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ADITYA BIRLA MINACS WORLDWIDE LIMITED

ANNUAL REPORT OF SUBSIDIARIES 2009-2010

Sl. No. Name Page No


1 A V Transworks Limited 1
2 Compass BPO Limited, UK 15
3 Aditya Birla Minacs Philippines Inc. 35
4 Aditya Birla Minacs Worldwide Inc., (Canada) 49
5 Compass BPO FZE (UAE) 72
6 Compass BPO Inc (USA) 85
7 Compass Business Process Outsourcing (P) Ltd (India) 90
8 Minacs Kft (Hungary) 105
9 Minacs Limited (UK) 114
10 Minacs Worldwide S A De C V (Mexico) 121
11 Minacs Worldwide GmbH (Germany) 125
12 The Minacs Group (USA) Inc. 132
13 Transworks Inc (USA) 141
A V Transworks Limited

AUDITORS’ REPORT

The Board of Directors of Aditya Birla Minacs Worldwide Limited


(Formerly known as Transworks Information Services Limited)

1. We refer to your letter dated March 1, 2010 requesting us to audit the accounts of A V Transworks Limited
(“the Company”), a wholly owned subsidiary of Transworks Information Services Limited (“the Parent”),
incorporated in the Canada, based on records, received from the said Company in Mumbai and in
accordance with the accounting policies described in Note 1 of Schedule 9 to the attached financial
statements (“the accounting policies”). We have not performed a statutory audit, the objective of which
would be the expression of an opinion on the financial statements in conformity with generally accepted
accounting practices and accordingly, we do not express such an opinion.

2. We have audited, in accordance with the accounting policies, the attached Balance Sheet of the Company as
at March 31, 2010 and also the Profit and Loss account and cash flow statement for the year ended on that
date annexed thereto, which are in agreement with the books of account verified by us. These financial
statements are the responsibility of the Company’s management and have been prepared in accordance with
the accounting policies, for the purpose of consolidation with the financial statements of the Parent. Our
responsibility is to express an opinion on these financial statements based on our audit.

3. We conducted our audit in accordance with generally accepted auditing standards in India. These Standards
require that we plan and perform the audit to obtain reasonable assurance whether the financial statements
are free of material misstatements. An audit includes, examining on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial
statements. We believe that our audit provides a reasonable basis for our opinion.

5. In our opinion, based on our audit, and to the best of our information and according to the explanations
given to us, the accompanying financial statements give a true and fair view in conformity with the
accounting policies:

a. in the case of the Balance Sheet, of the state of affairs of Company as at 31st March, 2010;
b. in the case of the Profit and Loss Account, of the loss for the year ended on that date; and
c. in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

6. This report is furnished solely for the purpose of meeting the requirement if consolidation of the
attached financial statements with the financial statement of the Parent and hence should not to be used
for any other purpose.

For S. R. Batliboi & Co.


Firm Registration No. 301003E
Chartered Accountants

per Vijay Maniar


Partner
Membership No.: 36738
Mumbai,
April 23, 2010

1
A V Transworks Limited

BALANCE SHEET AS AT 31ST MARCH 2010

As At 31st Mar, As At 31st As At 31st As At 31st


2010 Mar, 2010 Mar, 2009 Mar, 2009
Schedule CAD Rs. Lacs CAD Rs. Lacs

I. SOURCES OF FUNDS
1 Shareholders' Funds

Share Capital 1 127,000,001 56,083.20 127,000,001 51,132.61

Preference Share Capital 1 30,000,000 13,248.00 - -

Foreign exchange on translation - (23.68) - 6.48

2 Unsecured Loan from Bank 30,901,850 13,646.26 30,901,850 12,441.67

3 Loan from Holding Company 21,424,531 9,461.07 20,526,184 8,264.23

Total 209,326,382 92,414.85 178,428,035 71,844.99

II. APPLICATION OF FUNDS

1 Investments 2 207,892,852 91,805.48 177,892,852 71,623.03

2 Current Assets, Loans and


Advances :

Accured Interest 106,963 47.23 399,501 160.85

Cash and Bank Balances 3 67,073 29.62 3,506 1.41

174,036 76.85 403,007 162.26


Less: Current Liabilities and
Provisions : 4

Current Liabilities 629,334 277.92 448,821 180.70

Provisions 2,607 1.15 2,607 1.05

631,941 279.07 451,428 181.75

Net Current Assets (457,905) (202.22) (48,421) (19.49)

3 Profit & Loss Account 1,891,435 811.59 583,604 241.45

2
A V Transworks Limited

Total 209,326,382 92,414.85 178,428,035 71,844.99

1 - (0) (0.00)
Notes to Accounts 8
The Schedules referred to above and the notes to accounts form an integral part of the Balance
Sheet.

As per our report of the event For and on behalf of the Board of
date Directors of
A V Transworks Limited
For S.R. BATLIBOI & CO.
Firm Registration No. 301003E
Chartered Accountants DEEPAK J. PATEL

per Vijay Maniar


Partner
Membership No. 36738

Place: Mumbai RAMESH KAMATH


Date: April 23, 2010 Chief Financial Officer

3
A V Transworks Limited

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2010
For the Year Ended 31st
Mar 2010 For the Year Ended
31st Mar 2009
Schedule CAD Rs. Lacs CAD Rs. Lacs
INCOME :

Other Income 5 157,375 68.61 1,632,336 676.04

Total 157,375 68.61 1,632,336 676.04

EXPENDITURE :

Administrative Expenses 6 (39,723) (17.31) 615,746 255.02

Financial Charges 7 1,504,930 656.06 1,589,341 658.24

Total 1,465,208 638.75 2,205,087 913.26

Profit / (Loss) before tax for the year (1,307,833) (570.14) (572,751) (237.21)

Less: Provision for Tax - - - -

Profit / (Loss) for the year (1,307,833) (570.14) (572,751) (237.21)

Profit / (Loss) brought forward from


previous year (583,602) (241.45) (10,853) (4.24)

Accumulated balance carried forward to the


Balance Sheet (1,891,435) (811.59) (583,604) (241.45)

Notes to Accounts 8
The Schedules referred to above and the notes to accounts form an integral part of the Profit & Loss Account.

As per our report of the event date For and on behalf of the Board of Directors of
A V Transworks Limited
For S.R. BATLIBOI & CO.
Firm Registration No. 301003E
Chartered Accountants DEEPAK J. PATEL

per Vijay Maniar


Partner
Membership No. 36738
Place: Mumbai RAMESH KAMATH
Date: April 23, 2010 Chief Financial Officer

4
A V Transworks Limited

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2010
For the Year ended For the Year ended
March 31 2010 March 31 2009

CAD Rs. Lacs CAD Rs. Lacs


A Cash flows from Operating Activities
.
Net Profit/(Loss) before taxation, and
extraordinary items (1,307,833) (570.14) (572,751) (237.21)
Adjustments for:
Interest Income
(157,375) (68.61) (1,631,908) (675.87)
Interest Expense
1,497,734 652.92 1,585,191 656.52
Foreign Exchange (Gain)/Loss (Net)
0 6,125.02 5,752,600 4,911.96
Operating Profit before working capital
changes 32,526 6,139.19 5,133,132 4,655.40
Movements in working capital :
(Increase)/Decrease in payable to subsidiary
267,093 121.24 31,222 13.47
(Increase)/Decrease in Loans & Advances
- - 819 0.32
Increase/(Decrease) Current Liabilities &
Provisions (12,534) (4.04) 31,618 12.84
Cash generated from operations
287,085 6,256.39 5,196,790 4,682.03
Loan to subsdiaries
- - 65,470,971 25,245.61
Cash flow before extraordinary items
287,085 6,256.39 70,667,761 29,927.64
Add/(Less): Extraordinary items
- - - -

Net Cash flow from Operating Activities 287,085 6,256.39 70,667,761 29,927.64

B Cash Flows from Investing Activities


.
Investment in Subsidaries
(30,000,000) (20,182.45) (50,638,021) (22,553.57)
Interest income received
449,913 182.23 2,852,136 1,139.59

Net Cash from/(for) Investing Activities (29,550,087) (20,000.22) (47,785,886) (21,413.98)

C Cash flow from Financing Activities


.

Loan from Holding Company 898,346 1,196.84 (20,038,641) (7,377.56)

Preference Capital from Holding Company 30,000,000 13,248.00 - -

Interest Payment (1,571,778) (672.80) (2,843,693) (1,136.20)

Net Cash used in Financing Activities 29,326,569 13,772.04 (22,882,334) (8,513.76)

Net Decrease in cash and Cash equivalants during


the year 63,567 28.21 (458) (0.10)

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A V Transworks Limited

Cash and cash equivalants at the beginning of the


year 3,506 1.41 3,964 1.51

Cash and cash equivalants at the end of the year 67,073 29.62 3,506 1.41
Notes:
Components of Cash and Cash Equivalents As At 31st As At 31st As At 31st As At 31st
Mar, Mar, Mar, Mar,
2010 2010 2009 2009

i) Cash Balance on hand - - - -


ii
) Balance with Scheduled and other Banks :

- in Current Account 67,073 29.62 3,506 1.41

Total 67,073 29.62 3,506 1.41

(0) 0.00 0 0
As per our report of the event date For and on behalf of the Board of
Directors of
A V Transworks Limited
For S.R. BATLIBOI & CO.
Firm Registration No. 301003E
Chartered Accountants DEEPAK J. PATEL
per Vijay Maniar
Partner
Membership No. 36738
Place: Mumbai RAMESH KAMATH
Date: April 23, 2010 Chief Financial Officer

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A V Transworks Limited

SCHEDULES FOR THE YEAR ENDED 31ST MARCH 2010

As At 31st Mar, 2010 As At 31st Mar, 2009


CAD Rs. Lacs CAD Rs. Lacs
SCHEDULE - 1
SHARE CAPITAL

Authorised Capital

127,000,001 Equity Shares of CAD$ 1 each 127,000,001 56,083.20 127,000,001 51,132.61

Issued, Subscribed & Paid up Capital


127,000,001 Equity Shares of CAD$ 1 each fully paid
up 127,000,001 56,083.20 127,000,001 51,132.61

30,000,000 Preference shares (P.Y. Nil) of CAD$ 1


each 30,000,000 13,248.00 - -
(All the above equity and Preference shares are held
by Holding Company )
- Aditya Birla Minacs Worldwide Limited)

Total 157,000,001 69,331.20 127,000,001 51,132.61

SCHEDULE - 2
INVESTMENTS

Long Term Investments (At Cost)

In Subsidiary Companies
Unquoted, fully paid-up

27,945,822 shares (P.Y. 27,945,822 shares) of CAD$


1 each in Aditya Birla Minacs Worldwide Inc. 157,571,131 69,583.41 157,571,131 63,441.12

20,321,721 Preference shares (P.Y. 20,321,721 shares)


of CAD$ 1 each in Aditya Birla Minacs Worldwide
Inc. 20,321,721 8,974.07 20,321,721 8,181.91

30,000,000 Preference shares (P.Y. Nil) of CAD$ 1


each in Aditya Birla Minacs Worldwide Inc. 30,000,000 13,248.00 - -

Total 207,892,852 91,805.48 177,892,852 71,623.03

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A V Transworks Limited

For the Year Ended For the Year Ended


SCHEDULE - 3 31st Mar 2010 31st Mar 2009
CASH AND BANK BALANCES CAD Rs. Lacs CAD Rs. Lacs
Balance with other Banks :

- On Current Account 67,073 29.62 3,506 1.41

Total 67,073 29.62 3,506 1.41

SCHEDULE - 4
CURRENT LIABILITIES & PROVISIONS

i) Sundry Creditors 3,864 1.71 3,864 1.56

ii) Acrrued Interest on Secured Loan from Bank 83,926 37.06 318,856 128.38

iii) Acrrued Interest on Loan from Holding Company 171,041 75.53 10,155 4.09

iv) Payable to Subsidiary Company 351,422 155.19 84,329 33.95

v) TDS Payable 19,081 8.43 31,617 12.73

629,334 277.92 448,821 180.71


PROVISIONS

i) Provision for Taxation / Minimum Alternative Tax 2,607 1.15 2,607 1.05

Total 631,941 279.07 451,428 181.76

SCHEDULE - 5
OTHER INCOME
Interest received

i) Bank interest - - 416 0.17

ii) DBS Loan - - 971,607 402.40

iii) Intercompany Loan 157,375 68.61 660,301 273.47

iv) Others - - 12 0.01

Total 157,375 68.61 1,632,336 676.05

8
A V Transworks Limited

For the Year Ended 31st For the Year Ended 31st
SCHEDULE - 6 Mar 2010 Mar 2009
ADMINISTRATIVE EXPENSES
CAD Rs. Lacs CAD Rs. Lacs

i) Foreign Exchange Loss /(Income) (43,050) (18.76) 585,551 242.51

ii) Legal & Professional Charges - - 6,257 2.59

iii) Telephone Expenses - - 2,929 1.21

iv) Rates & Taxes 3,327 1.45 7,389 3.06

v) Miscellaneous Expenses - - 13,620 5.65

Total (39,723) (17.31) 615,746 255.02

SCHEDULE - 7
FINANCIAL CHARGES

i) Bank charges 7,196 3.14 4,150 1.72

ii) Interest on DBS loan 1,040,947 453.79 971,607 402.40

iii) Interest on Intercompany Loan 456,787 199.13 613,584 254.12

Total 1,504,930 656.06 1,589,341 658.24

SCHEDULE – 8: Notes to Accounts

1. ACCOUNTING POLICIES

a. Basis of preparation

The accounts have been prepared under the historical cost convention on accrual basis in accordance
with the generally accepted accounting principles applicable in India.

b. Interest

Interest on Loan given/ taken is booked on a time proportion basis taking into account the amounts of
loan given and taken and the rate of interest

c. Transactions in Foreign Currency

i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign
currency amount the exchange rate between the reporting currency and the foreign currency at the
date of the transaction.

ii) Conversion
Foreign currency monetary items are reported using the closing rate. Non-monetary items, which
are carried in terms of historical cost denominated in a foreign currency, are reported using the
exchange rate at the date of the transaction.

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A V Transworks Limited

iii) Exchange Differences


Exchange differences arising on the settlement of monetary items or on reporting company's
monetary items at rates different from those at which they were initially recorded during the year,
or reported in previous financial statements, are recognized as income or as expenses in the year in
which they occur.

d. Provision

A provision is recognized when an enterprise has a present obligation as a result of past event; it is
probable that an outflow of resources will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its present value and are determined
based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best estimates.

e. Investments

i) Investments that are readily realizable and intended to be held for not more than a year are
classified as current investments. All other investments are classified as long-term investments.
ii) Long-term investments are valued at cost. Any decline in the value of investments other than
temporary, is provided for and charged to the profit & loss account.

f. Conversion of Financial Statements

For the purpose of consolidation of the financials statements with that of the Parent, the amounts in
Canadian Dollar (CAD) are converted into INR as follows:
Equity capital and all other balance sheet items at closing rate of exchange, profit and loss items at
average rate and resultant translation gain/loss is shown separately in Balance sheet

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A V Transworks Limited

2. Related Party Transactions

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

Ultimate Holding Company Aditya Birla Nuvo Limited

Holding Company Aditya Birla Minacs Worldwide Limited (ABMWL)

Fellow Subsidiaries TransWorks Inc., USA

Aditya Birla Minacs Philippines Inc. (formerly TransWorks BPO


Philippines Inc.) (ABMPI) (Subsidiary of ABMWL) (w.e.f
November 03, 2006)
Subsidiaries Aditya Birla Minacs Worldwide Inc. Canada (ABMWI)
(Subsidiary of AV TransWorks) (w.e.f August 18, 2006)
Minacs Kft., Hungary (Subsidiary of Minacs GmbH) (w.e.f
August 18, 2006)
Minacs Limited , UK, (Subsidiary of MWI) (w.e.f August 18,
2006)
Minacs Worldwide S.A. de C.V., Mexico (Subsidiary of MWI)
(w.e.f August 18, 2006)
The Minacs GmbH, Germany (Subsidiary of Minacs Ltd) (w.e.f
August 18, 2006)
The Minacs Group, USA (Subsidiary of MWI) (w.e.f August 18,
2006)

Compass BPO Limited, U.K. (w.e.f. March 9, 2010 )

Compass BPO, Inc, U.S.A (Subsidiary of Compass BPO Limited,


U.K) (w.e.f. March 9, 2010 )
Compass Business Process outsourcing Ltd, India Subsidiary of
Compass BPO Limited, U.K) (w.e.f. March 9, 2010 )
Compass BPO FZE, U.A.E (Subsidiary of Compass BPO Limited,
U.K) (w.e.f. March 9, 2010 )

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A V Transworks Limited

(b) Summary of transactions with related parties:

(In CAD)
Particulars As at March 31, As at March 31,
2010 2009
Holding Company
Loan Repayment 7,500,000 20,038,641
Loan Taken 8,450,000 Nil
Interest on loan from ABMWL 456,787 613,584
Subsidiary (ABMWI)
Investment 30,000,000 50,638,021
Loan repayment from subsidiary 7,500,000 65,470,971
Loan given to subsidiary 7,500,000 Nil
Interest on loan given 157,375 660,301
Related Party Balances
Holding
Equity Contribution from holding Co 127,000,001 127,000,001
Preference Contribution from holding Co 30,000,000 Nil
Loan from Holding Co. 21,424,531 20,526,184
Interest Payable to Holding Co 171,041 10,155
Corporate guarantee given by Holding Co 30,901,850 30,901,850

Subsidiary (ABMWI)
Investment in Subsidiary 207,892,852 177,892,852
Loan to subsidiary Nil Nil
Interest received from Subsidiary 157,375 1,631,908

Balance as at the year end


Payable to Holding Co 21,595,571 20,536,339
Receivable from Subsidiary Co (ABMWI) Nil 399,502
Payable to Subsidiary Co (ABMWI) 244,461 Nil

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A V Transworks Limited

(In Rs. Lacs)


Particulars As at March 31, As at March 31,
2010 2009
Holding Company
Loan Repayment 3,269.51 7,377.56
Loan Taken 3,683.65 Nil
Interest on loan from ABMWL 199.13 254.12
Subsidiary (ABMWI)
Investment 20,182.44 22,553.58
Loan repayment from subsidiary 3,269.51 25,245.61
Loan given to subsidiary 3,269.51 Nil
Interest on loan given 68.61 273.47

Related Party Balances


Holding
Equity Contribution from holding Co 56,083.20 51,132.61
Preference Contribution from holding Co 13,248.00 Nil
Loan from Holding Co 9,461.07 8,264.23
Interest Payable to holding Co 75.53 4.09
Corporate guarantee given by holding Co 13,646.26 12,441.67

Subsidiary (ABMWI)
Investment in Subsidiary 91,805.48 71,623.04
Loan to subsidiary Nil Nil
Interest received from Subsidiary 68.61 675.87

Balance as at the year end


Payable to Holding Co 9,536.60 8,268.32
Receivable from Subsidiary Co. (ABMWI) Nil 160.85
Payable to Subsidiary Co (ABMWI) 107.96 Nil

3. Derivative Instruments

The Company uses derivative financial instruments such as forward exchange contracts, currency swaps
and interest rate swaps to hedge its risks associated with foreign currency fluctuations and interest rate.

