23

(g) Insurance 47.42 31.14

(h) legal fee 36.75 29.80

(i) Rates & Taxes 127.13 54.39

(j)Miscellaneous Expenditure 40.15 22.09

Total Other Expenses 1,159.09 524.97



Rs in lacs Rs in lacsI (a) Telephone, Postage and Others 51.80 32.96

(b) Business Promotion Expenses 424.35 370.71 (c) Conveyance 359.47 352.82

(d) Office Maintenance 53.06 51.57

(e) Printing & Stationery Expenses 84.45 66.91

(f) Managerial Remuneration 72.00 72.00 (g) Consultancy Charges 950.00 680.49

(h) Director S itting Fee 0.70 0.70

(i) Payment to Auditors:

(i) As Audit fee 3.00 1.30

(ii As Tax audit fee 1.00 0.30

(iii) For Reimbursement of expenses 0.22 1.84

Total A dministrative Expenses 2,000.05 1,631.59

Particulars

NOTE NO. 23 : ADMINISTRA TIVE EXPENSES

S. No.

NOTE NO. 21 : EMLOYEE BENEFIT EXPENSES

S. No. Particulars

NOTE NO. 22 : OTHER OPERATING EXPENSES

S. No. Particulars




NOTE NO 26-OTHER NOTES YEAR 2013-14As at 31st As at 31st

March, 2014 March, 20131. Estimated amount of contract remaining to be

executed on capital account -not provided for Nil Nil

2. Contingent liability not provided for in respect of :(a) Claims not acknowledged as debts :

(i) Income Tax 90.39 100.43

(ii) Others 11.80 Nil

3. Research and DevelopmentCapital Expenditure incurred on research and development is depreciated over the estimated life of related assets and therevenue expenditure is expensed as incurred.The company has in – House Research & Development Centre involved in developmental activities for new products in thefields of Simulation and Training. Details of Capital & Revenue Expenditure incurred are as detailed below.

Expenditure 2013-14 2012-13

Revenue -- --

Employee Cost 799.87 749.44

Rent 9.97 9.63

Total 816.98 765.48

(Rs. in Lacs)

For t he Y e ar Ended 31st M a r -2014

For t he Y e ar Ended 31st Ma rch-2013

Rs in la cs Rs in lacs

I (a) Inte rest Expenses :

- Interest on Cash C redit 313 .42 284.19

- Interest on T erm Loan 37.70 49.34

- Interest on Unsecure d Loan 49.23 45.13

- Loan process ing Charges 14.20 6.36

- Bank charges 43.74 16.07

Tota l Fina nce Cost 458.29 401.09

For t he Y e ar Ended 31st M a r -2014

For t he Y e ar Ended 31st Ma rch-2013

Rs in la cs Rs in lacs

I (a) S ta ff Recruitm ent & T ra ining Expenditu re 98.48 89.17

(b) Advertisem ent 36.56 49.20

(c) C om m unication charges 76.41 50.54

(d) AGM expenses 0 .19 0.16

(e) Books & Per iodica ls 5 .65 2.30

(f) M em be rship & S ubcr iptions 6 .19 8.36

(g)Annua l m a intenance & O ther e xpenses 81.48 50.75

(h) T rave l Expenditure 248 .33 210.56

(i) Research & Deve lopm ent Expenses (Refe r No te Be low ) 816 .97 765.48

(j )Bad Debts w r itten off 218 .58 277.10

Refe r Note No: 26.10 for Expenditure in Fo re ign Currency

Tota l Ot her e xpense s 1,588.84 1 ,503.61

S. No. Par t iculars

NOTE NO.25 : OTHER EX PENSES

S. No. Par t iculars

NOTE NO. 24 : FINA NCE COST




BUSINESS SEGMENT

Capital employed as also assets and liabilities of the company are not capable of being stated separately segment-wisesince all the assets and liabilities are held under composite undertaking for both the geographic segments

Geographical Segment

Capital employed as also assets and liabilities of the company are not capable of being stated separately segment-wisesince all the assets and liabilities are held under composite undertaking for both the geographic segments.

4. Balances appearing under Unsecured Loans and Loans and advances are in the process of reconciliation.

5. Segment Information as per Accounting Standard (AS)-17

The Company has identified two types of reporting segments at standalone level viz., Business Segment and GeographicalSegments. Business Segments identified as Software Services & Software Products and Geographical segments identifiedas Domestic and Overseas. Segments have been identified and reported taking into account nature of products andservices the differing risks, returns and the internal business reporting systems. Accounting policies adopted for segmentreporting are in line with Accounting Policy of the company and are in accordance with the AS-17.

Export Domestic Total

France UAE Indian

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

Segment7688.49 5896.52 5711.87 4354.17 481.01 320.39 13881.37 10571.08Revenue




6. Related Party Disclosure as per Accounting Standard (AS-18):Name of the related parties and description of relationships:

Subsidiaries

i) Sankhya SARL, France

ii) Sankhya US Corporation

iii) Mahasena Info Technologies (India) Pvt. LimitedJoint Venture

Harvest Holding Partners LLC, Dubai

Key Management Personnel

i) Mr. N. Sridhar – Chairman & Managing Director (CMD)

ii) Mr. N. Srinivas – Vice Chairman (VC)

Relatives of Key Management Personnel

i) Mr. N. Ramakrishna Rao - Father of CMD

ii) Mrs. N. Gayatri - Wife of CMDiii) Mrs. Indira Ramani - Wife of VC

iv) Mrs. N. Parvata Vardhani - Mother of CMD

7. Earnings per Share (EPS) As per Accounting Standard (AS)-20:

6.05




8. Gratuity Provision of Rs.3 Lac for the year ended 31.3.2014 is made on Provisional Valuation Certificate obtained fromthe LIC Gratuity Fund Account. Independent Actuarial valuation certificate not obtained.

9. Provision for Income Tax for Tax demand raised by Income Tax Department:

The income tax department has raised demand for the Assessment Year 2008-09 and 2009-10 amounting to Rs.234.37Lakh. The company’s request for payment of the amount in installments has been agreed and the company has paid anamount of Rs.66 lacs till 31.3.2014. However, the company has provided only 143.48 lacs in the books Rs.90.89 lacshas not been provided. The company would make suitable provisions for the FY 14.

10. Expenditure incurred in Foreign Currency

S.No Nature of Expenditure Amount

1 Employee Benefit Expenses 9249.04

2 Other Operating Expenses 1119.88

3 Administrative Expenses 1896.56

4 Other Expenses 448.82

5 Bank Charges 40.05

Total 12754.35

(Rs. in Lacs)

11. Overseas TransactionsOverseas banking operations of the company for all the customers in France and customer contracts of UAE signedprior to 2006 are operated at BNP Paribas Toulouse and are administered by Mr. Christian REY, and supported by Mr.Sebastian VIGREUX, Administrative Accountant.

12. Write offThe Company has made a total write off of Rs.218.58 Lakh of the invoices raised on M/s Kingfisher Airlines (previousyear 277.09 Lakh)

13 Unclaimed DividendThe Company has an amount of Rs.5.52 Lakhs representing unclaimed Dividend. The details are as mentionedbelow:

14. Regrouping & Rounding off

The previous year’s figures have been reclassified and regrouped, wherever necessary to confirm the Current Year classificationand to confirm to the relevant laws. Paisa has been rounded off to the nearest rupee.