Derivative Outstanding as at March 31 2010


Amount in Foreign
Particulars Currency Purpose
Currency (in lacs)
Cross Currency Swap 203.21 To hedge Loan Payable
CAD
(203.21)

All the above contracts are for hedging and not for speculation.

As at March 31, 2010 all the foreign currency exposure stands hedged by derivative instrument or
otherwise.

The Company, time to time, holds financial derivatives instruments primarily for hedging purpose. In
pursuance of the announcement dated 29th March 2008 of ICAI, The Company has decided to account
for losses, if any, on derivatives transactions, on net basis, after considering effect of underlying
exposure / commitments / obligations. As there was no such loss at the end of the year, the above
changes does not have any effect on the profit for the year.

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A V Transworks Limited

4. Previous year figures have been regrouped wherever necessary to correspond with current period
figures.

For S. R. BATLIBOI & CO. For and on behalf of the Board of Directors of
Firm Registration No. 301003E A V Transworks Limited
Chartered Accountants

DEEPAK J. PATEL
Per VIJAY MANIAR
Partner
Membership No. 36738

Place: Mumbai RAMESH KAMATH


Date: April 23, 2010 Chief Financial Officer

14
Compass BPO Limited

REPORT OF THE DIRECTORS

FOR THE YEAR ENDED 31 MARCH 2010

The directors have pleasure in submitting their annual report with the audited accounts of the group for the year.

PRINCIPAL ACTIVITY

The principal activity of the group during the year under review was the provision of personnel and related
consultancy services from Asia.

REVIEW OF BUSINESS

Despite the global economic slowdown, the group, through alignment, focus and relentless execution, has been able
to generate revenue of £4.37m for the current year (2009 :£5.06m).
Earnings before interest, tax, depreciation and gain/losses on foreign exchange was £93,837 (2009 : £ 426,028).
Cash on the balance sheet at the year end was £197,484 (2009 : £461,155).

On 9 March 2010 the entire issued share capital of the group was acquired by Aditya Birla Minacs Worldwide Inc.
(a Canadian company), a part of the US$29.2 billion Aditya Birla Group that today employs 130,000 people of 30
different nationalities.

Minacs has a history that goes back three decades. Today, they serve clients across 3 continents, 8 countries, in 41
languages - several of them Fortune 500 corporations. Minacs has 12,500 people across 29 centres to serve clients in
the verticals of BFSI (banking, financial services and insurance), TIME (telecom, technology infrastructure, media,
and entertainment), manufacturing and the public sector.

On 9 March 2010, the 10% convertible loan notes of £350,000 were converted into ordinary shares at 1 ordinary
share per £53.75 of nominal loan value.

DIVIDEND

The directors do not recommend the payment of a dividend. (2009: £Nil).

DIRECTORS

The directors who served during the year were: -

R Tice (Chairman) (resigned 9 March 2010)


M Atkins (resigned 9 March 2010)
D McCullough (resigned 9 March 2010)
N Godrej (resigned 9 March 2010)
C T Newberry (resigned 9 March 2010)
D Patel (appointed 9 March 2010)
M Kedia (appointed 9 March 2010)

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Directors’ Report and the financial statements in accordance with
applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the
directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors
must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of

15
Compass BPO Limited

affairs of the company and of the profit or loss of the company for that period. In preparing these financial
statements, the directors are required to:

 select suitable accounting policies and then apply them consistently;


 make judgments and accounting estimates that are reasonable and prudent;
 state whether applicable UK Accounting Standards have been followed, subject to any material departures
disclosed and explained in the financial statements;
 prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and
enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible
for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.

So far as each of the directors is aware at the time the report is approved:

 there is no relevant audit information of which the company's auditors are unaware; and
 the directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit
information and to establish that the auditors are aware of that information.

AUDITORS

The auditors, haysmacintyre, will be proposed for re-appointment in accordance with S485 of the Companies Act
2006.

The Directors report has been prepared in accordance with the special provisions of Part 15 sections 416 and 417 of
the Companies Act 2006 relating to small entities.

By order of the Board

D Patel
Director

Registered Office
Fairfax House
15 Fulwood Place
London
WC1V 6AY

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Compass BPO Limited

INDEPENDENT REPORT OF THE AUDITORS TO THE SHAREHOLDERS OF COMPASS BPO


LIMITED

We have audited the financial statements of Compass BPO Limited for the year ended 31 March 2010 which
comprise the Profit and Loss Account, the Consolidated and Company Balance Sheets, the Consolidated Statement
of Total Recognised Gains and Losses and the related notes. The financial reporting framework that has been
applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom
Generally Accepted Accounting Practice).

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an Auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other the company’s members as a body, for
our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

As explained more fully in the Directors’ Responsibilities Statement set out on page 3, the directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit the financial statements in accordance with applicable law and International Standards on
Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical
Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the accounting policies are appropriate to the company’s
circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant
accounting estimates made by the directors; and the overall presentation of the financial statements.

Opinion on financial statements

In our opinion the financial statements:

 give a true and fair view of the state of the company’s affairs as at 31 March 2010 and of its loss for the year
then ended;
 have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice;
and
 have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Directors’ Report for the financial year for which the financial statements
are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

 We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
 adequate accounting records have not been kept, or returns adequate for our audit have not been received
from branches not visited by us; or
 the financial statements are not in agreement with the accounting records and returns; or

17
Compass BPO Limited

 certain disclosures of directors’ remuneration specified by law are not made; or


 we have not received all the information and explanations we require for our audit.

Anastasia Frangos (Senior statutory auditor)
Fairfax House for and on behalf of haysmacintyre, Statutory Auditor
15 Fulwood Place
London
WC1V 6AY

18
Compass BPO Limited

CONSOLIDATED PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31 MARCH 2010

2010 2009
Notes £ £

TURNOVER 1 4,370,362 5,057,531

COST OF SALES (2,156,475) (2,370,049)


---------------------- ----------------------
GROSS PROFIT 2,213,887 2,687,482
Administrative expenses (2,327,243) (2,216,816)
-------------------- --------------------
OPERATING (LOSS)/PROFIT 2 (113,356) 470,666

(Loss)/profit on sale of assets (4,457) 545


Interest receivable 4,290 2,069
Interest payable 3 (56,400) (54,251)
------------------- -------------------
(LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE
TAXATION (169,923) 419,029

TAXATION 5 (1,525) (53,767)


------------------- -------------------
(LOSS)/PROFIT FOR THE FINANCIAL YEAR AFTER
TAXATION 12 £(171,448) £365,262
========= =========

All results relate to continuing activities.

STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

2010 2009
£ £

(Loss)/profit for the financial year (171,448) 365,262


Exchange translation differences 11,505 66
-------------------- -----------------
Total recognised gains and losses relating to the year £(159,943) £365,328
========= =========

The attached notes form an integral part of these accounts.

19
Compass BPO Limited

COMPANY PROFIT AND LOSS ACCOUNT


FOR THE PERIOD ENDED 31 MARCH 2010
31-Mar-10 31-Mar-09
Company Company
£ £

SALES 2,049,167 2,487,680


LESS: COST OF SALES (1,803,959) (2,161,362)

GROSS PROFIT 245,208 326,318

Profit on sale of assets (60) -

Interest Received 41 570


Interest Payable / Guarantee Commission (55,858) (52,605)
Exchange Gain / (Loss) (35,818) 82,077

153,513 356,360
LESS: OVERHEADS

Telephone 31,323 34,472

Insurance 33,348 31,938

Printing, postage and stationary 2,580 816

Entertaining and staff welfare 133 733

Rent and electricity for premises 34,282 36,956

Rent for Data Centre 4,680 3,900

Accountancy Fees 15,050 7,900

Bank Charges 10,699 9,920

Legal and professional fees 121,086 58,612

Marketing Costs 35,844 18,652

Commission Charges 21,819 20,492

Sales support 24,000 31,133

Salaries 23,535 27,312

Social Security 2,227 2,822

Meetings and Conferences 1,657 1,880

20
Compass BPO Limited

Office expenses 2,185 6,996

Depreciation 1,749 2,213

Travel Expenses 1,647 4,993

Computer maintenance and support 7,448 9,779

Bad debts - 5,018


(375,292) (316,537)

PROFIT / (LOSS) ON ORDINARY ACTIVITIES (221,779) 39,823

21
Compass BPO Limited

CONSOLIDATED BALANCE SHEET


AS AT 31 MARCH 2010
31-Mar-10 31-Mar-09
£ £ £ £
Notes

FIXED ASSETS

Tangible Assets 6 299,210 174,187

CURRENT ASSETS

Debtors 8 946,096 1,037,990

Cash at bank and in hand 197,484 461,155

1,143,580 1,499,145

CREDITORS: amount falling due within


one year 9a (556,705) (570,771)

NET CURRENT ASSETS 586,875 928,374

TOTAL ASSETS LESS CURRENT

LIABILITIES 886,085 1,102,561

CREDITORS: amount falling due 9b - (407,313)


after one year

NET ASSETS 886,085 695,248

CAPITAL AND RESERVES

Called up share capital 10 18,967 16,560

Share premium 11 1,145,207 765,174

Equity element of the convertible loan 13 - 31,661


Profit and Loss account 12 (278,089) (118,146)

22
Compass BPO Limited

TOTAL SHAREHOLDERS' FUNDS 14 886,085 695,248

These accounts are prepared in accordance with the special provisions of Part 15 of the Companies Act 2006 relating
to small entities.

The financial statements were approved and authorised for issue by the Board on
and were signed below on its behalf by:-

D Patel M Kedia
Director Director

The attached notes form an integral part of these accounts.

23
Compass BPO Limited

COMPANY BALANCE SHEET

AS AT 31 MARCH 2010

2010 2009
Notes £ £ £ £
FIXED ASSETS
Tangible assets 6 1,507 1,573
Investments 7 268,548 268,548
------------------ ------------------
270,055 270,121
CURRENT ASSETS
Debtors 8 698,620 717,945
Cash at bank and in hand 144,669 313,396
-------------------- --------------------
843,289 1,031,341
CREDITORS: amounts falling due within
one year 9a (185,960) (119,960)
-------------------- --------------------
NET CURRENT ASSETS 657,329 911,381
------------------ ------------------
TOTAL ASSETS LESS CURRENT
LIABILITIES 927,384 1,181,502

CREDITORS: amounts falling due greater than


one year 9b - (407,313)
------------------- -------------------
NET ASSETS £927,384 £774,189
========= =========
CAPITAL AND RESERVES
Called up share capital 10 18,967 16,560
Share premium 11 1,145,206 765,173
Other reserve 13 - 31,661
Profit and loss account 12 (236,789) (39,205)
-------------------- ------------------
TOTAL SHAREHOLDERS’ FUNDS 14 £927,384 £774,189
========= =========

These accounts are prepared in accordance with the special provisions of Part 15 of the Companies Act 2006 relating
to small entities.

The financial statements were approved and authorised for issue by the Board on
and were signed below on its behalf by:-

D Patel M Kedia
Director Director

The attached notes form an integral part of these accounts.

24
Compass BPO Limited

STATEMENT OF ACCOUNTING POLICIES

FOR THE YEAR ENDED 31 MARCH 2010

The financial statements have been prepared in accordance with applicable accounting standards. The particular
accounting policies adopted are described below:

(a) Basis of accounting

The accounts have been prepared under the historical cost convention and in accordance with the Financial
Reporting Standard for Smaller Entities (effective April 2008).

(b) Basis of consolidation

The group financial statements consolidate the accounts of Compass BPO Limited and its subsidiary
undertaking made up to 31 March each year; the group profit and loss account includes the results of the
subsidiary undertaking for the period from the date of their incorporation or acquisition and up to the date of
disposal.

No profit and loss account is presented for Compass BPO Limited as provided by S408 of the Companies
Act 2006. The holding company’s loss for the year was £197,584 (2009: profit £21,981).

(c) Turnover

Turnover arises from the principal activity of the company.

(d) Foreign Currency

Company

Assets and liabilities on foreign currencies are translated at the rates of exchange ruling at the balance sheet
date. Transactions on foreign currencies are recorded at the rate of exchange ruling at the date of the
transaction. All differences are taken to the profit and loss account.

Group

The balance sheets of overseas subsidiary undertakings are translated at the rate of exchange ruling at the
balance sheet date and the profit and loss accounts are translated at the average rates for the year. The
exchange differences arising on the re-translation of opening net assets is taken directly to reserves.

(e) Deferred Taxation

Deferred taxation is provided on the full provision method to take account of timing differences between the
treatment of certain items for accounts purposes and their treatment for tax purposes. Tax deferred or
accelerated is accounted for in respect of all timing differences, where material.

(f) Hire Purchase Agreements

Assets acquired under hire purchase contracts are capitalised in the balance sheet and are depreciated over
their expected useful lives. The interest element of the instalments is charged to the profit and loss account
over the period of the contract.

25
Compass BPO Limited

STATEMENT OF ACCOUNTING POLICIES (continued)

FOR THE YEAR ENDED 31 MARCH 2010

(g) Operating Lease Agreements

(h) Pension Costs

Contributions to defined contribution pension schemes are charged to the profit and loss account in the
period in which they become payable. Compass Business Process Outsourcing Pvt Limited operates a
defined benefit pension scheme, known as Compass Development (India) Pvt Ltd. Employees Group
Gratuity Assurance Scheme, covering all eligible employees. The deficit on the pension scheme has
been provided for in the financial statements.

(i) Tangible Fixed Assets and Depreciation

Depreciation is calculated to write off the cost of the assets, net of disposal proceeds, over their
anticipated useful lives at the following rates:-

Computer Equipment - 331/3% straight line


Equipment - 331/3% straight line
Motor Vehicles - 331/3% straight line

(j) Investments

Fixed asset investments are shown at the lower of cost or directors’ valuation.

(k) Taxation

Corporation tax is provided for at the current rates.

(l) Cash Flow Statement

The directors have taken advantage of the exemptions available in Financial Reporting Standard No.1
and have chosen not to prepare a cash flow statement on the grounds that the group is small.

(m) Compound Financial Instruments

Compound financial instruments comprise of both liability and equity components. At issue date, the
fair value of the liability component is estimated by discounting its future cash flows at an interest rate
that would have been payable on a similar debt instrument without any equity conversion option. The
liability component is accounted for as a financial liability.

The difference between the net issue proceeds and the liability component, at the time of issue, is the
residual of equity component, which is accounted for as an equity instrument.