As per our report of even date

Sl. Financial Interim Date of Rate of Dividend Dividend AmountNo year / Final declaration dividend amount distribution remaining

Excluding Tax Tax unclaimed as on 31.03.2014

1 2006-07 Final 28-09-2007 10% 99,44,156 14,4,151 3,13,227.00

2 2007-08 Final 29-12-2008 12% 1,02,00,006 17,33,491 2,40,184.80

(Amount in Rs.)

Pravin Kumar Jabade(Partner)Membership No. 107196

N. SridharChairman & Managing Director

N. SrinivasVice Chairman


For and on behalf of the Board

For T.R Chadha & Co.Chartered AccountantsFirm Regn. No: 006711N




BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE.I Registration Details

Registration No: 01-45306

State Code 01

Balance Sheet Date: 31st March 2014

II Capital Raised During the Year [Amount in Lacs]

Public Issue NilPreferential Issue Nil

Rights Issue Nil

Bonus Issue Nil

Private Placement Nil

Rights Issue Nil

Bonus Issue Nil

Private Placement Nil

III Position of Modification and deployment of FundsTotal Assets 10983.76

Total Liabilities 10983.76

Sources of Funds

Paid Up Capital 1124.52

Share application Money NIL

Secured Loans 2567.43

Reserves & Surplus 5778.14

Application of FundsNet Fixed Assets 4901.95

Miscellaneous Expenditure Nil

IV Performance of the Company Turnover 14527.93

Profit / Loss Before Tax 89.59

Earnings per share in Rs ( Annualized) 0.80

Dividend Nil

V Generic Name of the Three Principle Products /Services of the Company

(As per monetary terms) Item Code (ITC Code) Nil

As per our report of even dateFor TR. Chadha & Co.,

The accompanying Notes are an integral part of the Financial Statements


N.SrinivasVice Chairman

N.SridharChairman & Managing Director

For and on behalf of the Board ofM/s. Sankhya Infotech Ltd.

Pravin Kumar JabadeT.R Chadha & Co.,Chartered AccountantsFirm Registration No.006711N

(Rs. in Lacs)




INDEPENDENT AUDITOR’S REPORTThe Members of SANKHYA INFOTECH LTD.

Report on Consolidated Financial Statements:We have audited the accompanying consolidated financialstatements of Sankhya Infotech Ltd. (“the Company”) and itssubsidiaries (collectively referred to as “Sankhya Group”), whichcomprise the consolidated Balance Sheet as at March 31, 2014,and the consolidated Statement of Profit and Loss and theconsolidated Cash Flow Statement for the year then ended, anda summary of significant accounting policies and otherexplanatory information.

Management’s Responsibility for the FinancialStatementsManagement is responsible for the preparation of these financialstatements that give a true and fair view of the financial position,financial performance and cash flows of the Company inaccordance with the Accounting Standards notified under thecompanies Act, 1956 read with the General Circular 15/2013dated 13th September, 2013 of the Ministry of Corporate Affairsin respect of Section 133 of the companies Act, 2013. Thisresponsibility includes the design, implementation andmaintenance of internal control relevant to the preparation andpresentation of the financial statements that give a true and fairview and are free from material mis-statement, whether due tofraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidatedfinancial statements based on our audit. We conducted our auditin accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India. Those Standardsrequire that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whetherthe consolidated financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidenceabout the amounts and disclosures in the consolidated financialstatements. The procedures selected depend on the auditor’sjudgment, including the assessment of the risks of materialmisstatement of the consolidated financial statements, whetherdue to fraud or error. In making those risk assessments, theauditor considers internal control relevant to the Company’spreparation and presentation of the consolidated financialstatements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances. Anaudit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of the accounting estimatesmade by management, as well as evaluating the overallpresentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion.

We did not audit the financial statements of its below mentionedlist of foreign subsidiaries whose total revenue amounting to Rs.Nil and total assets amounting to Rs. 329.11 lakhs was consideredfor the purpose of financial statements. These financialstatements have been audited by other auditors whose reportshave been furnished to us for the purpose of consolidation andour opinion in so far as it relates to the amounts included inrespect of the subsidiaries are based solely on reports of theother auditors.

The following are the details of subsidiaries whose financialstatements were audited by the other auditors.

1 Sankhya USA Wholly ownedUs Corporation Foreign Subsidiary

2 Sankhya France Wholly ownedSarl France Foreign Subsidiary

Opinion

Basis of Qualified Opinion

a) Attention is invited to Note No.26.11 of Financial Statementsregarding relating to not making provisions towards EmployeeBenefits as per Actuarial Valuation Certificate. (Impact notascertained).

b) Attention is invited to Note No.26.12 of Financial Statementsregarding relating to not making adequate provisions towardsIncome Tax Demand raised by the Income Tax Department andaccepted by the Company. The company has not provided theadditional demand of Rs.90.85 Lac. We report that had theprovision been made, Loss after the provision for Income Taxwould have been Rs.2.04 Lac (as against the profit reported atRs.88.81 Lac), Reserves & Surplus would be at Rs.5427.67 Lac(as against reported figure of 5518.52 Lac) and .Short TermProvisions would be at Rs.111.67 Lac (as against reported figureof 20.82 Lac)

c) Attention is invited to Note No.26.13 of Financial Statementsregarding balance confirmations from unsecured loans andadvances. (Impact not ascertained).

Opinion

In our opinion and to the best of our information and accordingto the explanations given to us, except for the effects of thematter described in the Basis of Qualified Opinion paragraphabove, the aforesaid financial statements give the informationrequired by the Act in the manner so required and give a trueand fair view in conformity with the accounting principlesgenerally accepted in India:

(a) In the case of the Consolidated Balance Sheet, of the stateof affairs of the Company as at March 31, 2014;

(b) In the case of the Consolidated Statement of Profit and Loss,of the profit for the year ended on that date; and

(c) In the case of the Consolidated Cash Flow Statement, of thecash flows for the year ended on that date.

Emphasis of Matter

We draw attention to Note 17 in the financial statements whichindicates that the advances given to the extent of Rs.327.93 Lacto one of the subsidiaries pending since long time. TheManagement is of the view that these advances are in connectionexecution of a signed contract fully recoverable in cash or inkind for value to be received in due course as operations wouldbe commenced fully in near future. Our opinion is not qualifiedin this matter.

Our opinion is not qualified in this matter.

For T.R Chadha & Co.Chartered Accountants


Pravin Kumar Jabade(Partner)

Membership No: 107196Date : 22.05.2014Place : Hyderabad




Notes referred to above form an Integral part of the Balance Sheet and should be read in conjunction therewith



Pravin Kumar Jabade N. Sridhar N. SrinivasPartner Chairman & Managing Director Vice ChairmanM. No. 107196