The interest expense on the liability component is calculated by applying the effective interest rate for
the liability component of the instrument. The difference between any repayments and the interest
expense is deducted from the carrying amount of the liability.

26
Compass BPO Limited

NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2010


1. TURNOVER

Turnover is attributable to the principal activity of the group, net of Value Added Tax.

A geographical analysis of turnover is as follows:


2010 2009
Group Group
£ £

United Kingdom 2,098,751 2,487,680


Rest of the world 2,271,611 2,569,851
----------------------- -----------------------
£4,370,362 £5,057,531
========== ==========

2. OPERATING LOSS
2010 2009
Group Group
£ £
Operating loss is stated after charging:
Depreciation 136,447 113,137
Auditors remuneration - audit 8,500 7,900
- other services 12,476 -
======== ========

3. INTEREST PAYABLE
2010 2009
Group Group
£ £

10% convertible loan stock interest 47,725 45,257


Guarantee Commission 4,896 5,500
Bank loan interest 3,779 3,478
Hire purchase interest - 16
---------------- ----------------
£56,400 £54,251
======== ========

Interest on the 10% convertible loan stock has been charged at a rate of 12.5%, the estimated rate of interest
that would have applied on a pure loan in the absence of the convertibility feature.

4. EMPLOYEES
2010 2009
Group Group
£ £
Staff costs (including directors) during the year amounted to:
Wages and salaries 2,214,508 2,343,897
Social security costs 2,227 2,822
---------------------- ----------------------
£2,216,735 £2,346,719
========== ==========

27
Compass BPO Limited

No. No.

The average weekly number of Employees during the year was: 363 402
==== ====

DIRECTORS’ REMUNERATION 2010 2009


Group Group
£ £

Directors’ fees (paid through subsidiary undertakings) £411,009 £482,250


======== ========

Pension contributions are made to a defined contribution scheme. All assets therein are independent of the
group.

5. TAX ON ORDINARY ACTIVITIES

(a) Analysis of tax charge for the year: 2010 2009


£ £

UK corporation tax at current rates (23,896) 13,596


Overseas taxation 28,986 33,776
Under/(over) provision of UK corporation tax in previous year (300) 4,246
-------------- --------------
Total current tax (note b) 4,790 51,618

Overseas deferred taxation (3,265) (6,393)


Overseas fringe benefit tax - 8,542
--------------- ---------------
Total tax charge for the year £1,525 £53,767
======= =======

(b) Factors affecting tax charge for year:

The corporation tax assessed for the year is different from the small companies’ rate of corporation tax in
the UK of 28% (2009: 21%). The differences are explained below:

2010 2009
£ £

Profit on ordinary activities before tax £(169,923) £419,029


========= =========
Profit on ordinary activities before tax multiplied by the small
rate of corporation tax in the UK of 28% (2009: 21%) (47,578) 87,996

28
Compass BPO Limited

5. TAX ON ORDINARY ACTIVITIES (continued) 2010 2009


£ £
Effects of:

Amounts not subject to UK corporation tax (14,520) (79,634)


Expenses not deducible for tax purposes 21,531 5,049
Capital allowances for the year in excess of depreciation (327) 206
Effect of change in tax rates 8,232 (21)
Losses carried forward 17,134 -
Other timing differences (8,368) -
-------------- --------------
Current tax charge for the year £(23,896) £13,596
======= =======

The company is carrying forward tax losses of £61,193 to offset against future profits.

6. TANGIBLE FIXED ASSETS


Group Company
Fixtures
Fittings
Computer and Office Motor Group
Equipment Equipment Vehicles Total Equipment Total
£ £ £ £ £ £
COST
1 April 2009 687,555 223,395 70,707 981,657 58,099 58,099
Additions 13,317 243,094 - 256,411 2,051 2,051
Forex adjustment 51,393 29,992 1,580 82,965 - -
Disposals (267,150) (175,544) (34,679) (477,373) (57,914) (57,914)
------------------- ------------------ ---------------- ------------------ ------------------- -----------------
At 31 March 2010 485,115 320,937 37,608 843,660 2,236 2,236
------------------- ------------------ ---------------- ------------------ ------------------ -----------------
DEPRECIATION
1 April 2009 573,017 191,728 42,725 807,470 56,526 56,526
Charge for Year 65,838 54,626 15,983 136,447 1,749 1,749
Forex adjustment 48,886 7,013 2,339 58,238 - -
Disposals (256,669) (169,427) (31,609) (457,705) (57,546) (57,546)
------------------- ------------------ ---------------- ------------------ ------------------- -------------------
At 31 March 2010 431,072 83,940 29,438 544,450 729 729
------------------- ------------------ ---------------- ------------------ ------------------- -------------------
NET BOOK VALUE
31 March 2010 54,043 236,997 8,170 299,210 1,507 1,507
========= ========= ======= ========= ======= =======
31 March 2009 114,538 31,667 27,982 174,187 1,573 1,573
========= ========= ======= ========= ======= =======

29
Compass BPO Limited

7. INVESTMENT IN SUBSIDIARY UNDERTAKINGS


Company
COST £

As at 1 April 2009 and 31 March 2010 £268,548


=========

The company's investments are comprised of the following:

Company of Class of shares % Cost of


Incorporation Held held Investment
Compass Business Process Outsourcing
Private Limited India Ordinary 100% 101,188

Compass Business Process Outsourcing


Private Limited India 10% Preference 100% 153,640

Compass BPO Inc US Ordinary 100% 65

Compass BPO FZE UAE Ordinary 100% 13,665

The 10% Preference Shares are redeemable at par any time between 5 and 10 years from 27 March 2000, the
date of allotment. However there is a put and call option anytime after 36 months from the date of allotment.

The principal activities of Compass Business Process Outsourcing Pvt. Ltd and Compass BPO Inc. are the
provision of personnel and related consultancy services from Asia.

The company holds 100% of the issued share capital of Compass BPO FZE, consisting of 1 share acquired
for AED100,000.

8. DEBTORS
2010 2009
Group Company Group Company
£ £ £ £

Trade debtors 471,776 160,165 623,732 165,743


Other debtors 321,934 15,818 275,273 15,232
Due from subsidiary undertakings - 488,611 - 524,374
Prepayments and accrued income 128,490 10,130 138,985 12,596
Corporation tax recoverable 23,896 23,896 - -
--------------------- ------------------- --------------------- -------------------
£946,096 £698,620 £1,037,990 £717,945
========= ======== ========= ========

30
Compass BPO Limited

9a. CREDITORS: Amounts falling due within one year:


2010 2009
Group Company Group Company
£ £ £ £

Trade creditors 214,450 97,831 180,458 12,957


Due to subsidiary undertakings - 19,665 - 14,437
Other taxation and social security 60,110 41,038 87,031 59,702
Other creditors 83,206 - 137,855 -
Bank loan - - 1,016 -
Corporation tax 54,230 - 67,608 13,596
Accruals 144,709 27,426 96,803 19,268
------------------- ------------------ ------------------- ------------------
£556,705 £185,960 £570,771 £119,960
========= ======== ========= =========

9b. CREDITORS: Amounts falling due after one year:


2010 2009
Group Company Group Company
£ £ £ £

10% Convertible Loan Stock - - 407,313 407,313


------------------- ------------------- ------------------- -------------------
- - £407,313 £407,313
========= ========= ========= =========
Repayable as follows:
Between one and two years - - 407,313 407,313
Between two and five years - - - -
------------------- ------------------- ------------------- -------------------
- - £407,313 £407,313
========= ========= ======== =========

On 27 February 2007 the Group issued convertible loan notes, redeemable by 1 April 2010, carrying a
coupon rate of 10% interest payable on redemption or conversion of the relevant note. At any time after 1
April 2009, the holders have the option to convert the face value of their holdings to shares at a price of
£53.75 for one ordinary £0.25 share.

On 9 March 2010, the convertible loan notes were converted into 6,511 ordinary shares at a price of £53.75
for each £0.25 share.

31
Compass BPO Limited

10. SHARE CAPITAL

Group and Company 2010 2009


£ £
Allotted, issued and fully paid:
75,866 (2009: 66,238) Ordinary shares of £0.25 each £18,967 £16,560
======== ========
On 9 March 2010, the 10% convertible loan notes of £350,000 were converted into ordinary shares at 1
Ordinary share per £53.75 of nominal loan value. This resulted in the issue of 6,511 new ordinary shares.

Also on the same date share options were exercised resulting in the issue of 3,117 ordinary shares of £65.91
per £0.25 share.

During the year the company had the following share options in issue:

At 1 April Number of Exercise


2009 shares exercised/ Date of At 31 March price
£ cancelled Grant 2010 £ Exercise dates

7,750 (7,750) 27/2/07 - 48.73 27/2/07 – 27/2/2011


3,531 (3,531) 15/1/07 - 45.44 15/1/07 – 15/1/2011

The share options were granted to 7 employees and one consultant of the group. There are no performance
conditions attached to any of the options.

On 9 March 2010, share options were exercised resulting in the issue of 3,117 ordinary £0.25 shares at
£65.91 per share.

11. SHARE PREMIUM


2010 2009
Group and Company Group Group
£ £

Share premium brought forward at 1 April 2009 765,173 760,157


Premium on issue of shares 348,372 5,016
Transfer from other reserves on conversion of loan notes 31,661 -
---------------------- --------------------
Share premium at 31 March 2010 £1,145,206 £765,173
========== =========

12. PROFIT AND LOSS ACCOUNT


2010 2009
Group Company Group Company
£ £ £ £

Balance brought forward at 1 April 2009 (118,146) (39,205) (483,474) (61,186)


(Loss)/profit for the financial year (171,448) (197,584) 365,262 21,981
Exchange gain on currency translation 11,505 - 66 -
------------------- ------------------- ------------------- -------------------
Carried forward at 31 March 2010 £(278,089) £(236,789) £(118,146) £(39,205)
========= ========= ========= =========

32
Compass BPO Limited

13. OTHER RESERVES


Group and Company
£
Equity component of 10% convertible loan notes

At 1 April 2009 31,661


Transferred to share premium on conversion of the loan notes (31,661)
-----------------
At 31 March 2010 £-
========
The loan notes are more fully described in note 9b.

14. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS

2010 2009
Group Company Group Company
£ £ £ £

New share capital (including share premium) 350,779 350,779 5,044 5,044
(Loss)/Profit for the financial year (171,448) (197,584) 365,262 21,981
Exchange gain on currency translation 11,505 - 66 -
Opening shareholders’ funds 695,248 774,189 324,876 747,164
------------------- ------------------- ------------------- -------------------
Closing shareholders' funds £886,084 £927,384 £695,248 £774,189
========= ========= ========= =========

15. PENSION COMMITMENTS

Compass Business Process Outsourcing Pvt Ltd, operates a defined benefit pension scheme, for eligible staff.
It is funded by the payment of contributions to a separately administered trust fund. The assets of the scheme
are held separately from those of the group.

The Group adopts the valuation and disclosure requirements of FRS 17 “Retirement Benefits”, as amended by
the FRSSE 2007. The Group includes the assets and liabilities of the pension fund in the Group’s balance sheet,
with a subsequent effect on reserves.

The pension contributions are determined with the advice of a qualified actuary on the basis of annual
valuations using the method. The most recent valuation was conducted as at 31March 2010. The principal
assumptions used by the actuaries were that the return on assets would be 9% per annum and salaries would
increase by 4% per annum. The market value of the assets at 31 March 2010 was £33,639.

The pension charge for the year was £17,017 (2009: £16,219). Contributions to the scheme are expected to
remain at this level in the future.

The key assumptions were as follows:

Main assumptions % per annum


2010 2009

Rate of return on investments 9% 9%


Increase in earnings 4% 4%
Discount rate 8% 8%

33
Compass BPO Limited

15. PENSION COMMITMENTS (continued) Value at Value at


31 March 2010 31 March 2009
£’000s £’000s

Market value of assets 34 25


Present value of scheme liabilities (53) (42)
--------- ---------
Net pension scheme liability (19) (17)
==== ====

The movement in the deficit during the year arose as follows: 2010
£’000s

Deficit as at 1 April 2009 (17)


Movement in present value of scheme liabilities (17)
Interest earnt 2
Settlements (12)
Employer contributions 17
Exchange gains 8
----------
Deficit as at 31 March 2010 (19)
=====

16. OPERATING LEASE COMMITMENTS

At 31 March 2010 the company had the following annual commitments under non-cancellable operating
leases.

2010 2009
Group Group
Land and Land and
Buildings Buildings
£ £
Operating leases which expire:
- within one year 64,652 -
- within one to two years - 267,771
- within two to five years 12,600 -
========= =========

17.RELATED PARTY TRANSACTIONS

The company has taken advantage of the exemption available not to disclose transactions with its 100%
owned subsidiary undertakings.

18. CONTINGENT LIABILITIES

The company is a joint guarantor in respect of loan and overdraft facilities granted to Compass Business
Process Outsourcing Pvt. Limited, the company’s wholly owned subsidiary. The loan and overdraft facilities
provided by The IDBI Bank (formerly known as The United Western Bank Limited) amounted to £36,836.
At the year end, £9,388 was drawn.

34
Aditya Birla Minacs Philippines Inc.

BALANCE SHEET
Mar-31
2010(PHP) 2010(INR) 2009(PHP) 2009(INR)
ASSETS
Current Assets
Cash 4,294,486 4,299,248 13,055,293 13,703,601
Receivables (Note 4) 33,738,747 33,776,160 22,513,318 26,612,422
Prepaid expenses and other current assets 5,575,511 5,581,694 3,850,684 1,060,780
(Notes 5)
Total Current Assets 43,608,744 43,657,101 39,419,295 41,376,802
Noncurrent Assets
Property and equipment (Notes 6 and 7) 40,140,748 40,185,260 61,624,662 64,684,856
Other noncurrent assets (Note 14) 3,280,358 3,283,996 3,394,393 3,562,954
Total Noncurrent Assets 43,421,106 43,469,255 65,019,055 68,247,810
TOTAL ASSETS 87,029,850 87,126,357 104,438,350 109,624,612

LIABILITIES AND CAPITAL


DEFICIENCY
Current Liabilities
Accounts payable and accrued expenses 36,529,566 36,570,073 39,319,089 41,271,620
(Note 7)
Noncurrent Liabilities
Loans from parent company (Note 11) 96,900,408 97,007,860 89,343,650 93,780,330
Accrued retirement benefits (Note 12) 200,500 200,722 261,000 273,961
Total Noncurrent Liabilities 97,100,908 97,208,583 89,604,650 94,054,291
Total Liabilities 133,630,474 133,778,656 128,923,739 135,325,911
Capital Deficiency
Capital stock - 100 par value
Authorized - 1,000,000 shares
Issued and outstanding - 490,000 shares 49,000,000 49,054,336 49,000,000 51,433,271
Deposits for future stock subscription 47,923,213 47,976,355 47,923,213 50,303,013
(Note 15)
Deficit -143,523,837 -143,682,990 -121,408,602 -127,437,583
Total Capital Deficiency -46,600,624 -46,652,299 -24,485,389 -25,701,299
TOTAL LIABILITIES AND CAPITAL 87,029,850 87,126,357 104,438,350 109,624,612
DEFICIENCY

See accompanying Notes to Financial Statements.

35
Aditya Birla Minacs Philippines Inc.

STATEMENTS OF INCOME
Years Ended March 31
2010(PHP) 2010(INR) 2009(PHP) 2009(INR)
SERVICE INCOME (Note 11) 145,577,147 147,781,703 140,439,885 141,796,611

COST OF SERVICES (Note 8) 153,491,031


151,201,305 163,768,713 165,350,809
GROSS LOSS 5,624,158 5,709,328 23,328,828 23,554,197
General and administrative expenses (Note 19,326,527 19,619,199 29,111,554 29,392,788
9)
Foreign exchange loss (gain) - net -3,506,651 -3,559,754 6,824,094 6,890,018

Interest and bank charges (Note 11) 1,848,541 1,876,534 3,424,397 3,457,479

Interest and other income -1,180,717 -1,198,597 -74,133 -74,849

LOSS BEFORE INCOME TAX 22,111,858 22,446,710 62,614,740 63,219,633


PROVISION FOR INCOME TAX - 3,377 3,428 4,491 4,534
Current (Note 13)
NET LOSS 22,115,235 22,450,138 62,619,231 63,224,167

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN CAPITAL DEFICIENCY


FOR THE YEARS ENDED MARCH 31, 2010 AND 2009
Deposits for
Future Stock
Subscription
Capital Stock (Note 15) Deficit Total

BALANCES AT MARCH 31, 2008 =49,000,000


P =47,923,213
P (P
=58,789,371) =38,133,842
P
Net loss for the year – – (62,619,231) (62,619,231)

BALANCES AT MARCH 31, 2009 49,000,000 47,923,213 (121,408,602) (24,485,389)


Net loss for the year – – (22,115,235) (22,115,235)

BALANCES AT MARCH 31, 2010 =49,000,000


P =47,923,213 (P
P =143,523,837) (P
=46,600,624)

See accompanying Notes to Financial Statements.