A s a t 3 1 s t - M a r - 2 0 1 4 A s a t 3 1 s t - M a r - 2 0 1 3

R s in La cs R s in La cs

I. EQUITY A ND LIA BILITIES

(1 ) S h a r e h o ld e r 's Fu n d s

(a ) S ha re C a p ita l 3 1 ,1 24 .5 2 1 ,1 24 .52

(b ) R e se rve s a nd S u rp lu s 4 5 ,5 18 .5 2 5 ,4 28 .38

(2 ) No n - Cu r r e n t Lia b ilit ie s

(a ) Lo ng- te rm Bo rr ow ings 5 7 84 .2 6 8 88 .07

(b ) De ffe rr ed T a x Lia b il itie s (Ne t) 6 1 41 .2 6 53 .19

(c ) Lo ng te rm pr ovis ion s 7 39 .1 4 8 .50

(4 ) Cu r r e n t L ia b ilit ie s

(a ) S ho rt- T e rm Bo rr o w ings 8 2 ,1 99 .9 3 2 ,1 61 .22

(b ) T ra de Pa ya b le s 9 5 04 .5 8 2 99 .09

(c ) O the r C u r re nt Lia b ilitie s 10 3 91 .7 0 3 31 .58

(d ) S ho rt - T e rm Pr ov is ion s 11 20 .8 2 2 .30

To t a l 1 0 ,7 2 4 .7 2 1 0 ,2 9 6 .8 5

II.A s s e t s

(1 ) No n - Cu r r e n t A s s e t s

(a ) F ixed A s se ts

( i) T ang ib le A s se ts 12 53 .4 8 65 .40

( i i) In tang ib le A s se ts 12 4,8 48 .4 7 4 ,3 68 .16

( i ii) C ap ita l W or k- in -P ro gr e s s 6 95 .9 0 6 95 .90

(b ) N on -C u rr e nt In ve s tm e nts 13 - -

(c ) Lo ng T e rm Loa ns and A d va nce s 14 60 .0 7 64 .08

(2 ) Cu r r e n t A s s e t s

(a ) T ra de R e ce ivab le s 15 4,0 90 .8 7 3 ,9 80 .26

(b ) C a sh and C a sh Equ iva le n ts 16 17 .4 2 24 .58

(c ) S hor t-T e rm Lo an s a nd A d van ce s 17 3 80 .7 4 3 40 .79

(d ) O the r C u rr en t A s se ts 18 5 77 .7 8 7 57 .68

To t a l 1 0 ,7 2 4 .7 2 1 0 ,2 9 6 .8 5

Co mp a n y In fo r m a t io n 1

S u mm a r y o f S ig n if ic a n t A c c o u n t in g Po lic ie s 2A d d it io n a l No t e s fo r min g p a r t o f Fin a n c ia l

S t a t e m e n t 26

S A N K H Y A IN F O T EC H L IM ITE D

Pa r t icu la r s No t e No

C o n s o l id a te d B a la n c e S h e e t a s a t 3 1 s t M a r c h , 2 0 1 4

# 4 0 5 , N S IC B U S IN ES S P A R K , E C IL P O S T H Y D E R A B A D -5 0 0 0 6 2 IN D IA




Notes referred to above form an Integral part of the Statement of Profit and Loss and should be read in conjunction therewith


For T.R.Chadha & Co., For SANKHYA INFOTECH LIMITEDChartered AccountantsFirm Registration No: 006711N

Pravin Kumar Jabade N. Sridhar N. SrinivasPartner Chairman & Managing Director Vice ChairmanM. No. 107196



2014


2013

Rs Rs

I. Revenue From Operations 19 13,881.37 10,572.88

II. Other Income 20 647.45 (52.84)

III. Total Revenue (I +II) 14,528.82 10,520.04

IV. Expenses:

Employee Benefit Expense 21 8,624.24 5,965.00

Other Operating Expenses 22 1,160.97 526.58

Administrative Expenses 23 2,000.05 1,632.70

Finance Costs 24 458.29 401.17

Depreciation and Amortization Expense 12 471.21 479.89

Other Expenses 25 1,588.84 1,503.61

IV. Total Expenses 14,303.60 10,508.95

V. Profit Before Exceptional and Extraordinary Items and Tax ( III - IV) 225.22 11.09

VI. Extraordinary Items

VII. Profit before tax (V-VI) 225.22 11.09

VIII. Tax expense:

(1) Current tax 48.34 2.11

(2) Deferred tax 88.07 3.60

IX. Profit/(Loss) for the period (VII-VIII) 88.81 5.38

X. Earning per equity share:

Basic and Diluted Earnings per Share (Rs.) 26 0.79 0.05

Summary of Significant Accounting PoliciesAdditional Notes forming part of Financial Statement

SANKHYA INFOTECH LIMITED

Consolidated Profit and Loss statement for the year ended 31st March, 2014

Particulars Note No

#405, NSIC BUSINESS PARK, ECIL POST HYDERABAD -500062 INDIA

26





For TR.Chadha & Co., For SANKHYA INFOTECH LIMITEDChartered AccountantsFirm Registration No: 006711N



Pa rt icula r s A s a t 31-03- 2014 A s a t 31.03.2013A . CA SH FROM OPERA TING A CTIV ITIES

Ne t Profit/ (Loss) Be fore Ta x 225.22 11.08

Adjustm e nt for :

Depre cia tion 471.21 479.89

Inte re st Expenses 458.29 94.47

Ope ra t ing Profit Be for e W or king Ca pit a l Cha nge s 1 ,154.72 585.44 Adjustm e nt for :

Decrease/(Increase ) in T ra de Rece ivable s (110.61) (575.91)

Decrease/(Increase ) in S hor t T erm Loans & Advances (39.94 ) 90.60

Decrease/ (Increase ) in Other Curren t A sse ts 175.53 79.79

Increase/(Decrease ) in S hor t te rm Borrow ings 38.71 161.22

Increase/(Decrease ) in T ra de Pa yables 206.38 (2.17)

Increase/(Decrease ) in Other Curren t Lia bilities 59.31 (56 .81)

Increase/(Decrease in Long te rm provis ion 30.64 3 .00

Decrease/(Increase ) in Long T erm Loans & Advances 4.01 (6.85)

Net o ff of T ax (25.54 ) -

Ne t Ca sh Flow fr om Oper a t ing A ct iv it ie s A 1,493.20 278.31

B. CA SH FLOW FROM INV ESTING A CTIV ITIESPurchase of F ixed A sse ts (939.60) (588.56)

Increase in C ap ita l W ork in process - -

(Incre ase) / Decrea se in Inve stm ents - -

Ne t Ca sh fr om/ (Us e d) in Inv e st ing A ct iv it ie s B (939.60) (588.56)

C. CA SH FLOW FROM FINA NCING A CTIV ITIES Increase in Equity S hare C apita l - -

Increase/(Decrease ) in Long te rm borrow ings (103.81) 163.45

Increase/(Decrease ) in C apita l Rese rve/F luc tua tion Reserve 1.33 -

Increase/(Decrease ) in S hare W arrants Applica tion Money - -

Increase/(Decrease ) in equity share prem ium - -

Inte re st Pa id (458.29) (94 .47)

Ne t Ca sh fr om/ (Us e d) in Fina ncing A ct iv it ie s C (560.77) 68.98 Net increase in C ash a nd Cash Equiva lents ( A+B+C ) (7.16) (241.27)

Ope ning Ca sh a nd Ca sh Equiv a le nt s 24.58 265.85

C lo sing Cash and Cash Equiva lents 17.42 24.58

SA NKHY A INFOTECH LIMITED

#405, NSIC BUSINESS PA RK, ECIL POST HY DERA BA D -500062 INDIA Conso lida t e d Cas h Flow St a te me nt for the Y e a r Ended 31.03.2014 (Rs in La cs)




SIGNIFICANT ACCOUNTING POLICIES TOCONSOLIDATED FINANCIAL STATEMENTS

1) Corporate Information

Sankhya is a leading software products and services companyserving the rapidly growing niche markets of Training,Education, Modeling and Simulation. The company hasdeveloped several Software products targeted in the area ofEducation, Training and Learning and owns 100% of the“Intellectual Property” in them. The company’s services includesoftware services around the products, development ofSimulation software for specific customer needs, courseware,besides providing consulting support to customers. Thecompany has established operations in France and UAE. Thecompany has diverse clients from across several continents,and is a well-established name in the field of education andtraining.