36
Aditya Birla Minacs Philippines Inc.

STATEMENT OF CAHS FLOWS


Years Ended March 31
2010(PHP) 2010(INR) 2009(PHP) 2009(INR)
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before income tax -22,111,858 -22,446,710 -62,614,740 -63219633
Adjustments for:
Depreciation (Note 6) 29,581,074 29,613,876 28,304,030 10826830
Unrealized foreign exchange loss (gain) - net -3,796,197 -3,800,407 11,527,566 28577462
Interest expense (Note 11) 1,764,308 1,766,264 3,337,380 3369621
Movement in accrued retirement benefits (Note 12) -60,500 -61,416 142,200 149261
Interest income -32,792 -33,289 -74,133 -74849
Operating income (loss) before working capital 5,344,035 5,038,319 -19,377,697
changes -20520568
Decrease (increase) in:
Receivables -13,001,452 -13,015,869 -1,697,834 -1782146
Prepaid expenses and other current assets -1,724,827 -1,726,740 203,425 213527
Increase (decrease) in accounts payable and
accrued expenses -6,233,507 -6,240,419 21,624,306 22698139
Net cash flows from (used in) operations -15,615,751 -15,944,709 752,200 758213
Income taxes paid -3,377 -3,428 -4,491 -4534
Net cash flows from (used in) operating activities -15,619,128 -15,948,137 747,709 753678
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (Notes 6 and 7) -4,599,460 -4,604,560 -18,502,797 -19421620
Decrease (increase) in other noncurrent assets 114,035 114,161 -796,735 -836300
Interest received 32,792 33,289 74,133 74849
Net cash flows used in investing activities -4,452,633 -4,457,110 -19,225,399 -20183071
CASH FLOWS FROM FINANCING ACTIVITY
Loans from parent company 12,429,562 12,443,345 27,284,331 -20183071
EFFECT OF EXCHANGE RATE CHANGES IN -1,118,608 -1,135,548 -853,197
CASH -861439
NET INCREASE (DECREASE) IN CASH -8,760,807 -9,097,450 7,953,444 8348401
CASH AT BEGINNING OF THE YEAR 13,055,293 13,703,601 5,101,849 5355200
CASH AT END OF THE YEAR 4,294,486 4,606,150 13,055,293 13703601

See accompanying Notes to Financial Statements.

37
Aditya Birla Minacs Philippines Inc.

NOTES TO FINANCIAL STATEMENTS

1. Corporate Information

Aditya Birla Minacs Philippines, Inc. (the Company) was registered with the Philippine Securities and
Exchange Commission (SEC) on November 3, 2006 with the primary purpose of carrying on and
undertaking the business of setting up and operating a center for sales and customer interaction
services and business process outsourcing services; providing system integration and software
development services which are ancillary thereto; and carrying on the business in computer hardware
and software related matters and fields, including the design, development, manufacture, production,
marketing, selling, leasing and integration of computer hardware and software systems, the provision
of customized software development consultancy and services, and the import and export of computer
hardware technology. The Company started its commercial operations on March 5, 2007.

The Company is a wholly owned subsidiary of Aditya Birla Minacs Worldwide Ltd. (ABMW). The
ultimate parent company is Aditya Birla Nuvo Limited (ABNL). ABMW and ABNL are incorporated
in India.

The Company’s principal place of business is at 1800 Eastwood Ave. Bldg., 10/F Eastwood City
Cyberpark, 188 E. Rodriguez, Jr. Ave., Bagumbayan, Quezon City. The Company has 378 and 185
employees as of March 31, 2010 and 2009, respectively.

The financial statements were approved for issue by the Board of Directors (BOD) on
April 21, 2010.

2. Registration with the Philippine Economic Zone Authority (PEZA)

The Company is registered with PEZA as an Ecozone Information Technology (IT) Enterprise,
engaged in providing customer contact center services at Eastwood City Cyberpark.

The Company is entitled to all incentives granted to pioneer projects under Republic Act (RA)
No. 7916, as amended, and the PEZA IT Guidelines, subject to certain terms and conditions, including,
among others, the following:

a. The Company’s project shall be entitled to six (6) years income tax holiday (ITH) incentive, as
amended in accordance with the 2006 Investment Priorities Plan. The project’s entitlement to the
said incentive shall be subject to validation by PEZA based on the Company’s audited financial
statements covering the first year of its operations showing the investment cost per seat for its
project is equivalent to at least United States (US) $2,500, inclusive of the cost of equipment, office
furniture and fixtures, building improvements and renovations, fixed assets, except land, building
and working capital, and complies with the minimum US$2.5 million investment required for
pioneer status.

In case the Company does not attain the said investment cost per seat, the Company’s project shall
be granted 5% gross income incentive and other incentives under RA 7916, as amended, instead of
the ITH incentive. On the other hand, if the Company complies with the minimum

US$2,500 investment cost per seat but fails to comply with the minimum US$2.5 million
investment required for pioneer status, the Company shall instead be entitled to only four (4) years
ITH incentive.

Entitlement of the project to the 5th and 6th years of ITH from the date of start of commercial
operations shall be subject to the issuance by the PEZA Director General of a written validation of
the project cost.

38
Aditya Birla Minacs Philippines Inc.

b. The Company’s operations shall be limited to its PEZA-approved projects. Any expansion of this
project or other additional activities to be undertaken by the Company shall require prior PEZA
clearance.

The Company is in a tax loss position for the years ended March 31, 2010 and 2009 and as such, it did
not benefit from the ITH.

3. Summary of Significant Accounting and Financial Reporting Policies

The principal accounting policies adopted in preparing the financial statements of the Company are as
follows:

Basis of Preparation and Statement of Compliance


The financial statements of the Company have been prepared in accordance with accounting principles
generally accepted in the Philippines applicable for non-publicly accountable entities (NPAE). The
Company qualifies as an NPAE under Philippine Accounting Standard 101, Financial Reporting
Standards for Non-Publicly Accountable Entities, and as permitted under the standard, prepared its
financial statements on the basis of Statements of Financial Accounting Standards/International
Accounting Standards effective as of December 31, 2004.

The accompanying financial statements have been prepared under the historical cost convention and
are presented in Philippine Peso (Peso). Amounts are rounded to the nearest Peso unless otherwise
indicated.

Future Changes in Accounting Policy


The Philippine Financial Reporting Standard for Small and Medium-sized entities (PFRS for SMEs)
has been approved for adoption by the Philippine Financial Reporting Standards Council on October
13, 2009 and by the SEC, on December 3, 2009 and has not been early adopted by the Company. The
PFRS for SMEs is effective for annual periods beginning on or after January 1, 2010, and is required to
be used by entities that meet the definition of an SME, which include, among others, an entity with
total assets of between P
=3.0 million and P
=350.0 million or total liabilities of between P
=3.0 million and
=250.0 million.
P

The PFRS for SME is a self-contained standard that is tailored for the needs and capabilities of smaller
businesses. Many of the principles in full PFRSs for recognizing and measuring assets, liabilities,
income and expenses have been simplified, topics not relevant to SMEs have been omitted, and the
number of required disclosures has been significantly reduced.

The Company, which currently follows the accounting principles generally accepted in the Philippines
applicable to NPAE, will adopt the PFRS for SMEs in its fiscal year 2011 financial statements. The
Company is currently assessing the impact on its financial statements when the PFRS for SME is
adopted in fiscal year 2011.

Cash
Cash includes cash on hand and in banks.

Receivables
Trade receivables are recognized and carried at original invoice amount, less any allowance for
uncollectible accounts. An estimate for doubtful accounts is made when there is objective evidence that
the Company will not be able to collect the debts.

Other receivables are recognized at face amount, less any allowance for doubtful accounts.

39
Aditya Birla Minacs Philippines Inc.

Prepayments
Prepaid expenses are amounts paid in advance for goods and services that are yet to be delivered and
from which future economic benefits are expected to flow to the Company with its normal operating
cycle or within 12 months from the balance sheet date.

Property and Equipment


Property and equipment are carried at cost, less accumulated depreciation and any impairment in
value.

The initial cost of property and equipment consists of its purchase price, including import duties, taxes
and any directly attributable cost of bringing the asset to its working condition and location for its
intended use. Expenditures incurred after the property and equipment have been put into operation,
such as repairs and maintenance, are normally charged to income in the period in which the costs are
incurred. In situations where it can be clearly demonstrated that the expenditures have resulted in an
increase in the future economic benefits expected to be obtained from the use of an item of property and
equipment beyond its originally assessed standard of performance, the expenditures are capitalized as
additional cost of property and equipment.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets as
follows:

Category Years
Computer equipment 3
Furniture and fixtures 3-5
Office and communication equipment 5

Leasehold improvements are amortized over the life of the assets (average of two years) or the term of
the lease, whichever is shorter. Recognition of depreciation commences when the asset is ready for its
intended use.

The estimated useful lives of the assets and depreciation method used are reviewed periodically to
ensure that these are consistent with the expected pattern of economic benefits from items of property
and equipment.

When assets are sold or retired, their cost, accumulated depreciation and any impairment in value are
eliminated from the accounts. Any gain or loss resulting from their disposal is recognized in the
statement of income.

Impairment of Assets
The carrying values of property and equipment are reviewed for impairment when events or changes in
circumstances indicate that the carrying values may not be recoverable. If any such indication exists
and where the carrying values exceed the estimated recoverable amounts, the assets or cash-generating
units are written down to their recoverable amount. The recoverable amount of the asset is the greater
of net selling price and value-in-use. In assessing value-in-use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset. For an asset that does not generate
largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to
which the asset belongs. Any impairment loss is recognized in the statement of income.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognized, the previously recognized
impairment loss is reversed. Any subsequent reversal of an impairment loss is recognized in the
statement of income, to the extent that the carrying value of the asset does not exceed its amortized cost
at the reversal date.

40
Aditya Birla Minacs Philippines Inc.

Construction in progress represents assets under construction and is stated at cost, including cost of
construction and other direct costs. Construction in progress is not depreciated until the relevant assets
are completed and ready for their intended operational use.

Liabilities
Liabilities are recognized when the Company has a present obligation from past events, the settlement
of which is expected to result in an outflow of economic benefits from the Company and the amount
can be reliably measured. Liabilities expected to be settled in the Company’s normal operating cycle or
within 12 months from the balance sheet date are classified as current liabilities. Otherwise, these are
classified as noncurrent liabilities.

Capital Stock
Capital stock is carried at par value of the shares issued. When the shares are sold at a premium, the
difference between the proceeds and the par value is credited to additional paid-in capital. When the
shares are issued for a consideration other than cash, the proceeds are measured by the fair value of the
consideration received. In case the shares are issued to extinguish or settle the liability of the
Company, the shares shall be measured either at the fair value of the shares issued or fair value of the
liability settled, whichever is more readily determinable.

Deposits for Future Stock Subscription


Contributions from stockholders that are intended as payment for future capital stock subscriptions are
recognized as deposits for future stock subscription. The deposits are reduced and the corresponding
shares of stock are issued when the regulatory requirements have been complied with.

Retained Earnings (Deficit)


Retained earnings (deficit) represent the cumulative balance of the net income or loss, net of any
dividend declaration.

Revenue
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
Company and the amount of revenue can be reliably measured. Revenue is measured at the fair value
of the consideration received or receivable. The following specific recognition criteria must also be
met before revenue is recognized:

Service income
Service income is recognized as related services are performed based on agreements with the
customers.

Interest income
Interest income is recognized as the interest accrues.

Leases
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are
classified as operating leases. Operating lease expense is recognized in the statement of income on a
straight-line basis over the lease term.

Retirement Benefits Cost


The Company provides for estimated retirement benefits to be paid under Republic Act (RA) No. 7641
to all its permanent employees. The cost of providing benefits under the defined benefit retirement
plan is determined using the projected unit credit actuarial valuation method. This method reflects
services rendered by employees to the date of valuation and incorporates assumptions concerning
employees’ projected salaries. Retirement benefits cost includes current service costs plus amortization
of past service costs, experience adjustments and changes in actuarial assumptions over the expected
remaining working lives of qualified employees, and effect of any curtailment or settlement.
41
Aditya Birla Minacs Philippines Inc.

Actuarial gains and losses are recognized as income or expense if the cumulative unrecognized
actuarial gains and losses at the end of the previous reporting period exceeded the greater of 10% of the
present value of defined benefit obligation and 10% of the fair value of the plan assets at that date. The
gains and losses are recognized over the expected average remaining working life of the employees
participating in the plan.

The past service cost is recognized as an expense on a straight-line basis over the average period until
the benefits become vested. If the benefits are already vested immediately following the introduction of,
or changes to, a pension plan, past service cost is recognized immediately.

The defined benefit liability is the aggregate of the present value of the defined benefit obligation and
actuarial gains and losses not recognized, reduced by past service cost not yet recognized and the fair
value of plan assets out of which the obligations are to be settled directly.

Foreign Currency Transactions


Transactions denominated in foreign currencies are recorded in peso using the exchange rate
prevailing at the date of the transaction. Outstanding monetary assets and liabilities denominated in
foreign currencies are translated to peso using the closing exchange rate at the balance sheet date.
Foreign exchange gains or losses are credited to or charged against current operations.

Income Taxes
Current income tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to
compute the amount are those that have been enacted or substantively enacted at the balance sheet date.

Deferred income tax


Deferred income tax is provided, using the balance sheet liability method, on all temporary differences
at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes.

Deferred income tax liabilities are recognized for all taxable temporary differences. Deferred income
tax assets are recognized for all deductible temporary differences and unused net operating loss
carryover (NOLCO), to the extent that it is probable that sufficient future taxable profits will be
available against which the deductible temporary differences and carryforward benefits of unused
NOLCO can be utilized.

The carrying amount of deferred income tax assets (DTA) is reviewed at each balance sheet date and
reduced to the extent of the sufficient future taxable profits that will be available to allow all or part of
the deferred income tax asset to be utilized. Unrecognized income deferred tax assets are reassessed at
each balance sheet date and are recognized to the extent that it has become probable that future taxable
profits will allow the deferred income tax assets to be recognized.

Deferred income tax assets and deferred income tax liabilities are measured at the tax rates that are
expected to apply to the period when the asset is realized or the liability is settled, based on tax rates
and tax laws that have been enacted or substantively enacted at the balance sheet date.

Deferred income tax assets and deferred income tax liabilities are offset if a legally enforceable right
exists to offset current tax assets against current tax liabilities and the deferred taxes relate to the same
taxable entity and the same taxation authority.

Borrowing Costs
Borrowing costs are generally expensed as incurred.

Provisions and Contingencies


42
Aditya Birla Minacs Philippines Inc.

Provisions are recognized when: (1) the Company has a present obligation (legal or constructive) as a
result of a past event; (2) it is probable that an outflow of resources embodying economic benefits will
be required to settle the obligation; and (3) a reliable estimate of the amount of the obligation can be
made.

Contingent liabilities are not recognized in the financial statements. They are disclosed in the notes to
financial statements unless the possibility of an outflow of resources embodying economic benefits is
remote. A contingent asset is not recognized in the financial statements but is disclosed in the notes to
the financial statements when an inflow of economic benefits is probable.

Events after the Balance Sheet Date


Post year-end events that provide additional information about the Company’s position at the balance
sheet date (adjusting events) are reflected in the financial statements. Post year-end events that are not
adjusting events are disclosed in the notes to financial statements when material.

4. Receivables

2010(PHP) 2010(INR) 2009(PHP) 2009(INR)


Trade 33,156,570 33,193,337 22,181,591
23,283,098
Advances to employees and others 582,177 582,823 331,727
3,329,324
33,738,747 33,776,160 22,513,318 3,329,324

5. Prepaid Expenses and Other Current Assets

2010(PHP) 2010(INR) 2009(PHP) 2009(INR)

Prepaid insurance 3,395,572 3,399,337 25,171 26,421

Deposits 821,351 822,262 827,797 868,904

Rental and other prepayments (Note 14) 1,358,588 1,360,095 2,997,716 3,146,578
5,575,511 5,581,694 3,850,684 4,041,904

6. Property and Equipment

2010

Computer Furniture Office and Leasehold Constructio Total 2010


and Commu n
nication
Equipment Fixtures Equipment Improvement In Progress (PHP)
s
Cost
Balance at
beginning of year =38613107
P = 26606446
P =15468204
P =15803863
P =10836115
P =107327735
P
Additions 3821271 301100 - - 3974789 8097160
Reclassification 631621 - - 10204494 (10836115) -
End of year 43065999 26907546 15468204 26008357 3974789 115424895

43
Aditya Birla Minacs Philippines Inc.

Accumulated
Depreciation
Beginning of year 20593516 8794710 4113891 12200956 – 45703073
Depreciation 13107172 5145169 3114283 8214450 – 29581074
End of year 33700688 13939879 7228174 20415406 - 75284147
Net Book Values =
P
=9365311
P =12967667
P = 8240030
P =5592951
P =3974789
P 40140748

2009
Computer Furniture Office and Leasehold Construct Total
Equipment and Communica Improveme ion in
Fixtures tion nts Progress
Equipment
Cost
Beginning of year =35433750
P =26371725
P =10095349
P =14726680
P =-
P P86627504
=
Additions 3179357 234721 5372855 1077183 10836115 20700231
End of year 38613107 26606446 15468204 15803863 10836115 107327735
Accumulated
Depreciation
Beginning of year 7818339 3700235 1120327 4760142 – 17399043
Depreciation 12775177 5094475 2993564 7440814 – 28304030
End of year 20593516 8794710 4113891 12200956 - 45703073
Net Book Values =
P
=18019591
P =17811736
P =11354313
P =3602907
P 10836115 =61624662
P

7. Accounts Payable and Accrued Expenses

2010(PHP) 2010(INR) 2009(PHP) 2009(INR)

Accounts payable 4,811,527 4,816,862 14,034,217 14,731,137

Accrued expenses (Note 11) 28,897,211 28,929,255 24,112,021 25,309,390

Others 2,820,828 2,823,956 1,172,851 1,231,093

36,529,566 36,570,073 39,319,089 41,271,620

Accounts payable as of March 31, 2010 and 2009 includes unpaid invoices for the acquisition of certain
items of property and equipment totaling P
=3,497,700 and P
=2,197,434, respectively.

8. Cost of Services

2010(PHP) 2010(INR) 2009(PHP) 2009(INR)

Personnel costs (Note 10) 66,946,854 67,960,668 83,636,031 84,444,001

Depreciation (Note 6) 29,581,074 30,029,037 28,304,030 28,577,462

Technology charges 23,349,297 23,702,889 26,113,266 26,365,534

Rent and utilities (Note 14) 15,322,959 15,555,003 12,621,461 12,743,391

44
Aditya Birla Minacs Philippines Inc.

Staff welfare 4,992,377 5,067,979 5,875,844 5,932,608


Recruitment
3,725,398 3,781,814 2,695,311 2,721,349

Repairs and maintenance 2,506,195 2,544,148 1,904,251 1,922,647

Training 2,342,528 2,378,002 460,638 465,088

Outside services and others 2,434,623 2,471,492 2,157,881 2,178,727

151,201,305 153,491,031 163,768,713 165,350,809

9. General and Administrative Expenses

2010(PHP) 2010(INR) 2009(PHP) 2009(INR)


Personnel costs (Note 10) 8,416,819 8544279.617 15,842,972 15,996,024
Shared cost (Note 11) 4,017,722 4078564.621 1,502,784
1,488,405
Professional fees 1,386,705 1407704.653 1,284,400
1,272,111
Accommodations 1,079,333 1095677.946 718,074
711,203
Transportation and travel 1,051,985 1067915.8 2,296,093
2,274,124
Utilities 849,838 862707.5741 875,290
866,915
Rent (Note 14) 943,046 957327.0752 1,214,593
1,202,972
Insurance 382,936 388735.0149 806,261
798,547
Others 1,198,143 1216287.152 4,699,268
4,654,305
19,326,527 19,619,199
29,111,554 29,392,788

10. Personnel Costs

2010(PHP) 2010(INR) 2009(PHP) 2009(INR)


Salaries, wages and bonuses 74,526,731 75,655,331 97,656,319 98,599,733
Retirement benefits cost
-60,500 -61,416 142,200 143,574
(income) (Note 12)
Other short-term employee
897,442 911,032 1,680,484 1,696,718
benefits
75,363,673 76,504,947 99,479,003 100,440,025

11. Related Party Transactions

a. The Company availed of various loans from ABMW to finance its working capital requirements.
The loans bear interest at LIBOR + 1% and are payable in 60 months (including the interest and
other related charges). As of March 31, 2010 and 2009, the outstanding principal amounted to P
=
90.57 million (US$2.01 million) and P =84.33 million (US$1.76 million), respectively. Interest

45
Aditya Birla Minacs Philippines Inc.

expense charged to the Company amounted to


=1.76 million (US$39.13 thousand) and P
P =3.34 million (US$69.0 thousand) for the years ended
March 31, 2010 and 2009, respectively. Accrued interest expense (included under “Due to
affiliates” in the balance sheets) as of the said dates amounted to P =6.33 million and
=5.01 million, respectively.
P

b. The Company has various service agreements which are carried out together with its affiliates
based in Bangalore, India and Toronto, Canada. These agreements are effective for three years,
subject to renewal terms, and primarily cover after-sale support/call center services. Rates are
determined based on the statement of work agreed with client and are normally expressed per
minute or per hour. Revenue recognized for these agreements amounted to
=145.58 million and P
P =140.44 million for the years ended March 31, 2010 and 2009, respectively.

c. Shared costs charged by ABMW amounted to P =4.02 million and P


=1.5 million in 2010 and 2009,
respectively, and are included under general and administrative expenses. The amount
outstanding as of March 31, 2010 and 2009 amounting to P =5.86 million and P=1.49 million,
respectively, are included in “Accounts payable and accrued expenses.”

12. Retirement Benefits Cost

The Company provides retirement benefits to all its regular, full time employees in accordance with
RA No. 7641.

Retirement benefits cost (income) charged to operations in 2010 and 2009 consisted of the following:
2010(Php) 2010(Inr) 2009(Php) 2009(Inr)
Current service cost 1,800 1,827 164,100 172,248.98
Interest cost 15,400 15,417 11,400 11,966.11
Amortization of actuarial gain -43,200 -43,248 – -
Curtailment gain -34,500 -34,538 -33,300
(34,953.63)
-60,500 -60,542 142,200 149,261

The amounts recognized in the balance sheets comprise the following:

2010(Php) 2010(Inr) 2009(Php) 2009(Inr)


Defined benefit obligation 394,500 400,474 41,100 41,497
Unrecognized actuarial gains (losses) -194,000 -196,938 219,900 222,024
Accrued retirement benefits 200,500 203,536 261,000 263,521

Changes in the present value of defined benefit obligation are as follows:

2010(Php) 2010(Inr) 2009(Php) 2009(Inr)


Beginning balances 41,100 41,146 118,800 124,699
Current service cost 1,800 1,827 164,100 165,685
Interest cost 15,400 15,633 11,400
11,510
Actuarial loss: 0 -
Experience adjustments 13,400 13,603 45,100 45,536
Change in assumptions 390,700 396,617 -298,000 -300,879
Curtailment gain -67,900 -68,928 -300 -303
Ending balances 394,500 399,897 41,100 46,249

46
Aditya Birla Minacs Philippines Inc.

The latest actuarial valuation of the plan is as of March 31, 2010. The principal actuarial assumptions used
to determine retirement benefit cost were as follows:

2010 2009
Discount rate 9.6% 37.5%
Average annual salary increase 8.0% 8.0%

13. Income Taxes

a. The provision for current income tax represents final tax on interest income.

b. The Company did not recognize deferred income tax assets on the following temporary differences
and NOLCO since these were incurred and will expire/reverse within the period when the
Company is under ITH (see Note 2).

2010(Php) 2010(Inr) 2009(Php) 2009(Inr)


NOLCO 135,665,715 142,838,947 111,292,223 114,795,815
Deferred lease 118,158 118,289 504,703 529,787
Accrued retirement benefits 849,539 850,481 261,000 273,961
Unrealized foreign exchange loss - net 8,687,707 8,697,341 8,687,707 9,119,126

The Company’s NOLCO as of March 31, 2010 will expire as follows:

Incurred in Year PHP INR Expiring in


2008 51,755,698 54,325,678 2011
2009 50,574,668 51,340,549 2012
2010 37,131,546 37,172,721 2013
139,461,912 142,838,947

NOLCO incurred in 2007 amounting to P


=8,961,857 expired in 2010.

c. Deferred income tax liability of P


=1,138,859 was recognized as of March 31, 2010 on the
Company’s net unrealized foreign exchange gain of P=3,796,197 in 2010. Deferred income tax
asset on NOLCO was recognized up to the amount of the deferred income tax liability.

d. The reconciliation between the provision for income tax at statutory rates and the provision for
income tax as shown in the statement of income is as follows:

2010(Php) 2010(Inr) 2009(Php) 2009(Inr)


Income tax at statutory rate -6,633,557 -6,734,013 -21,132,474 (21,336,625)
Additions to (reduction in) income tax resulting
from the tax effects of:
Net increase in unrecognized deferred income
tax assets 6,640,148 6,740,703 21,140,111 21,344,336
Interest income subject to final tax -6,460 -6,558 -7,185 (7,254)
Nondeductible portion of interest expense
3,246 3,295 4039 4,078
3,377 3,428 4,491 4,534

47
Aditya Birla Minacs Philippines Inc.

e. RA No. 9337 or the Expanded Value-Added Tax Act of 2005, which took effect on
November 1, 2005, provides for, among others, the corporate income tax rate to be 35% for three
years effective on November 1, 2005, and 30% starting on January 1, 2009 and thereafter; and the
unallowable deduction for interest expense to be 42% of the interest income subject to final tax
effective November 1, 2005, and 33% effective January 1, 2009.

14. Lease Commitments

The Company has various lease agreements for its office space and condominium units with terms
ranging from three months to five years. These leases are renewable on terms mutually agreed by the
parties. Certain lease agreements require the Company to pay security deposits. These are included
under “Prepaid expenses and other current assets” and “Other noncurrent assets” in the balance sheets.

The Company has three-year lease agreements covering two of its office/facilities spaces that are
subject to annual escalation of 8% and 10%, with one month and three months rent-free period,
respectively.

Future minimum rentals payable under these noncancelable operating lease arrangements are as
follows:
2010(Php) 2010(Inr) 2009(Php) 2009(Inr)
Within one year 12,514,170 12,528,047 8,499,988 8,922,085
After one year but not more than five years 18,131,585 18,151,691 3,859,776 4,051,447
30,645,755 30,679,738 12,359,764 12,973,533

15. Equity

On January 19, 2009, the Company’s BOD authorized the issuance of 479,232 additional shares from
the remaining unissued shares at P
=100 per share in favor of ABMW, to be applied against the deposits
for future stock subscription.
As of March 31, 2010, the Company has yet to submit the application with the SEC.

16. Other Matter

The Company is a defendant in a number of labor cases filed with the National Labor Regulatory
Commission pertaining to nonpayment of salaries and other benefits to its employees. Management
believes that the outcome of these cases will not have a material effect on the Company’s financial
statements.

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Aditya Birla Minacs Worldwide Inc.

AUDITORS’ REPORT

To the Board of Directors of Aditya Birla Minacs Worldwide Inc.

We have audited the consolidated balance sheet of Aditya Birla Minacs Worldwide Inc. as at March 31, 2010 and
the consolidated statements of operations and deficit, comprehensive income (loss), changes in shareholders’ equity
(deficiency) and cash flows for the year then ended. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these financial statements based on our
audit

We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards
require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position
of the Company as at March 31, 2010 and the results of its operations and its cash flows for the year then ended in
accordance with Canadian generally accepted accounting principles.
Toronto, Canada, Chartered Accountants

April 23, 2010. Licensed Public Accountants

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Aditya Birla Minacs Worldwide Inc.

CONSOLIDATED BALANCE SHEET

50
Aditya Birla Minacs Worldwide Inc.

CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT

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Aditya Birla Minacs Worldwide Inc.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

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Aditya Birla Minacs Worldwide Inc.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY


(DEFICIENCY)

AUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’


DEFICIENCY

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Aditya Birla Minacs Worldwide Inc.

CONSOLIDATED STATEMENT OF CASH FLOWS

See accompanying notes to the consolidated financial statements.

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Aditya Birla Minacs Worldwide Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2010

1 NATURE OF BUSINESS

Aditya Birla Minacs Worldwide Inc. (the “Company” or “Minacs”) is incorporated under the Ontario
Business Corporations Act. The Company is wholly-owned by AV Transworks Limited Canada, a wholly-
owned subsidiary of Aditya Birla Minacs Worldwide Limited, India, which in turn is a subsidiary of Aditya
Birla Nuvo Limited. The Company operates in one segment as a provider of business process outsourcing
(“BPO”) solutions. These incorporate contact centre solutions, integrated marketing services and back
office administration. Operating in multiple languages, the Company serves customers throughout Nor th
America, Europe, Latin America and the Pacific Rim from its operating locations in North America and
Europe.

2 SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These consolidated financial statements have been prepared in accordance with Canadian generally accepted
accounting principles ("GAAP") and include the accounts of the Company and its subsidiaries. All significant inter-
company balances and transactions among these entities have been eliminated on consolidation.
Changes in Accounting Policies

Effective April 1, 2009, the Company adopted the following new Canadian Institute of Chartered
Accountants ("CICA") accounting standards and Emerging Issues Committee ("EIC") abstract.

Section 3064, Goodwill and Intangible Assets, which replaced Section 3062, Goodwill and Other Intangible
Assets. The standard establishes guidelines for the recognition, measurement, presentation and disclosure of
goodwill and intangible assets subsequent to initial recognition. As a result of the adoption of th is standard,
the Company has reclassified computer software from property, plant and equipment to intangible assets and
has separately disclosed deferred development costs on the consolidated balance sheet.

The following table summarizes the adjustment that was recorded in the consolidated financial statements.

Section 1000, Financial Statement Concepts. The objectives of this Section are to reinforce a principle-based
approach to the recognition of costs as assets and to clarify the application of the concept of matching revenue and
expenses in Section 1000. Collectively, this change brings the Canadian practice closer to International Financial
Reporting Standards ("IFRS") and U.S. generally accepted accounting principles by eliminating the practice of
recognizing as assets a variety of start-up, pre-production and similar costs that do not meet the definition and
recognition criteria of an asset. Adoption of this guidance had no impact on the Company's consolidated
financial statements.

EIC 173, Credit Risk and the Fair Value of Financial Assets and Financial Liabilities. This guidance
clarifies that an entity's own credit risk and the credit risk of the counterparty should be taken into account
in determining the fair value of financial assets and financial liabilities including derivative instruments.
Adoption of this guidance had no impact on the Company's consolidated financial statements.

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Aditya Birla Minacs Worldwide Inc.

The adoption of the above pronouncements had no impact on opening deficit.

Future Accounting Changes

In 2006, the CICA announced that accounting standards in Canada will converge with IFRS. The Company
will have the option of reporting under IFRS beginning January 1, 2011, with comparative data for the prior
year. IFRS uses a conceptual framework similar to Canadian GAAP, but there could be significant
differences on recognition, measurement and disclosures that will need to be addressed.

In September 2009, the CICA approved the final accounting standards for private enterprises in Canad a.
The new standards (GAAP for private enterprises) are available for early adoption. Under the new
standards, private enterprises will have a choice of reporting in accordance with Canadian GAAP by
adopting either the same set of accounting standards as publicly accountable enterprises (i.e. IFRS) or the
new GAAP for private enterprises. The existing accounting standards in the CICA Handbook will be
available until 2011, at which time they will be withdrawn. As such, enterprises will be able to adopt GAAP
for private enterprises in 2009, 2010 or 2011. The Company is considering the impact of these new
standards and assessing whether it will adopt IFRS or GAAP for private enterprises.

Use of Estimates

The preparation of these consolidated financial statements in conformity with Canadian GAAP requires
management to make estimates and assumptions. These estimates and assumptions affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and the reported amounts of revenues and expenses during the year.
Actual results could differ from those estimates.

Revenue Recognition

The Company derives revenues by providing BPO solutions and consulting arrangements. Payment terms
may vary by contract. The Company recognizes revenues at the time services are performed and when the
price is fixed or determinable and collection is reasonably assured.

The majority of revenues are recognized based on the billable hours or minutes rendered as defined in the
client contract. The rate per billable hour or minute charged is based on a predetermined contractual rate as
agreed in the underlying contract. This contractual rate fluctuates based on the Company’s performance
against certain predetermined criteria related to quality and performance. Some clients are entitled to
service credits when the Company is not in compliance with certain obligations as defined in the client
contract. Such service credits are recorded as a reduction of revenues as incurred based on a measurement
of the Company’s obligation under the terms of the client contract.

For some contracts, the Company is paid by its customer based on achievement of client-determined criteria
specified in the client contract such as full-time equivalents, units processed or completed contacts. The
Company recognizes this performance-based revenue by measuring its actual results against the
performance criteria specified in the contracts.

Amounts collected from customers prior to the performance of services are recorded as deferred revenue.
These advances are amortized to revenues in accordance with the Company’s policy on revenue recognition.