2) Basis of preparation of consolidated FinancialStatements :

The financial statements have been prepared as per historicalcost convention and in accordance with Generally AcceptedAccounting Principles in India, the provisions of the CompaniesAct, 1956, and the applicable Accounting Standards referredto in Section 211 (3C) of the Companies Act, 1956 and relevantguidelines issued by Securities Exchange Board of India asissued from time to time. All Income and Expenditurehaving material bearing on the financial statements arerecognized on accrual basis.

3) Principles of Consolidation

a) Basis of preparation

These financial statements have been prepared inaccordance with the generally accepted accountingprinciples in India under the historical cost conventionon accrual basis, except for certain financial instrumentswhich are measured at fair value. These financialstatements have been prepared to comply in all materialaspects with the accounting standards notified underSection 211(3C) (which continues to be applicable interms of General circular 15/2013 dated September 13,2013 of the Ministry of Corporate Affairs in respect ofSection 133 of the Companies Act, 2013) and otherrelevant provisions of the Companies Act, 1956.

b) Principles of consolidation

The financial statements of the subsidiary companiesused in the consolidation are drawn up to the samereporting date as of the Company. The subsidiarycompanies considered in the consolidated financialstatements are:-

The consolidated financial statements have been preparedon the following basis:

i) The financial statements of the Company and itssubsidiary companies have been combined on a line-by-line basis by adding together like items of assets,liabilities, income and expenses. Inter-company balancesand transactions and unrealised profits or losses havebeen fully eliminated.

ii) The consolidated financial statements include the shareof profit / loss of associate companies, which areaccounted under the ‘Equity method’ as per which theshare of profit / loss of the associate company has beenadjusted to the cost of investment. An associate is anenterprise in which the investor has significant influenceand which is neither a subsidiary nor a joint venture.

iii) The excess of the cost to the parent of its investmentsin a subsidiary over the parent’s portion of equity at thedate, on which investment in the subsidiary is made, isrecognized as ‘Goodwill (on consolidation)’. When thecost to the parent of its investment in a subsidiary isless than the parent’s portion of equity of the subsidiaryat the date on which investment in the subsidiary ismade, the difference is treated as ‘Capital Reserve (onconsolidation)’ in the consolidated financial statements.

iv Minority interest in the net assets of consolidatedsubsidiaries consists of the amount of equity attributableto the minority shareholders at the dates on whichinvestments in the subsidiary companies are made andfurther movements in their share in the equity,subsequent to the dates of investments.

v) On disposal of a subsidiary, the attributable amount ofgoodwill is included in the determination of the profit orloss on disposal.

c) Use of estimates

The preparation of financial statements requires themanagement of the Group to make estimates andassumptions that affect the reported balances of assets andliabilities and disclosures relating to the contingent liabilitiesas at the date of the financial statements and reportedamounts of income and expense during the year. Examplesof such estimates include provision for doubtful receivables,employee benefits, provision for income taxes, accountingfor contract costs expected to be incurred, the useful livesof depreciable fixed assets and provision for impairment.Future results could differ due to changes in these estimatesand the difference between the actual result and theestimates are recognized in the period in which the resultsare known/materialise.

1) Revenue recognition

Revenue is recognized to the extent that it is probable thatthe economic benefits will flow to the Company and the revenuecan reliably be measured.

Revenue from Services:

* Time and material contracts – Revenues are recognizedon the basis of time spent duly approved by therespective customers.

Sl. Name of the Country of % ofNo Company Incorporation holding

1 Sankhya US Corp U.S.A 100%

2. Sankhya SARL FRANCE 100%

3. Mahasena INDIA 100%Info Technologies(India) Pvt Ltd




* Fixed price contracts – Revenues are recognized on thebasis of approval received from the respective customersin accordance with the “Percentage of Completion”method.

* Internal timesheets or timesheets submitted by vendorsfor time and material contracts and for fixed pricecontracts based upon assessment of work done. Unbilledrevenue recognized is subsequently billed to customersafter receipt of approval.

* Other Income - In other income such as income frominterest is recognized using the time proportion method,based on rates implicit in the transaction.

2) Expenditure

All software development and services purchased arecharged to cost of revenue in at which they were initiallyrecorded during the year, or reported in previous financialstatements, are recognized as income or as expenses in theyear in which they arise the year of acquisition. Provisionsare made for all known losses and liabilities. Where everapplicable leave encashment liability is provided on the basisof actuarial valuation.

3) Fixed assets, intangible assets and Capital workin progress.

Tangible Fixed Assets and Depreciation

Fixed assets are stated at cost less accumulateddepreciation. Direct costs are capitalized until fixed assetsare ready for use. “Cost means” cost of bringing the asset toits working condition for its intended use. Fixed assets arecapitalized as per the statement issued by the Institute ofChartered Accountants of India. Capital work in progresscomprises of the expenditure incurred in the process ofdeveloping the intangible assets for the time being and theassets are not yet ready for their intended use as at the date ofBalance sheet.

Depreciation on tangible fixed assets is applied on the writtendown value method by following the rates prescribed inSchedule XIV of the Companies Act, 1956. Depreciation onaddition to fixed assets is provided on pro-rata basis fromthe date the assets are put to use. Depreciation on sale/deduction from fixed assets is provided for up to the date ofsale, deduction, discardment as the case may be. Individuallow cost assets (acquired for less than Rs.5000/-) are entirelydepreciated in the year of acquisition.

Intangible Fixed Assets and amortization

Intangible assets other than goodwill are valued at cost lessamortization. These generally comprise of costs incurred toacquire computer software licenses and implement thesoftware for internal use (including software coding,installation, testing and certain data conversion). as well ascosts paid to acquire studies for obtaining approvals fromregistration authorities of products having proven technicalfeasibility. Research costs are charged to earnings as theyarise. Costs incurred for applying research results or otherknowledge to develop new products, are capitalized to theextent that these products or registrations are expected togenerate future financial benefits. Other development costs

are expensed as and when they arise. Intangible assets arereported at acquisition value with deductions for accumulatedamortization and any Impairment losses. Amortization isprovided on a written down value basis over the asset’santicipated useful life. The useful life is determined basedon the period of the underlying contract and the period oftime over which the intangible asset is expected to be usedand generally does not exceed 10 years. An impairment testof intangible assets is conducted annually or more often ifthere is an indication of a decrease in value. The impairmentloss, if any, is reported in the Statement of Profit and Loss.

6. Impairment of assets

The carrying values of assets of the Company’s cash-generating units are reviewed for impairment annually ormore often if there is an indication of decline in value. If anyindication of such impairment exists, the recoverable amountsof those assets are estimated and impairment loss isrecognized, if the carrying amount of those assets exceedstheir recoverable amount. The recoverable amount is thegreater of the net selling price and their value in use. Valuein use is arrived at by discounting the estimated future cashflows to their present value based on an appropriate discountfactor.

7. Unbilled Revenue

The work in progress is the unbilled amount for the contractsthat are in execution stage and the client deliverables are eitherin testing phase or certification/ acceptance stage, Thereforerevenue is not recognized. The same is accounted for at Cost.

8. Investments

Long Term Investments in wholly owned subsidiary are at costless provision for other than temporary diminution in value,if any. Current Investment are valued at the lower of costand fair value.


Capital Expenditure incurred on research and developmentis depreciated over the estimated life of related assets andthe revenue expenditure is expensed as incurred.

10. Employee Benefits

Short term employee benefits are recognized as an expenseat the undiscounted amount expected to be paid over theperiod of services rendered by the employees to theCompany.

The Company has both defined-contribution and defined-benefit plans, of which some have assets in special funds orsecurities. The plans are financed by the Company and inthe case of some defined contribution plans by the Companyalong with its employees. The contributions as specified underthe law are paid to the Provident Fund set up as irrevocabletrust by the Company or to the Regional Provident FundCommissioner. The Company is generally liable for annualcontribution and any shortfall in the fund assets based onthe government specified minimum rates of return. Suchcontributions and shortfall, if any, are recognized in theStatement of Profit and Loss as an expense in the yearincurred.




Expenses for gratuity and supplemental payment plans arecalculated as at the balance sheet date by independentactuaries in a manner that distributes expenses over theemployee’s working life. These commitments are valued atthe present value of the expected future payments, withconsideration for calculated future salary increases, using adiscount rate corresponding to the interest rate estimatedby the actuary having regard to the interest rate ongovernment bonds with a remaining term that is almostequivalent to the average balance working period ofemployees.

The contributions to Gratuity are made to fund administeredby the Life Insurance Corporation of India (LIC).

The employees of the Company are entitled to compensateabsence. The employees can carry-forward a portion of theunutilized accrued compensated absence and utilize it infuture periods or receive cash compensation at retirementor termination of employment for the unutilized accruedcompensated absence. The Company records an obligationfor compensated absences in the period in which theemployee renders the services that increase this entitlement.The Company measures the expected cost of compensatedabsence as the additional amount that the Company expectsto pay as a result of the unused entitlement that hasaccumulated at the balance sheet date. Long termcompensated absences is accrued based on actuarialvaluation at the balance sheet date carried out by anindependent actuary.

11. Foreign currency transactions InitialRecognition

Foreign currency transactions are recorded in the reportingcurrency, by applying to the foreign currency amount theexchange rate between the reporting currency and the foreigncurrency at the date of transaction.

Conversion

Foreign currency monetary items are reported using theclosing rate. Non-monetary items which are carried in termsof historical cost denominated in a foreign currency arereported using the exchange rate at the date of thetransaction; and non-monetary items which are carried at fairvalue or other similar valuation denominated in a foreigncurrency are reported using the exchange rates that existedwhen the values were determined.

Exchange Differences

Exchange differences arising on the settlement of monetaryitems at rates difference from those at which they were initiallyrecorded during the year, or reported in previous financialexpenses in the year in which they arise.

Exchange Contracts not intended for trading orspeculation purposes

The premium or discount arising at the inception of forwardexchange contracts is amortized as expense or income overthe life of the contract. Exchange differences on such contractsare recognized in the statement of profit and loss in the yearin which the exchange rates change. Any profit or loss arising

on cancellation or renewal of forward exchange contractis recognized as income or as expense for the year.

Translation of foreign branch

The financial statements of an integral foreign operation aretranslated as if the transactions of the foreign operationhave been those of the company itself.

12. Income Tax

Provision for Income Tax, comprising current tax and deferredtax, is made on the basis of the results of the year.

In Accordance with Accounting Standard 22 Accounting forTaxes on Income, issued by the Institute of CharteredAccountants of India, the deferred tax for timing differencesbetween the book and the tax profits for the year is accountedfor using the tax rates and laws that have been enacted orsubstantively enacted as of the balance sheet date.

Deferred tax assets arising from temporary timing differencesare recognized to the extent there is a reasonable certaintythat the assets can be realized in the future.

13. Earnings per share

Basic earnings per share are calculated by dividing the netprofit or loss for the per iod attr ibutable to equityshareholders by the weighted average number of equityshares outstanding during the year.

14. Cash flow statement

Cash flows are reported taking the indirect method, whereinnet profit before tax is adjusted for the transactions of non-cash nature and others or other accruals of past or futurereceipts and / or payments. The cash flows from regular revenuegenerating, investing and financing activities of the companyare segregated.

15. Segment Reporting

The accounting policies adopted for segment reporting arein line with the accounting policies of the Company. SegmentRevenue, Segment Expenses, Segment Assets and SegmentLiabilities have been identified to segments on the basis oftheir relationship to the operating activities of the segment.Revenue, expenses, assets and liabilities which relate to theCompany as a whole and are not allocable to segments onreasonable basis, have been included under “UnallocatedRevenue / Expenses / Assets / Liabilities”.

16. Provisions and Contingencies

A provision is recognized when the Company has a presentobligation as a result of a past event and it is probable thatan outflow of resources will be required to settle theobligation, in respect of which a reliable estimate can bemade. Provisions (excluding retirement benefits) are notdiscounted to their present value and are determined basedon best estimate required to settle the obligation at thebalance sheet date. These are reviewed at each balancesheet date and adjusted to reflect the current best estimates.Contingent liabilities are not recognized but are disclosed inthe notes to the financial statements unless the possibilityof an outflow of resources embodying economic benefit isremote. A contingent asset is neither recognized nordisclosed.




No. of Shares Rs in Lac No. of shares Rs in Lac

a Share Capital ( For each class of capital )

Authorised

15000000 Equity Shares of Rs. 10/- each 150.00 1,500.00 150.00 1,500.00

1,500.00 1,500.00 Issued, Subscribed and Paid up

1,12,45,205 Equity Shares of Rs.10/- each, fully paid 112.45 1,124.52 112.45 1,124.52

Total Equity Share capital 1,124.52 1,124.52

b A Reconciliation of the Number of Shares Outstanding at the Beginning and at the end of the Reporting Period:

Equity Shares of Rs.10Each, Fully paid up :

At the Beginning

Issued During the year - Cash Issue

Forfeited / Bought Back During the Year

At the End

c Details of Shareholder Holding more than 5% Shares of the Company:

Equity Shares of Rs. 10 each Held By No of Shares Percentage No of Shares Percentage

Srinivas N - 821,953 7.30% 821,953 7.30%

Sridhar N - 762,152 6.78% 762,152 6.78%

Parvatha Vardhani N - 854,600 7.60% 854,600 7.60%

Gayatri N - 776,109 6.90% 776,109 6.90%

As at 31st-Mar-2014

As at 31st-Mar-2013

Rs in Lac Rs in Lac

I RESERVES AND SURPLUS

a) Capital reserve As at the commencement of the year 84.03 84.03 Add: Additions during the year (forfeiture of share application money)

- -

84.03 84.03

b) Securities Premium Reserve As at the commencement of the year 1,521.88 1,521.88 Add: Additions during the year

1,521.88 1,521.88 c) General Reserves

As at the commencement of the year 37.40 37.40

37.40 37.40 d) Surpuls :

Opening Balance - Profit and Loss Account 3,785.07 3,779.69

Add: Transfer from Profit & Loss Account 88.81 5.38

3,873.88 3,785.07

e) Foreign Exchange Fluctuation Reserve 1.33 -

Total Reserves and Surplus 5,518.52 5,428.38

S. No.

1,124.52

Particulars

NOTE NO.4 : RESERVES AND SURPLUS

% of Share Holding

Number of Shares

- 1,124.52

274.52

Number of Shares

- 850.00

1,124.52

NOTE NUMBERS TO BALANCE SHEET

As at 31st -Mar-2013ParticularsS.NO.