The Company classifies reimbursements received from customers for out-of-pocket expenditures as
revenues. The Company incurs out-of-pocket expenditures such as expenses related to travel, postage and
telecommunications costs for which customers have agreed to reimburse Minacs. The corresponding cost

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Aditya Birla Minacs Worldwide Inc.

associated with this revenue is recorded within direct expenses. Some customers agree to reimburse the
Company for initial training and recruiting costs over a specified period of time. The revenue for these
costs is recorded over the period of time stipulated within the contract with a corresponding cost r ecorded
within direct expenses.

Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated amortization. Amortization is provided on
a straight-line basis over the estimated useful lives of the assets. Computer equipment is amortized over a
four-year life. Communications equipment is amortized over five to seven-year lives. Furniture and
fixtures are amortized over seven to ten-year lives. Leasehold improvements are amortized over the term of
the lease.

Leases

Leases are classified as either capital or operating leases. Leases that substantially transfer all of the
benefits and risks of ownership of property to the Company are accounted for as capital leases. At the time
a capital lease is entered into, an asset is recorded together with its related long-term obligation to reflect the
acquisition and financing. Equipment recorded under capital leases is amortized on the same basis as
property, plant and equipment. Rental payments under operating leases are expensed as incurred.

Business Combinations, Goodwill and Intangible Assets

The Company follows the guidance in the CICA Handbook Section 1581, Business Combinations, which
requires all business combinations to be accounted for using the purchase method. In addition, any goodwill
and intangible assets acquired in a business combination are accounted for under CICA Handbook Section
3064, Goodwill and Intangible Assets. This section requires that goodwill not be amortized, while identified
intangible assets with finite useful lives be amortized over their useful lives.

Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets
acquired. Goodwill and indefinite life intangible assets are tested for impairment annually or more
frequently if events or changes in circumstances indicate that those assets might be impaired. The
impairment test is carried out in two steps. In the first step, the identification of a potential impairment is
determined by comparing the fair value of the reporting unit to its carrying value. Fair value is based on
estimates of discounted future cash flows. When the fair value of the reporting unit is less than its carrying
value, the fair value is allocated to all its assets and liabilities based on their fair values. The amount that
the fair value of the reporting unit exceeds the amounts assigned to its assets and liabilities is the fair value
of the goodwill. In the second step, impairment is determined by comparing the fair value of goodwill to its
carrying value. Any shortfall is charged to income.

Intangible assets with finite useful lives acquired through business combinations are recorded at their fair
value at the date of acquisition. An impairment loss on an intangible asset with a finite useful life is
recognized when its carrying value exceeds the total undiscounted cash flows expected from its use and
disposition. The amount of loss is determined b y deducting its fair value based on undiscounted cash flows
expected from its use and disposition from its carrying value. The Company reviews definite life intangible
assets for impairment whenever events or changes in circumstances indicate that the carrying value may not
be recoverable. Amortization of intangible assets, other than computer software, is provided on a straight-
line basis over ten years. Computer software is amortized over four to five-year lives.

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Aditya Birla Minacs Worldwide Inc.

Asset Impairment

The Company follows the guidance in CICA Handbook Section 3063, Impairment of Long-Lived Assets, and
CICA Handbook Section 3855, Financial Instruments - Recognition and Measurement. The Compan y
evaluates the carrying value of long-lived assets for potential impairment annually or more frequently if
events or circumstances warrant a review. The carrying value of such assets is considered impaired when
the anticipated net recoverable amount of the asset is less than its carrying value or when the change in
value is other than temporary. In that event, the carrying value of the asset is adjusted to fair value and an
impairment loss is charged to income. The Company reviews long-lived assets for impairment whenever
events or changes in circumstances indicate that the carrying value may not be recoverable.

Income Taxes

The Company follows the liability method of accounting for income taxes. Under this method, future tax
assets and liabilities are determined based on differences between the financial reporting and tax bases of
assets and liabilities, and are measured using substantively enacted tax rates and laws that are expected to be
in effect when the differences are expected to reverse. Valuation allowances are established when necessary
to reduce future tax assets to the estimated amount that is more likely than not to be realized.

Government Assistance

Government assistance towards current expenses is included in the determination of income for the year as a
reduction of the expenses to which it relates. The Company has made a number of estimates and
assumptions in determining the amount eligible for government assistance. It is possible that the allowed
amount of assistance could be materially different from the recorded amount upon assessment by the
respective government agency.

Equity and Comprehensive Income

Comprehensive income is the change in equity from transactions and other events from non-owner sources.
Other comprehensive income refers to items recognized in comprehensive income that are excluded from net
income calculated in accordance with Canadian GAAP.

Financial Instruments

All financial instruments, including derivatives, are measured on the consolidated balance sheet at fair value
except for loans and receivables, held-to-maturity investments and other financial liabilities, which are
measured at amortized cost. Subsequent measurement and changes in fair value will depend on their initial
classification, as follows: held-for-trading financial assets are measured at fair value and changes in fair
value are recognized in net income; available-for-sale financial instruments are measured at fair value with
changes in fair value recorded in other comprehensive income until the investment is derecognized or
impaired, at which time the amounts would be recorded in net income. The Company's financial assets and
liabilities are generally classified and measured as follows:

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Aditya Birla Minacs Worldwide Inc.

Asset/Liability Category Measurement

Cash Held-for-trading Fair value

Receivables Loans and receivables Amortized cost

Payables and accrued liabilities Other financial liabilities Amortized cost

Long-term debt Other financial liabilities Amortized cost

Obligations under capital leases Other financial liabilities Amortized cost

Deferred grant and government assistance Other financial liabilities Amortized cost

The Company had no financial instruments classified as available-for-sale during the year ended March 31,
2010.

Financing costs and credit facility arrangement fees associated with the issuance of long-term debt are
netted against the carrying value of the related debt and are amortized using the effective interest rate
method to interest expense over the period to maturity of the related debt.

Hedges

The Company applies hedge accounting to forward rate contracts, options and cross-currency swap
agreements. These contracts have been designated as cash flow hedges, and are measured at fair value at the
end of each period. The resulting gain/loss on recognition of the forward rate contracts, options and cross-
currency swap agreements is recognized in other comprehensive income.

Foreign Exchange Translation

Foreign operations are considered to be self-sustaining and are translated into Canadian dollars using the
current rate method. Assets and liabilities are translated using the exchange rate in effect at the
consolidated balance sheet date and revenues and expenses are translated at the average rate for the month in
which the transaction is recorded. Exchange gains or losses on translation of the Company’s investments in
these subsidiaries are recorded in accumulated other comprehensive income.

Research and Development

Research costs are expensed as incurred. Development costs that meet specific criteria related to technical,
market and financial feasibility are capitalized and amortized over the useful life of the technology when put
into use.

3 ACQUISITION

On March 9, 2010, the Company acquired Compass BPO Limited ("Compass") for cash consideration of $7,853,000
(INR 34.68 Cr) including acquisition costs of $39,000 (INR 0.17 Cr). The purchase has been accounted for under
the purchase method and, accordingly, the results of operations are included in the consolidated financial statements
from the date of acquisition. The consideration and allocation of the purchase price are as follows:

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Aditya Birla Minacs Worldwide Inc.

The customer relationships will be amortized on a straight-line basis over ten years. Included in the net working
capital is $257,000 (INR 1.13 Cr) of cash.

4 OTHER RECEIVABLES

Other receivables are comprised of:

As at March 31, 2009, a derivative liability of $11,300,000 (INR 49.90 Cr) was included in accounts
payable and accrued liabilities.

5 PROPERTY, PLANT AND EQUIPMENT

Included in these figures are assets under capital leases as follows:

The assets under capital leases are held as collateral for the capital lease obligations. For the year ended
March 31, 2010, included within amortization expense is $1,732,000 (INR 7.65 Cr) (2009: $3,112,000)
(INR 13.74 Cr) relating to assets under capital leases.

Included in restructuring charges for 2010 is an impairment loss of $933,000 (INR 4.33 Cr) relating to the
write-down in value of leasehold improvements and lease exit costs relating to the Saskatoon and Port
Hawkesbury site closures (Note 14). Included in restructuring charges for 2009 is an impairment loss of
$4,606,000 (INR 20.08 Cr) relating to the write-down in value of leasehold improvements and lease exit
costs relating to the Saskatoon, Pickering and Chatham site closures (Note 14).

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Aditya Birla Minacs Worldwide Inc.

6 DEFERRED DEVELOPMENT COSTS

Deferred development costs are comprised of:

7 INTANGIBLE ASSETS

Intangible assets consist of:

Included in these figures are intangible assets under capital leases as follows:

The intangible assets under capital leases are held as collateral for the capital lease obligations. For the year
ended March 31, 2010, included within amortization expense is $165,000 (INR 0.72 Cr) (2009: $268,000)
(INR 1.17 Cr) relating to intangible assets under capital leases.

8 GOODWILL

Goodwill consists of:

9 DEFERRED GRANT AND GOVERNMENT ASSISTANCE

(a) In fiscal 2009, the Company became eligible to receive funding from the Ontario Apprenticeship
Program. For the year ended March 31, 2010, the Company recorded $10,775,000 (INR 47.58 Cr) (2009:
$1,014,000) (INR 4.42 Cr) as a reduction of direct expenses and selling, general and administrative
expenses for these grants. As at March 31, 2010, the Company has recorded $10,818,000 (INR 47.77 Cr)
(2009: $1,014,000) (INR 4.48 Cr) as part of other receivables.

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Aditya Birla Minacs Worldwide Inc.

(b) The Company also receives payroll rebates from Nova Scotia Business Inc. if certain incremental wage
growth is achieved within the Province of Nova Scotia. As at March 31, 2010, the Company has recorded
$230,000 (INR 1.02 Cr) (2009: $642,000) (INR 2.83 Cr) as a payroll rebate receivable which is included in
other receivables. During the year ended March 31, 2010, the Company recorded $231,000 (INR 1.01 Cr)
(2009: $257,000) (INR 1.12 Cr) as a reduction of direct expenses and selling, general and administrative
expenses for this grant.

(c) In fiscal 2008, Minacs finalized an agreement with the Province of New Brunswick to receive a
forgivable loan in the amount of $2,260,000 (INR 9.98 Cr). The loan provides for forgiveness subject to
terms being met in respect of employment to be created at a contact centre in that province. To date, Minacs
has received $900,000 (INR 3.97 Cr); no amounts were received in fiscal 2010. As at March 31, 2010, the
Company has recorded $858,000 (INR 3.79 Cr) (2009: $771,000) (INR 3.4 Cr) as deferred grant and
government assistance. If the terms of the loan are not met by August 31, 2014, then the amount remaining
as deferred grant and government assistance will need to be repaid.

10 LONG-TERM DEBT

Senior Revolving Facility – Bank of America

This facility bears interest at 0.65% margin over bank prime, banker’s acceptance or LIBOR rates. The total
commitment available under the senior revolving facility is $40,000,000 (INR 176.64 Cr), subject to certain
borrowing base calculations and certain other restrictive covenants. The facility is a 365-day facility and, as
collateral, the Company has given a first charge on accounts receivable. In addition this facility is
guaranteed by Aditya Birla Nuvo Limited. As at March 31, 2010, the Company is in compliance with
applicable bank covenants.

Non-Revolving Term Facility – BNP Paribas (Canada)

As at March 31, 2010, this facility was fully repaid. Subsequent to the year end, BNP Paribas (Canada) has released
the corporate guarantee on the debt and is proceeding with releasing their charge on the Company’s property, plant
and equipment in North America held as collateral against said facility.

Interest Rate

The weighted average interest rate on borrowings at March 31, 2010 was 1.05% (2009: 4.62%).

Interest and financing expenses are comprised of the following amounts:

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Aditya Birla Minacs Worldwide Inc.

11 RELATED PARTY TRANSACTIONS

Transactions with the Aditya Birla Nuvo Limited group of companies are as follows:

These transactions are measured at the exchange amounts of consideration established and agreed to by the
related parties.

In fiscal 2010, the Company entered into a forward contract agreement with AV Transworks Limited Canada
to provide foreign exchange protection to AV Transworks Limited Canada on their foreign exchange
liability in the amount of U.S. $24,500,000 (INR 108.19 Cr). For the year ended March 31, 2010, Minacs
has recorded a $5,699,000 (INR 25.17 Cr) (2009 – nil) gain in other comprehensive income. The derivative
asset of $7,474,000 (INR 33.01 Cr) recorded by the Company as at March 31, 2010 includes this gain.

12 SHARE CAPITAL

The Company is authorized to issue an unlimited number of common shares and an unlimited number of preferred
shares issuable in series.

The Company received $20,000,000 (INR 88.32 Cr) on February 24, 2010 and a further $10,000,000 (INR
44.16 Cr) on March 26, 2010 in cash from its parent company AV Transworks Limited Canada as
subscription for Redeemable Series B Preference Shares that were issued during the year.

The Series A Preference Shares are redeemable at face value at the option of the Company, at any time after
December 31, 2012. The Series B Preference Shares are redeemable at face value at the option of the
Company, at any time after December 31, 2014. However, there is no redemption obligation on the
Company. The preference shareholders are entitled to a cumulative dividend of 4.50% for Series A and 5%
for Series B on the outstanding preference shares. The payment of dividends is at the discretion of the
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Aditya Birla Minacs Worldwide Inc.

Company and subject to availability of profits of the Company. The undeclared dividend as of March 31,
2010 is $1,029,312 (INR 4,55 Cr) (2009 - $2,505) (INR 0.01 Cr).

13 COMMITMENTS AND CONTINGENCIES

Capital Leases

Interest on obligations under capital leases accrues at various rates ranging from 6.5% to 9.2%. The
following is a schedule of future minimum annual lease payments for these capital leases:

Commitments

The Company has operating leases for its premises, furniture and fixtures and certain computer and
communications equipment, as well as minimum purchase commitments for telephone services. The
minimum annual payments for the next five years and thereafter are as follows:

Contingent Liabilities

On May 17, 2006, the former major shareholder and founder of the Company, Elaine Minacs, died. The
major shareholder of the Company then became the Estate of Elaine Minacs (the “Estate”) together with certain
entities controlled by it (the “EM Shareholders”) until August 18, 2006, when AV Transworks Limited Canada
acquired the shares of the Estate and the EM Shareholders.

The Company is the owner of a $350,000 (INR 1.55 Cr) whole life insurance policy and a $2,000,000 (INR 8.83 Cr)
term life insurance policy insuring the life of Elaine Minacs. The term life policy is a key-man policy, originally
required by the Company's previous lenders. The beneficiary of the policies when they were originally acquired was
the Company. During 2005, the beneficiary of the whole life insurance policy was changed at the direction of
Elaine Minacs. Also during 2005, the beneficiary of the term life insurance policy was changed to family members
related to Elaine Minacs at the direction of Elaine Minacs. In fiscal 2007, management changed the beneficiary back
to the Company. A legal proceeding has been commenced by the Estate against the Company claiming $5,000,000
(INR 22.08 Cr) in damages stating that the change in beneficiary was in breach of Elaine Minacs’ employment
agreement. Proceeds of $350,000 (INR 1.55 Cr) were paid into escrow pursuant to an escrow agreement with the
Estate. The proceeds of $2,000,000 (INR 8.83 Cr) were paid by the underwriter to the court to be held in trust. The

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Aditya Birla Minacs Worldwide Inc.

Company has filed a defense and counterclaim to the initial Estate claim in August 2007 for the proceeds of the life
insurance policies and damages of $500,000 (INR 1.55 Cr). A second claim for damages of $500,000 (INR 1.55 Cr)
and for punitive damages of $100,000 (INR 0.44 Cr) was commenced by the Estate in December 2007 stating the
Company was in breach of contract related to an employment agreement. Management has not accrued a contingent
liability for the claims made by the Estate because they believe that the claims have no merit and the outcome of the
proceeding is not determinable.

During the ordinary course of business activities, in addition to the above, the Company may be a party to
claims and may be contingently liable for litigation. Management believes that adequate provisions have
been made in the accounts where required. Although it is not possible to estimate the extent of potential
costs and losses, if any, management believes that the ultimate resolution of such contingencies will not
have a material adverse effect on the consolidated financial position of the Company.

Guarantees

At March 31, 2010, the Company had $75,000 (INR 0.33 Cr) (2009: $75,000) (INR 0.33 Cr) of outstanding
letters of credit to secure customer performance guarantees.

14 RESTRUCTURING AND OTHER CHARGES

In fiscal 2010, the Company terminated a number of employees. Total severance payments and other
charges of $1,343,000 (INR 5.85 Cr) (2009: $1,825,000) (INR 7.96 Cr) have been charged to restructur ing
costs.

In fiscal 2009, the Company closed its Saskatoon and Pickering sites and suspended operations at its
Chatham site.

In fiscal 2010, the Company approved a plan to close its Port Hawkesbury site and restart the operations at
the Chatham site.

The costs recorded in restructuring relating to lease exit costs and asset impairment in fiscal 2010 are
$2,485,000 and include a recovery of $687,000 (INR 2.99 Cr) of the prior year provision (2009: $6,452,000)
(INR 28.13 Cr).