As at 31st -Mar-2014

NOTE NO. 3 : SHARE CAPITAL

Surplus:




A s at 31s t-Mar-2014

A s at 31st -Mar-2013

Rs in Lac Rs in LacI Long Term Borrow ings

a) Te rm Loans:

From Banks:

S ecured - Re fer Note No. 5(i) 187.50 337.50

From Other Parties:

S ecured - Re fer Note No. 5(ii) 180.00 180.00

Interest a ccrued and due on above 25.32 7.59

b) Loans and Advances F rom Rela ted Pa rties

Un S ecured: - Refer Note No. 5(iii) 391.44 362.98

Notes :Note No.5(i): The term loan w as taken from IDBI Bank Ltd w hich w as

secured by firs t charge on Fixed Assets of the Com pany and S econd

Charge on all current assets of the Com pany, Mortgage of land belongs

to M rs. N. Pa rva ta Va rdhani w hich is s itua ted a t Yadaram V illage,

Medcha l and pledge of shares belonging to prom ote r Director in favour

of IDBI Bank Ltd, Branch Hyderabad and it is furthe r secured by

personal guarantee o f Prom oter Director.

Note No.5(ii): The Loan w as taken from Merlin Ho ld ings Lim ited w hich

w as secured by pledge of share be longing to prom oter Dire ctors .

Note No 5(iii) : The unsecured loan is taken from the shareholders of

the com pany & others

Tota l Long Term Borrowings 784.26 888.07



Rs in Lac Rs in Lac

I Opening Deferred tax Liability 53.19 49.59 Add:De ferred Tax Liability for the Year 89.09 132.24 Less: Deferred Tax Assets on Expenditure disa llow ed u/s 40A(7) of Incom e Tax Act 1.02 (128.64) Less: Deferred Tax Assets on Deprecia tion Loss - -

Deferred Tax Liability / ( A sset ) - Net 141.26 53.19



Rs in Lac Rs in LacI Gratuity payable 11.50 8.50 2 S ecurity Depos it (received from Vendor) 27.64 -

Note : Gratuity Provis ion of Rs.3 Lac for the year ended 31.3.2014 ismade on Provis ional Valua tion Certificate obtained from the LICGratuity Fund Account. Independent Actua ria l valuation ce rtificate notobtained.

39.14 8.50

S.No.

NOTE NO.5 : LONG TERM BORROW INGS

NOTE NO.6 : DEFERRED TA X LIA BILITY ( NET )

S. No.

Particulars

Particulars

NOTE NO.7 : LONG TERM LIA BILITIES.

S. No. Particulars




A s a t 31 s t -M a r- 20 14

A s a t 31 s t -M a r- 20 13

Rs in La c Rs in La cI S ho r t T e rm Bo r row ings

a) Loans Repa yab le on Dem and:

F rom Banks

S e cured R e fe r No te No . 8 ( i) 2,199 .93 2 ,161 .22

No t e s :No t e No.8( i) : T he W orking cap ita l loa n w a s ta ken from IDBI Bank Ltdw hich w a s se cured by fir s t cha rge on A ll c ur re nt a s se ts o f the Com panyand S e cond cha rge on a ll fixe d A sse ts o f the C om pany, M or tgage ofla nd be longs to M rs . N. Pa rva ta V a rdhan i w h ich is s itua te d a t Yada ramV illa ge , M edcha l and p le dge o f sha re s be long ing to prom ote r Dire c to r infa vour o f IDBI Bank Ltd, Branch Hyde rabad and it is fu r the r se cured bype rs ona l guarantee o f P rom ote r Dire cto r .

To t a l s ho rt t e rm bo rro w ing s 2,1 99 .9 3 2 ,1 61 .22

A s a t 31 s t -M a r- 20 14

A s a t 31 s t -M a r- 20 13

Rs in La c Rs in La c

I a) T ra de Pa yab le s

M icro , S m a ll, M ed ium Ente rpr ise s - -

S undry C red ito r s 504 .58 299 .09

Tot a l Tr a d e Pa y a ble s 5 04 .5 8 2 99 .09

A s a t 31 s t -M a r- 20 14

A s a t 31 s t -M a r- 20 13

Rs in La c Rs in La c

I St a t u t o ry Lia b ilit ie s

Provis ion fo r Incom e T a x (Re fe r No te no .26 .9 ) 77 .37 143 .53

S erv ic e T a x Pa yable 45 .14 37 .65

T DS Pa yab le 139 .43 76 .34

ES I Pa yab le 2 .01 0 .19

PF Pa yab le 16 .96 1 .60

PT Pa yab le 1 .01 0 .18

V AT & C S T pa yab le 2 .91 -

Ot h e r Pr ov is io ns

Provis ion fo r D ividend 5 .52 5 .52

In te re s tPa yab le & In te re s t A c crued 89 .06 55 .96

O the r P rovis ions 12 .29 10 .59

Tot a l Ot h e r Cur re nt Lia b ilit ie s 3 91 .7 0 3 31 .58

A s a t 31 s t -M a r- 20 14

A s a t 31 s t -M a r- 20 13

Rs in La c Rs in La cI M a t Pa yab le (Ne t o ff a dvance ta x cur re nt ye a r 29 .72 p re vious ye a r

Rs .2 .30 La kh) 20 .82 2 .30

Tot a l S ho rt Te rm Pro v is ion s 20 .8 2 2 .30

NOTE NO.11 : S HORT TERM PROV IS IONS

S . No . Pa rt ic u la rs

Pa rt ic u la rs

Pa rt ic u la rs

NOTE NO. 9 : TR A DE PA Y A BLES

S . No .

S . No .

NOTE NO. 10 : OTHER CURRENT LIA BILITIES

S . No .

Pa rt ic u la rs

Note : Ba s ed on the In fo rm a tion a va ila b le w ith the C om pany the re a re no supp lie r s w ho a re regis te re d as M ic ro, S m a ll & M ed ium Ente rpr ise sunde r the M ic ro S m a ll M ed ium Ente rpr ise s Deve lopm ent A ct 2006 , a s at31s t M a rch 2014 o r a s at the end o f pre vious yea r. T he re fo re theque s tion o f lia b lity tow a rds in te re s t in te rm s o f s e ction 16 o f M ic ro,S m a ll & M ed ium Ente rpr ise de ve lopm ent a ct 2006 doe s no t a r is e .

NOTE NO.8 : S HORT TERM BORROW INGS .




TAN

GIB

LE

INTA

NG

IBLE






Rs in Lac Rs in Lac

I Non- Current Investments

1) Investment in Subsidiaries

a) Equity Shares (Unquoted)

-S ankhya S arl, France and 100% of holding - -

-S ankhya US Corporation, US and 100% of holding - -

-Mahasena Info Technologies (India) Pvt Ltd, and 100% of holding - -

Total Non - Current A ssets ( Net ) - -

Footnote: Investments are valued at Cost less provision for dim inution of temporary nature)



Rs in Lac Rs in Lac

I Long - T erm Loans and Advances:

a) S ecurity Deposit

S ecured Refer Note 14(i) 60.07 64.08

60.07 64.08 Note No 14(i): EMD is provided for the various projects, and fixed deposit w ere kept w ith Centra l Excise, Electr icity Department and for Rent



Rs in Lac Rs in Lac

I Outstanding for a Period of less than 6 months Un Secured, Considered Good 4,080.76 3,687.53

Outstanding for a Period of more than 6 months

Unsecured, Considered Good 10.11 292.73

Tota l Trade Receivables(net) 4,090.87 3,980.26



Rs in Lac Rs in Lac

I a) Cash and Cash Equiva lents :

1) Balances w ith Banks in Current Accounts in India 1.31 0.75 2) Balances w ith Banks in Current Accounts outs ide India 8.40 16.69

3) Cash on Hand 2.19 1.62 Other Bank Ba lances

1) Un Paid Dividend Account 5.52 5.52

Total Cash and Cash Equivalents 17.42 24.58

S. No.

Particulars

NOTE NO. 15 : TRA DE RECEIVA BLES

S. No. Particulars

NOTE NO. 16 : CA SH A ND CA SH EQUIVA LENTS

NOTE NO. 13 : NON- CURRENT INVESTMENTS

NOTE NO. 14 : LONG TERM LOA NS A ND A DVA NCES

S. No.

ParticularsS. No.

Particulars




A s a t 31st-Mar-2014

A s at 31st-Ma r-2013

Rs in Lac Rs in La c

I S hort -Term Loans and Advances :

a) Other Loans and Advances (Unsecured)

A dvance for Expenditure 364.15 340.79

A dvance to Joint V enture Project 16.59 -

Total short term loans & adva nces( net ) 380.74 340.79

A s a t 31st-Mar-2014

A s at 31st-Ma r-2013

Rs in Lac Rs in La c1 Unbilled Revenue Refer Note below 573.94 745.23 2 Advance T axes (Net off provis ion current year Rs .29.72 Lakh, previous

year 2.30 lakh) 0.18 7.91 3 Other Current A ssets 0.64 0.64 4 Interes t A ccrued 2.26 1.08 5 Vat (Refund) 0.76 0.76 6 Misc exp not w ritten off (0.00) 2.06

Tota l Ot he r Curre nt A sset s 577.78 757.68

Unbilled Revenue as at 31 s t March 2014 includes am ount Rs .429.98 Lacrela ting to Contract which has not been billed s ince 30.03.2012. TheManagem ent is of the view that the contract is entire ly billable . TheCom pany is in constant engagem ent w ith the client to get the w orkcertified and bill the sam e.

S. No.

NOTE NO. 17 : SHORT TERM LOA NS A ND A DVA NCES

Pa rt iculars

NOTE NO.18 : OTHER CURRENT A SSETS

S. No. Pa rt iculars

For the Year Ended 31st Mar

-2014

For the Year Ended 31st March-

2013Rs in lacs Rs in lacs

I Revenue from operations in respect of non-finance company (a)Income from Services

Domestic Income 481.01 322.19 Export Income 13,400.36 10,250.69

Total Revenue From Operations 13,881.37 10,572.88

For the Year Ended 31st Mar

-2014

For the Year Ended 31st March-

2013Rs in lacs Rs in lacs

I (a) Interest Income 1.96 5.38 (b) Net gain/loss on foreign currency translation and transaction 644.40 (58.22)

(c) Misc Income 1.09 -

Total Other Income 647.45 (52.84)

ParticularsS. No.

NOTE NUMBERS TO STATEMENT OF PROFIT & LOSS

NOTE NO. 20 : OTHER INCOME

S. No. Particulars

NOTE NO. 19 : REVENUE FROM OPERATIONS






Rs in lacs Rs in lacsI (a) Salaries & Wages 8,612.72 5,950.74

(b) Contribution to Provident & Other Funds 10.40 12.41

(c) S taff Welfare Expenses 1.12 1.86

Total Employee Benefit Expenses 8,624.24 5,965.00



Rs in lacs Rs in lacsI (a) ComputerHardware & Accessories 85.39 93.31

(b) Technical Assistance 148.93 -

(c) S imulation Software Services 340.08 -

(d) Power & Fuel 37.72 26.74 (e) Rent 107.13 94.88

(f) Computer Repairs & Maintenance 188.39 195.23

(g) Insurance 47.42 31.14

(h) legal fee 36.75 29.80

(i) Rates & Taxes 127.13 54.39

(j)Miscellaneous Expenditure 42.03 1.09

Total Other Expenses 1,160.97 526.58



Rs in lacs Rs in lacsI (a) Telephone, Postage and Others 51.80 32.96

(b) Business Promotion Expenses 424.35 370.71 (c) Conveyance 359.47 353.02

(d) Office Maintenance 53.06 51.57

(e) Printing & S tationery Expenses 84.45 66.91

(f) Managerial Remuneration 72.00 72.00

(g) Consultancy Charges 950.00 680.49

(h) Director S itting Fee 0.70 0.70

(i) Payment to Auditors:

(i) As Audit fee 3.00 2.22

(ii As Tax audit fee 1.00 0.30

(iii) For Reimbursement of expenses 0.22 1.84

Total A dministrative Expenses 2,000.05 1,632.70

NOTE NO. 21 : EMLOYEE BENEFIT EXPENSES

S. No. Particulars

NOTE NO. 22 : OTHER OPERA TING EXPENSES

S. No. Particulars

Particulars

NOTE NO. 23 : A DMINISTRA TIVE EXPENSES

S. No.




Notes to Consolidated Financial Statement for the Year Ended March 31, 2014

As at 31st As at 31st

March, 2014 March, 2013

1. Estimated amount of contract remainingto be executed on capital account not provided for Nil Nil

2. Contingent liability not provided for in respect of :

(a) Claims not acknowledged as debts :

(i) Income Tax 90.39 100.43

(ii) Others 11.80 Nil




I (a) Interest Expenses :

- Interest on Cash Credit 313.42 284.19

- Interest on Term Loan 37.70 49.34

- Interest on Unsecured Loan 49.23 45.13

- Loan processing Charges 14.20 6.36

- Bank charges 43.74 16.16

Total Finance Cost 458.29 401.17




I (a) Staff Recruitment & Training Expenditure 98.48 89.17

(b) Advertisement 36.56 49.20

(c) Communication charges 76.41 50.54

(d) AGM expenses 0.19 0.16

(e) Books & Periodicals 5.65 2.30

(f) Membership & Subscriptions 6.19 8.36

(g) Annual maintenance & Other expenses 81.48 50.75

(h) Travel Expenditure 248.33 210.56 (i) Research & Development Expenses (Refer Note Below) 816.97 765.48

(j) Bad Debts written off 218.58 277.10

Refer Note No: 26.10 for Expenditure in Foreign Currency

Total Other expenses 1,588.84 1,503.61

S. No. Particulars

NOTE NO.25 : OTHER EXPENSES

S. No. Particulars

NOTE NO. 24 : FINANCE COST




Note: As the future liability for gratuity and leave encashment is provided on an actuarial basis for the Company as awhole, the amount pertaining to the Directors is not ascertained and therefore not included above.

6. Earnings per Share

7. Related Party Disclosuresa) Related Parties

3. Investments

Investments in wholly owned subsidiary are at cost. No fresh Investments are made during the financialyear 2013-14.

4. Foreign Travel

The foreign travel includes Director’s travel amounting to Rs. 1.10 lacs.

5. Directors Remuneration

Particulars 31-Mar -2014 31-Mar -2013

Salary including Allowance

Chairman & Managing Director 36.00 36.00

Director 36.00 36.00

(Rs. in Lacs)

Particulars 31-Mar -2014 31-Mar -2013

Net Profit for the year 88.81 5.38

Weighted average No of 1124.52 1124.52shares outstanding during the year

Earnings per share (Rs.) 0.79 0.05

Nominal Value of the Share (Rs.) 10 10

(Rs. in Lacs)

Sl.No Name Relationship

1 SANKHYA SARL, France Wholly Owned Subsidiary

2 SANKHYA US Corporation Wholly Owned Subsidiary

3 Mahasena Info Technologies (India) Pvt Ltd Wholly Owned Subsidiary

4 Sri. N. Sridhar Chairman & Managing Director

5 Sri. N. Srinivas Director




8. Micro, Small and Medium Enterprise.

There are no Micro, Small and Medium Enterprise, to whom the Company owes dues, which are outstanding at theBalance Sheet date, computed on unit wise basis.