The details of severance expenses, impaired assets, lease exist costs for the balance of the remaining lease
periods and the credits against lease exit liabilities are given below:

A reconciliation of beginning and ending accounts payable and accrued liabilities with respect to the
restructuring and other charges is as follows:

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Aditya Birla Minacs Worldwide Inc.

Long-term accrued liabilities relating to operating leases relate to tenant inducements and free-rent
liabilities.

15 INCOME TAX

Future tax assets consist of the following temporary differences:

Future tax liabilities consist of the following temporary differences:

Expiry of Losses

As at March 31, 2010, the Company has non-capital losses of approximately $77,316,000 (INR 341.43 Cr)
available to reduce future years’ income for tax purposes. If not utilized, these losses will expire as follows:

16 SUPPLEMENTAL CASH FLOW INFORMATION

Adjustments to reconcile net income (loss) to cash flows provided by operating activities include:

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Aditya Birla Minacs Worldwide Inc.

The net change in non-cash working capital balances related to operations include:

Cash interest and income taxes paid are as follows:

17 FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Fair Value of Financial Instruments

The fair value of financial instruments, which include cash, accounts receivable and unbilled revenue, other
receivables, income taxes recoverable, accounts payable and accrued liabilities, long-term debt, income and
other taxes payable, and obligations under capital leases, approximates their carrying value due to their
short-term nature and/or variable interest rates.

Other financial instruments are long-term in nature, which include long-term receivables, accrued liabilities
relating to operating leases and deferred grant and government assistance, and due to their nature are
measured at amortized cost, which approximates their fair value.

Risk Management

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Aditya Birla Minacs Worldwide Inc.

The Company's activities expose it to a variety of financial risks, including market risk (comprised of
foreign currency risk and interest rate risk), credit risk and liquidity risk. The Company's overall risk
management program focuses on the unpredictability of financial markets and seeks to minimize potential
adverse effects on the Company's financial performance. The Company does not purchase any derivative
financial instruments for speculative purposes.

Risk management is the responsibility of the corporate finance function. Material risks are monitored and
are regularly discussed with the Audit Committee of the Board of Directors.

Foreign Currency Risk

The Company has significant operations in Canada and the United States. The Company’s activities result
in exposure to fluctuations in foreign currency exchange rates due to sale and purchase transactions in a
foreign currency. Increases or decreases in these rates could impact the Company’s net income.

As at March 31, 2010, the Company purchased financial instruments to hedge its foreign currency exposure
as follows:

Included in revenues are losses from foreign exchange hedging contracts amounting to $1,302,000 (INR
5.68 Cr) for the year ended March 31, 2010 (2009: $7,375,000) (INR 32.15 Cr. Included in selling, general
and administrative expenses are gains from foreign exchange hedging contracts amounting to $183,000 (INR
0.80 Cr) for the year ended March 31, 2010 (2009: loss of $718,000 (INR 3.13 Cr)). At March 31, 2010, all
contracts were designated as hedges for accounting purposes.

During the year ended March 31, 2010, a substantial portion of the Company's income was earned outside of Canada
in currencies other than the Canadian dollar. Increases in the value of the Canadian dollar can reduce net income
and declines can result in increased net income. Based on the income, a +/- 1% change in the United States dollar
would, everything else being equal, have had the following effect on the Company’s reported net income for the
year ended March 31, 2010:

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Aditya Birla Minacs Worldwide Inc.

The table below presents the percentages of the Company's accounts receivable, accounts payable and accrued
liabilities that are denominated in US dollars:

During the years ended March 31, 2010 and 2009 the following percentage of revenues and expenses wer e
earned or incurred in US dollars:

Interest Rate Risk

The objective of the Company's interest rate management activities is to minimize the volatility of the Company's
income. The Company's interest rate risk primarily arises from its floating rate debt.

At March 31, 2010, the total long-term debt outstanding was $33,914,000 (INR 149.76 Cr) which is subject
to movements in floating interest rates. A +/-1% change in interest rates would, everything else being equal,
have an effect on the Company's net income for the year ended March 31, 2010 of approximately +/-
$412,000 (INR 3.10 Cr).

Credit Risk

Credit risk arises from cash held with banks and financial institutions, as well as credit exposure to clients, including
outstanding accounts receivable. The maximum exposure to credit risk is equal to the carrying value of the financial
assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company
assesses the credit quality of the counterparties, taking into account their financial position, past experience and
other factors.
The Company derived 50.2% or $148,000,000 (INR 645.18 Cr) of its revenues from multiple contracts with
two groups of clients in the automotive and technology sectors for the year ended March 31, 2010 (2009:
51.9% or $180,590,000) (INR 787.26 Cr).

As at March 31, 2010, multiple contracts with two clients represented 35.9% (2009: 55.8%) of the accounts
receivable balance.

The following table sets out details of the aging of accounts receivable that are outstanding and related
allowance for doubtful accounts:

69
Aditya Birla Minacs Worldwide Inc.

Included in accounts receivable and unbilled revenue are unbilled revenues of $14,652,000 (INR 64.7 Cr)
(2009: $3,340,000) (INR 14.75 Cr).

The carrying amount of accounts receivable is reduced through the use of an allowance account and the
amount of the loss is recognized in the consolidated statement of operations and deficit within operating
expenses. When a receivable balance is considered uncollectible, it is written off against the allowance for
accounts receivable. Subsequent recoveries of amounts previously written off are credited against operating
expenses in the consolidated statement of operations and deficit.

Liquidity Risk

Liquidity risk arises through the excess of financial obligations over available financial assets due at an y
point in time. The Company's objective in managing liquidity risk is to maintain sufficient readily available
reserves in order to meet its liquidity requirements at any point in time. The Company achieves this by
maintaining sufficient cash and through the availability of funding from committed credit facilities. As at
March 31, 2010, the Company was holding cash of $4,230,000 (INR 18.68 Cr).

18 MANAGEMENT OF CAPITAL

The Company defines capital that it manages as the aggregate of its shareholders' equity, cash on the balance sheet
and interest-bearing debt. The Company's objective when managing capital is to ensure that it can provide services
to its customers and returns to its shareholders.
As at March 31, 2010, managed capital comprised of shareholders' equity of $48,472,000 (INR 214.05 Cr)
(2009: $3,805,000) (INR 16.8 Cr), cash of $4,230,000 (INR 18.68 Cr) (2009: $3,087,000) (INR 13.63 Cr)
and interest-bearing debt of $35,557,000 (INR 157.02 Cr) (2009: $62,878,000) (INR 277.67 Cr).

70
Aditya Birla Minacs Worldwide Inc.

The Company manages its capital structure in a manner that ensures operating cash flow together with cash
on its balance sheet is greater than interest expense and current principal debt repayments required to be
paid.

19 EMPLOYEE BENEFIT PLANS

The Company has defined contribution pension plans. The Company’s expenditures with respect to these
plans were $673,000 (INR 2.93 Cr) during the year ended March 31, 2010 (2009: $1,224,000) (INR 5.34
Cr).

20 COMPARATIVE FIGURES
Certain of the comparative figures have been reclassified to conform to the current year’s presentation.

71
Compass BPO FZE

INDEPENDENT AUDITORS’ REPORT

To The Manager of,


Compass BPO FZE
Ras Al Khaimah - U.A.E.

Report on the financial statements

We have audited the accompanying financial statements of Compass BPO FZE which comprise the statement of
financial position as at 31 March 2010 and the statements of comprehensive income, changes in equity and cash
flows for the year then ended, a summary of significant accounting policies and other explanatory related notes to
financial statements set out on pages 3 to 14.

Management's responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance
with International Financial Reporting Standards (IFRS). This responsibility includes: designing, implementing
and maintaining internal control relevant to the preparation and fair presentation of financial statements that are
free from material misstatements, whether due to fraud or error, selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in the circumstances.

Auditor's responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our
audit in accordance with International Standards on Auditing. Those standards require that we comply with
relevant ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial
statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment,
including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, we consider internal control relevant to the entity's preparation and fair
presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control.
An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness of
accounting estimates made by management, as well as evaluating the overall presentation of the financial
statements.

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

Opinion

In our opinion, the accompanying financial statements give a true and fair view of the financial position of
Compass BPO FZE as at 31 March 2010, and of its financial performance and it’s cash flows for the year then
ended in accordance with International Financial Reporting Standards (IFRS).

Report on other legal and regulatory requirements

The accompanying financial statements comply with the U.A.E. Commercial Companies Law No. 8 of 1984 (as
amended by Law No. 13 of 1988).

Name of the Auditor


Ravi Kannampillil

Registration Number (80)


Dated: 12 April 2010

72
Compass BPO FZE

STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2010


31-03-10 31-03-09
Note Dirhams Dirhams
ASSETS:
NON-CURRENT ASSET
Property, Plant and Equipment 6 7,317 99,295

Total non-current assets 7,317 99,295

CURRENT ASSET
Trade and Other Receivables 7 167,602 697,899
Prepayments 8 22,332 63,260
Cash and Cash Equivalents 9 56,092 36,707

Total current assets 246,026 797,866

Total assets 253,343 897,161

EQUITY
Share Capital 100,000 100,000
Head Office Current Account 670,135 171,689
Retained Earnings (loss) (763,419) 294,983

Total equity 6,716 566,672

LIABILITIES:

CURRENT LIABILITIES
Trade and Other Payables, including Derivatives 10 126,631 206,612
Provisions 11 119,996 123,877

Total current liabilities 246,627 330,489

Total liabilities 246,627 330,489

Total equity and liabilities 253,343 897,161

For Compass BPO FZE

Manager

The notes on pages 7 to 14 are an integral part of these financial statements

73
Compass BPO FZE

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2010

31-03-10 31-03-09
Note Dirhams Dirhams

Revenue 2,553,233 4,660,751

Manpower Cost (2,844,853) (3,425,892)

Gross Profit (291,620) 1,234,859

Other Income 12 Nil 413,356

Administrative Expenses 13 (696,713) (750,247)

Depreciation & Amortisation Expenses (70,069) (73,346)

Net (Loss) / Profit for the period (1,058,402) 824,622

For Compass BPO FZE

Manager

The notes on pages 7 to 14 are an integral part of these financial statements

74
Compass BPO FZE

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2010

(Amount in Dirhams)

PREVIOUS YEAR Head Office


Share Current Retained
Total
Capital Account Earnings Equity

Balance as at 01 April 2008 100,000 Nil (529,639) (429,639)

Net movement during the year Nil 171,689 Nil 171,689

Total comprehensive income for the


year Nil Nil 824,622 824,622

Balance as at 31 March 2009 100,000 171,689 294,983 566,672

CURRENT YEAR

Balance as at 01 April 2009 100,000 171,689 294,983 566,672

Net movement during the year Nil 498,446 Nil 498,446

Total comprehensive loss for the


year Nil Nil (1,058,402) (1,058,402)

Balance as at 31 March 2010 100,000 670,135 (763,419) 6,716

75
Compass BPO FZE

STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31 MARCH 2010

31-03-10 31-03-09
Dirhams Dirhams
Cash flows from Operating Activities
(Loss)/ Profit for the period (1,058,402) 824,622
Adjustment for :
Depreciation of property, plant and equipment 70,069 73,346
Interest expense 5,483 5,734
Loss on sale of Property, Plant & Equipments 13,447 Nil

Operating Profit Before Working Capital Changes (969,403) 903,702


Decrease / (Increase) in trade and other receivables 530,297 (312,456)
Decrease / (Increase) in prepayments 40,928 (7,932)
Increase / (Decrease) in trade and other payables (79,981) (838,171)
(Decrease) / Increase in provisions (3,881) 72,247

Net Cash from / (used in) Operating Activities (482,040) (182,610)

Cash flows from Investing Activities


Purchase of property, plant & equipments (12,849) (9,535)
Proceeds from Sale of Property, Plant & Equipment 21,311 Nil

Net cash from / (used in) Investing Activities 8,462 (9,535)

Cash flows from Financing Activities

Interest paid (5,483) (5,734)


Net movement during the year 498,446 171,689

Net Cash (used in) Financing Activities 492,963 165,955

Net Increase / (Decrease) in cash and cash equivalents 19,385 (26,190)

Cash and cash equivalents at the beginning of the period 36,707 62,897

Cash and cash equivalents at the end of the period 56,092 36,707

76
Compass BPO FZE

NOTES TO FINANCIAL STATEMENTS AS AT 31 MARCH 2010

1. Reporting entity

'Compass BPO FZE', here-in-after called 'the Establishment' is incorporated in the RAK Free Trade Zone,
Ras Al Khaimah, as a Free Zone Establishment in accordance with the laws and regulations of the Free Zone
Authority.

The shareholder of the establishment is M/s. Compass BPO Limited, United Kingdom, who is the registered
holder of One Share of AED 100,000/-.

During the year the name of the holding company was changed from "Compass Connections Limited" to
"Compass BPO Limited".

The establishment is engaged in the business of Management Consultancy.

2. Reporting Period

These financial statements cover the year from 01 April 2009 to 31 March 2010. The previous year figures
are for the year 01 April 2008 to 31 March 2009.

3. Basis of Preparation

a) Statement of Compliance

The financial statements of the establishment have been prepared in accordance with International
Financial Reporting Standards (IFRS), which includes International Accounting Standards (IAS) and
its Interpretations.

b) Basis of Measurement

The financial statements have been prepared on the historical cost basis.

c) Functional and Presentation Currency


These financial statements are expressed in U.A.E. Dirhams, rounded to the nearest Dirham.

4. Changes in Accounting Policies

The accounting policies adopted are consistent with those of the previous financial year, except that the
establishment has adopted the following new and amended IFRS and IFRIC interpretations as on 01 January
2009:

 IAS 1 Presentation of Financial Statements (Revised)

5. Significant Accounting Policies

a) Associated Companies

Associated Companies are defined as those companies in which the establishment holds a long term
equity interest, has representation on the board of directors and is in a position to exercise significant
influence in their management, but not control, over the financial & operating policies.

b) Financial Instruments
77
Compass BPO FZE

(i) Non-derivative financial assets


The establishment initially recognizes loans and receivables and deposits on the date that
they are originated. All other financial assets (including assets designated at fair value
through profit or loss) are recognized initially on the trade date at which the company
becomes a party to the contractual provisions of the instrument.

♦ Loans and Receivables


Loans and receivables are financial assets with fixed or determinable payments
that are not quoted in an active market. They are recognized initially at fair value
plus any directly attributable transaction costs. They are measured at amortised
cost using the effective interest method, less any impairment losses.
Trade receivables are recognised initially at the transaction price. They are
subsequently measured at amortised cost using the effective interest method, less
provision for impairment. A provision for impairment of trade receivables is
established when there is objective evidence that the establishment will not be able
to collect all amounts due according to the original terms of the receivables.

(ii) Non-derivative financial liabilities


The establishment initially recognizes debt securities issued and subordinated liabilities on
the date they are originated. All other financial liabilities are recognized on the trade date.
It includes loans and borrowings, bank overdrafts and trade and other payables. These
financial liabilities (except trade and other payables) are recognized at fair value plus any
directly attributable transaction costs. Subsequently they are measured at amortized cost
using effective interest method.
Trade payables are recognised initially at the transaction price and subsequently measured at
amortised cost using the effective interest method.

c) Property, Plant & Equipment

(i) Measurement Basis


Property, plant & equipment are measured at cost less accumulated depreciation and any
impairment in value.

(ii) Subsequent costs


The cost for replacing part of an item of property, plant & equipment is recognised in the
carrying amount of the item if it is probable that the future economic benefits embodied
within the part will flow to the establishment and its cost can be measured reliably. The
carrying amount of the part so replaced is derecognised. The cost of day-to-day servicing of
property, plant & equipment are recognised in profit or loss as incurred.

(iii) Depreciation
Depreciation is calculated to write-off the cost of property, plant & equipment on the
straight line basis over their estimated useful lives as follows:

Number of years
Motor Vehicle 3 years
Furniture & Fixtures 3 years
Office Equipments 3 years

d) Provisions

Provisions are recognized when the establishment has a present legal or constructive obligation as a

78
Compass BPO FZE

result of past events, and when it is probable that an outflow of resources will be required to settle
the obligation, and when a reliable estimate of the amount can be made. Provisions are reviewed at
each balance sheet date and adjusted to reflect the current best estimate.

e) Impairment of assets

(i) Financial assets


The establishment assesses at each balance sheet date whether there is any objective
evidence that a financial asset or a group of financial asset is impaired. A financial asset or
a group of financial assets is deemed to be impaired if, and only if, there is objective
evidence of impairment as a result of one or more events that has occurred after the initial
recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the
estimated future cash flows of the financial asset or the group of financial assets that can be
reliably estimated. Evidence of impairment may include indications that the debtors or a
group of debtors is experiencing significant financial difficulty, default or delinquency in
interest or principal payments, the probability that they will enter bankruptcy or other
financial reorganization and where observable data indicate that there is a measurable
decrease in the estimated future cash flows, such as changes in arrears or economic
conditions that correlate with defaults.