Capital Expenditure incurred on research and development is depreciated over the estimated life of related assetsand the revenue expenditure is expensed as incurred.

The company has in – House Research & Development Centre involved in developmental activities for new productsin the fields of Simulation and Training. Details of Capital & Revenue Expenditure incurred are as detailed below.

Sl.No EXPENDITURE 2013-14 2012-13

A Revenue

Employee cost 799.87 749.44

Rent 9.97 9.6

Electricity 7.14 36.41

Total 816.97 765.48

(Rs. in Lacs)

b) Transactions with Related Parties Subsidiary companies

Sl.No Name Outstanding as on Outstanding as on31-Mar -2014 31-Mar -2013

1 SANKHYA SARL, 1.73 1.73France (Investment)

2 SANKHYA US Corporation (Investment) 46.72 46.72

Advance for Expenses 540.51 540.51

3 Mahasena Info Technologies 10.00 10.00(India) Pvt Ltd- (Investment)

(Rs. in Lacs)

10. Write off

The Company has made a total write off of Rs.218.58 Lacs of the invoices raised on King Fisher Airlines.

11. Gratuity Provision of Rs.3 Lac for the year ended 31.3.2014 is made on Provisional Valuation Certificate obtained fromthe LIC Gratuity Fund Account. Independent Actuarial valuation certificate not obtained.

12. Provision for Income Tax for Tax demand raised by Income Tax Department

The income tax department has raised demand for the Assessment Year 2008-09 and 2009-10 amounting to Rs.234.37Lakh. The company’s request for payment of the amount in installments has been agreed and the company has paid anamount of Rs.66 lacs till 31.3.2014. However, the company has provided only 143.48 lacs in the books Rs.90.89 lacs hasnot been provided. The company would make suitable provisions for the FYE14.

13. Balance Confirmation

Balances as appearing under Unsecured Loans, Sundry Debtors, Loans and advances are as per the confirmationsreceived from the respective heads of account holders.




14. Unclaimed Dividend

The Company has an amount of Rs.5.52 Lakhs representing unclaimed Dividend. The details are as mentionedbelow:

Sl. Financial Interim/ Date of Rate Dividend Dividend AmountNo year Final declaration ofdividend amount distribution remaining

Excluding Tax unclaimedTax as on

31.03.2014

1 2006-07 Final 28-09-2007 10% 99,44,156 14,4,151 3,12,2272 2007-08 Final 29-12-2008 12% 1,02,00,006 17,33,491 2,40,185

(Amount in Rs.)

15. Segment ReportingThe company’s operations relate to providing IT services, delivered to customers globally operating in transportationsegment. Income and expenses which are direct in nature in relation to segments is categorized based on items thatare identifiable individually to that segment, rest are categorized in relation to the associated turnover of the segment.Expenses such as Depreciation and Interest, which form a significant component of total expenses, are not specificallyallocable to specific segment as the underlying services are used interchangeably.




16. Regrouping & Rounding off

The previous year’s figures have been reclassified and regrouped, wherever necessary to confirm the Current Year

classification and to confirm to the relevant laws. Paisa has been rounded off to the nearest rupee. As per our report

of even date

For and on behalf of the Board

Sankhya Infotech Limited

Place : Hyderabad

Date : 22.05.2014

Pravin Kumar Jabade

Partner

Membership No.107196

N. Sridhar

Chairman & Managing Director

N. Srinivas

Vice Chairman

As per our report of even date

For T. R. Chadha & Co.,

Chartered AccountantsFirm Registration Number: 006711N




DETAILS OF SUBSIDIARIES

(Rs. in Lacs)

Sl. Particulars SANKHYA SANKHYA US MAHASENA SANKHYANo. SARL FRANCE CORPORATION, INFORMATION CONSOLIDATED

USA TECHNOLOGIESINDIA PVT LTD

31-Mar-14 31-Mar-14 31-Mar-14 31-Mar-14

a) Capital 1.73 5.16 10 1124.52

i) Share 41.56 Application money

ii) Loan Fund 541.51

b) Reserves 5518.52

c) Total Assets 1.73 588.23 10 10724.72

d) Total Liabilities 1.73 588.23 10 10724.72

e) Details of Investments(Except in case ofinvestment insubsidiaries)

f) Turnover - - - 13881.37

g) Profit Before Taxation - - - 225.22

h) Provision for taxation - - - 136.41

i) Other Provision - - - -

j) Prior period expenses - - - -

k) Profit after Taxation - - - 88.81

l) Proposed Dividend. - - - -




ATTENDANCE SLIP

SANKHYA INFOTECH LTD.Regd Office: Module 405, NSIC, BUSINESS PARK, ECIL PO, HYDERABAD 500062

PLEASE FILL ATTENDANCE SLIP AND HAND IT OVER AT THE ENTRANCE OF THE MEETING HALL

Joint shareholders may obtain additional slip at the venue of the meeting.

NAME AND ADRESS OF SHAREHOLDER

No of share(s) Held:

I hereby record my presence at the 17th ANNUAL GENERAL MEETING of the Company held on 27th September, 2014 at 11.AM, NSIC Bldg,ECIL PO, Hyderabad-500062.

Signature of the Share holder or Proxy

*Applicable for investors holding shares in dematerialized form

DP. ID* Master Folio No.

Client ID* No. of Shares




PROXY FORM

(Pursuant to Section 105(6) of the Companies Act, 2013 and rule 19(3) of the Companies(Management and Administration) Rules, 2014

I/We, being the member (s) of ________________shares of the above named company, hereby appoint.

FORM NO. MGT- 11

Name of the member(s)

Registered Address

Email Id

Folio No. / Client ID DP ID

as my / our proxy to attend and vote (on a poll) for me / us and on my / our behalf at the 17th Annual General Meeting ofthe company, to be held on Saturday, the 27th September, 2014 at 11.00 A.M at NSIC Business Park, ECIL PO, Hyderabad– 500062 and at any adjournment thereof in respect of such as resolutions are indicated below:

Resolutions:

1. Consider and adopt Audited Financial Statements, Reports of the Board of Directors and Auditors

2. Re-appointment of Mr. N Srinivas who retires by rotation

3. Appointment of Auditors and fixing their remuneration

4. Appointment of CA. Ch. Anand as Independent Director

5. Appointment of Dr. J. Venkateswara Rao as Independent Director

Signed this …………. day of ………………. 2014

Signature of shareholder: ____________________________

Signature of Proxy holder(s): _________________________

Note: This form of proxy in order to be effective should be duly completed and deposited at the RegisteredOffice of the Company, not less than 48 hours before the commencement of the Meeting.

Affix a1 Rupee

Revenue Stamp

1. Name

Address

E-mail Id Signature

or failing him

2. Name

Address

E-mail Id Signature

or failing him

3. Name

Address

E-mail Id Signature




Printed Matter

Book Post

To,

If undelivered Please return to:

Regd Office:

Sankhya Infotech Limited,

Module 405, NSIC BUSINESS PARK

ECIL POST

HYDERABAD 500062

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