(ii) Non financial assets


Assets that have an indefinite useful life, for example goodwill, are not subject to
amortisation and are tested annually for impairment. Assets that are subject to amortisation
are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount
by which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows (cash-generating units). Non-financial assets other than
goodwill that suffered an impairment are reviewed for possible reversal of the impairment at
each reporting date.

f) Foreign Currency Transactions

Transactions in foreign currencies are translated to UAE Dirhams at the foreign exchange rate ruling
at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at
the balance sheet date are translated to UAE Dirhams at the foreign exchange rate ruling at that date.
Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are
translated to UAE Dirhams at the foreign exchange rates ruling at the dates the values were
determined. All differences are taken to profit or loss.

g) Revenue Recognition

Revenue is recognized when it is probable that the economic benefits will flow to the establishment
and when the revenue can be measured reliably, on the following basis :

(i) Service Income


Service income is recognized in profit or loss in proportion to the stage of completion of the
transaction at the reporting date. The stage of completion is assessed by reference to
surveys of work performed.

(ii) Management Fee


Management fee is recognised on an accrual basis when service is rendered.
79
Compass BPO FZE

h) Cash and cash equivalents

Cash and cash equivalents for the purpose of cash flow statement consist of cash in hand and cash at
bank.

6. Property, Plant & Equipments

CURRENT YEAR (Amount in Dirhams)

Furnitur
Motor e Office
& Equipme
Vehicle Fixture nt Total

Cost or Deemed
Cost :
As at 01 April
2009 154,740 36,874 31,564 223,178
Additions during the
year Nil Nil 12,849 12,849

Deletion during the (36,874 (224,887


year (154,740) ) (33,273) )

As at 31 March
2010 Nil Nil 11,140 11,140

Depreciation & Impairment Losses :


As at 01 April
2009 90,265 21,510 12,108 123,883
Depreciation during
the year 47,282 11,267 11,520 70,069

Deletion during the (32,777 (190,129


year (137,547) ) (19,805) )

As at 31 March
2010 Nil Nil 3,823 3,823

Carrying Amounts :
As at 31 March
2010 Nil Nil 7,317 7,317

As at 31 March
2009 64,475 15,364 19,456 99,295

80
Compass BPO FZE

PREVIOUS YEAR (Amount in Dirhams)

Motor Furniture Office


Vehicle & Fixture Equipment Total

Cost or Deemed Cost :


As at 01 April 2008 154,740 36,874 22,029 213,643
Additions during the year Nil Nil 9,535 9,535

As at 31 March
2009 154,740 36,874 31,564 223,178

Depreciation & Impairment Losses :


As at 01 April 2008 38,685 9,219 2,633 50,537
Depreciation during the year 51,580 12,291 9,475 73,346

As at 31 March
2009 90,265 21,510 12,108 123,883

Carrying Amounts :
As at 31 March
2009 64,475 15,364 19,456 99,295

As at 31 March
2008 116,055 27,655 19,396 163,106

31-03-10 31-03-09
Dirhams Dirhams
7. Trade and Other Receivables

Trade Debtors 149,602 682,899


Deposits 18,000 15,000

167,602 697,899

8. Prepayments

Rent 21,576 61,493


Trade Licence fees 756 1,134
Others Nil 633
81
Compass BPO FZE

22,332 63,260

9. Cash and Cash Equivalents

Cash 15,523 24,109


HSBC Bank Middle East 40,569 12,598

56,092 36,707

10. Trade and Other Payables, including Derivatives

Loan from Directors 60,795 69,421


Advance from Customers 26,120 102,911
* Due to Associates 39,716 34,280

126,631 206,612

* Due to Associates

Compass BPO Pvt. Ltd. - India 39,716 34,280

39,716 34,280

The parent company - Compass BPO Ltd U.K's account is reclassified from Due to Associates to
Head Office Current Account in the equity.

11. Provisions

Bonus payable Nil 104,440


Professional charges 10,000 10,000
Maintenance Charges 43,168 9,437
Additional License Fee 66,828 Nil

119,996 123,877

31-03-10 31-03-09
Dirhams Dirhams
12. Other Income

Foreign exchange gain (net) Nil 413,356

82
Compass BPO FZE

13. Administrative Expenses

Travelling expense 201,470 247,364


Rent 172,418 276,335
Communication Expenses 111,735 42,183
Office costs 84,221 17,030
Marketing expenses 39,173 77,355
Foreign exchange difference 17,735 Nil
Loss on sale of asset 13,447 Nil
Audit Fee 17,500 Nil
Repairs and Maintenance 11,088 49,565
Electricity and Water 10,065 14,633
Legal & professional charges 6,000 10,000
Licence fee 6,378 10,048
Interest and Bank charges 5,483 5,734

696,713 750,247

14. Financial Risk Management Objectives & Policies

a) Credit Risk

Financial assets, which potentially subject the establishment to credit risk, comprises mainly of
bank balances and receivables. Bank balances are with regulated financial institutions. The
receivables are fully recoverable as per management representation.

b) Interest Rate Risk

The establishment does not utilise any type of facilities from banks or financial institutions.

c) Exchange Rate Risk

There were no significant exchange rate risks as most of the financial assets and liabilities are
denominated in UAE Dirhams & US Dollars except the due to associates' balances. The U.K.
associate Company's account is denominated in U.K. Pounds and the Indian associate Company's
account is denominated in Rupees.

83
Compass BPO FZE

d) Liquidity Risk

The table below summarized the maturity profile of the establishments' financial liabilities based on
contractual payment basis.

Financial liabilities as at 31-03-2010 < 3 mths 3 - 12 mths 1 - 5 yrs Total

Due to Associates Nil 39,716 Nil 39,716


Loan from Directors Nil 60,795 Nil 60,795
Advance from Customers 26,120 Nil Nil 26,120
Provisions 119,996 Nil Nil 119,996

Total 146,116 100,511 Nil 246,627

15. Fair Values of Financial Instruments

Financial instruments comprise financial assets and financial liabilities. Financial assets of the
establishment include bank balances and cash and trade receivables. Financial liabilities of the
establishment include loans from Directors, accounts payable and due to associates. The fair values of the
financial assets and liabilities are not materially different from their carrying values unless stated
otherwise.

16. Related Party Transactions

The establishment enters into trade transactions with another firm or persons that fall within the definition
of related party as contained in International Financial Reporting Standards (IFRS).

Salary paid to Directors Dhs. 975,514/-

17. Reclassification of Figures of the Preceding Year’s Financial Statements

Certain figures of the financial statements for the year-ended 31 March 2009 have been reclassified to be
consistent with the current year's classification.

For Compass BPO FZE


Manager

84
Compass BPO Inc.

Profit & Loss Account for the period ended 31 March 2010

Particulars Amt($) Amt($) Particulars Amt($) Amt($)


2009-10 2008-09 2009-10 2008-09

Salary Revenue
468,850 527,428 1,135,919 1,416,001
Consultant Charges
320,832 474,056
Travel
107,389 104,610
Office Costs
89,062 92,008
Marketing
35,990 28,511
Audit Fees
9,270 -
Legal & Professional Fees
2,020 7,205
Insurance
9,432 10,060
Bad Debts
- 34,664
Taxes & Fees
3,786 5,017
Depreciation
8,338 7,150
Bank Charges
710 1,609
Tax for the Year
24,200 43,536

Profit transferred to Balance Sheet


56,040 80,149

1,135,919 1,416,001 1,135,919 1,416,001

85
Compass BPO Inc.

Balance Sheet as at 31 March 2010

Liabilities Amt($) Amt($) Assets Amt($) Amt($)


2009-10 2008-09 2009-10 2008-09

Computer
Capital Stock
100 100 Equipment
Less: Depreciation
4,659 6,624
Amount owed to holding
company 249,696 419,185
Accounts Payable Office Equipments
36,085 40,530
Other Liabilities Less: Depreciation
10,629 54,998 1,287 1,174
Provision for taxation
24,200 48,408
Furnitures &
Fixtures
Retained Earning Less: Depreciation
165,302 109,261 4,252 6,066

Bank
10,648 147,629

Debtors
448,010 465,088

Prepaid
17,156 45,901

486,012 672,482 486,012 672,482

86
Compass BPO Inc.

Schedule for Profit & Loss Account

Account Code Account Name Amount


$

1 Salaries : Gross Salary (DM) 328,166


Gross Salary (JP) 164,111
Bonus (JP) 5,000
Bonus provn - 28,427

468,850
2 Office Cost :
400-150 Staff Welfare Exps 5,445
410-080 Computer Exps-Others 4,064
410-090 Courier Charges 4,882
410-200 Membership & Subscription 5,583
410-220 R & M - Office Equipment 1,358
410-230 R & M - Computers 5,193
410-240 R & M - Others 204
410-260 Rent 4,500
410-250 Rates & Taxes 2,592
410-290 Software Exp. 6,942
410-310 Tel Line Ongoing Cost 1,536
410-370 Tel Cost - Mobile 12,830
410-400 Tel. Cost Internet 8,287
410-410 Others 19,256
410-440 Meetings & Conferences 2,160
600-150 Staff Welfare Exps 266
610-200 Membership & Subscription 853
610-290 Software Exp - Direct 480
610-310 Tel Line Cost - Direct 2,630
89,062
3 Audit Fees :
410-020 Audit Fees 9,270
Legal &
4
Professional
Fees : 410-
Legal & Professional Fees 2,020
160

87
Compass BPO Inc.

5 Travel Etc. :
400-090 Flights Charges 25,735
400-110 Conveyance Local 13,056
400-130 Hotel Accomodation 15,721
400-190 Trl & Liv Travel 49,131
600-090 Flights Charges - Direct 654
600-110 Conveyance Local - Direct 181
600-130 Hotel Accom - Direct 1,459
600-190 Trl & Liv Travel 1,452
107,389
6 Marketing :
400-140 Marketing Cost 27,764
410-040 Business Prom/Ent 7,834
410-420 Entertain - B'ness Dev 347
610-040 Business Prom/Ent 45
35,990
7 Revenue
300-010 Staff Charges 1,745,770

320-010 Consulting - IND 581,341


320-025 Consulting Fixed Price 123,066
320-040 Software Revenue 10,450 2,460,628

320-020 Consulting-US
Consulting (DM) 52,035
Consulting (MEL) 79,624
Consulting (TERRI) 76,210
Consulting (VICKY) 119,910
Consulting (JOEL) 46,230
Consulting (CHERYL) 35,760 409,769

310-010 Other Income 213,180


310-020 P/L on FA - 3,288
310-030 Interest rec 1,340 211,233
3,081,629
Less:
400-020 CDIPL Charges-UK/US 1,871,861
Recharge 73,849 1,945,710
1,135,919

88
Compass BPO Inc.

Schedule for David's &


8
Joel's Gross Salary
Gross Salary (DM) Gross Salary (JP)
Month

April 26,304 17,581


May 26,314 17,629
June 26,304 17,581
July 27,314 18,996
Aug 27,314 20,042
Sept 27,304 18,055
Oct 27,343 18,125
Nov 27,298 18,051
Dec 27,476 18,051
Jan 28,646 -
Feb 28,259 -
March 14,140 -
314,016 164,111

478,127

Schedule for Balance Sheet

Account Code Account Name Amount


$
1 Debtors :
120-010 Debtors 448,010
250-015 Prov for Bad Debts -

448,010
2 Prepaid :
150-070 Prepaid Expenses 17,156
17,156

3 Other Liabilities :
150-040 Advance Account 7,320
150-105 Melinda Phillips Loan A/c (400)
240-060 Out.Liabilities for Exps 3,709
10,629

89
Compass Business Process Outsourcing Private Limited

DIRECTORS’ REPORT TO THE MEMBERS

Your Directors have pleasure in presenting the 12th Annual Report and the Audited Accounts for the year ended 31 st
March 2010.

FINANCIAL RESULTS:
(Rupees In Lacs)
31.03.2010 31.03.2009
Sales and Other Income 2409.23 2558.57

Profit/(Loss) before Depreciation 231.09 191.48

Depreciation (88.64) (74.59)

Profit/(Loss) before Taxation 142.45 116.89

Provision for Taxation (8.85) (2.06)

Profit/(Loss) after Taxation 133.60 114.83

Loss Brought Forward (146.85) (261.68)

Accumulated Profit/(Loss) Carried to Balance Sheet (13.25) (146.85)

DIVIDEND

The Company has made profits during the year. However it has been decided to retain the profits and hence the
directors do not recommend any dividend for the year.

DIRECTORS’RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with respect to Directors’
Responsibility Statement, it is hereby confirmed:

(i) That in the preparation of the annual accounts for the financial year ended 31.03.2010 the applicable
accounting standards have been followed along with proper explanation relating to material departures;
(ii) The Directors had selected such accounting policies and applied them consistently and made
judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state
of the affairs of the Company at the end of the financial year and of the profit or loss of the Company
for that period;
(iii) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records
in accordance with the provisions of this Act for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities.
(iv) That the Directors have prepared the accounts for the financial year ended 31.03.2010 on a ‘on going
concern’ basis.

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Compass Business Process Outsourcing Private Limited

PARTICULARS OF CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION:

Since your Company is a 100% export oriented unit and only operates in data processing and development, the
information as required under Section 217(1)(e) of the Companies Act, 1956 read with The Companies (Disclosure
of Particular in the Report of the Board of Directors) Rules, 1988 are reported below to the extent applicable. The
company has not deployed and imported Technology to carry out its process. The consumption of energy is
minimal. The Company will take suitable steps, if required, in future for reduction of consumption of energy.

FOREIGN EXCHANGE

Your company remains to be net foreign exchange earner for India


(Rupees in Lacs)
31.03.2010 31.03.2009

Export Earnings for Service 2406.34 2551.54


Less: Expenses
- Capital 8.54 23.49
- Others 24.74 29.07
Net Foreign Exchange Earning 2373.06 2498.98

PARTICULARS OF EMPLOYEES

There were no employees covered by the provisions of Section 217 (2A) of the Companies Act, 1956 read with
companies (Particulars of Employees) Rules, 1975, whose particulars are required to be given.

AUDITORS

The Auditors of the Company M/s. KDS & Co., Chartered Accountants, Mumbai retire at the conclusion of ensuing
Annual General Meeting and S. V. Ghatalia & Associate be appointed as Auditor for FY 2010-11.

DEPOSITS

The Company has not accepted any deposit during the financial year.

ACKNOWLEDGEMENTS

Your Directors thank Compass BPO Ltd., UK for their continuous support and guidance given to the Company.

Your Directors are also thankful to the various Governments Agencies and Banks for their valuable support. The
Directors also express their appreciation to all Employees, Staff and Shareholders of the Company.

For and on behalf of the Board of


Compass Business Process Outsourcing Pvt. Ltd.

(Mr. Deepak Patel)


DATE : 22/04/2010 Chairman
PLACE: Mumbai

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Compass Business Process Outsourcing Private Limited

A ud it ors' R ep ort

To
Th e Memb ers o f
Co mp ass Bus in ess P ro cess O utso ur cing P r iv at e Lim i ted

1 . We h av e aud it ed th e at tach ed B alan c e S he et o f Co mp ass Bus in ess P ro ces s O ut so urc in g


P r iv ate Limi ted (Th e C o mp an y) , as at 3 1 s t M ar ch 2 0 10 and a lso th e P r o fit and Loss
Ac cou nt for th e ye ar en d ed o n tha t da te annex ed ther eto . T hes e Fin an ci al S tat em en ts ar e
the r e sp o nsib il it y o f th e Co mp an y’ s M anag em ent . O ur resp o ns ib il it y i s to exp r es s an
op in io n o n th es e F in an c ia l S tat em en ts b ased o n o ur aud i t.

2 . We h ave co ndu cted our aud it in accor d an ce w i th Au diting S t and ar ds G en er al l y Ac cep ted
in Ind ia . Tho se S t an d ar ds r eq uire th at w e p lan and p er fo rm th e aud it to ob tain re ason ab le
assu r an ce ab ou t wh e th er th e fi nan cial st atemen ts are fre e o f ma ter i al m i ss ta tem en t(s) . An
au di t in clude s ex a min ing , on a test ch eck b asi s, ev iden ce su p p o rtin g the a moun ts an d
disc lo su r es in th e F in an cial S t at em ent s. An au d it also in clud es as se ssing th e ac co un t in g
p r in cip l es u sed and sign i fic an t est im a te s m ad e b y m anag em en t , as we ll as ev alu at ing th e
ov er al l fin an ci al s ta tem en t p re sen t at io n . W e b el iev e tha t our aud i t p r ov id es a re ason ab le
b asis fo r ou r op inion .

3 . We r ep or t th at :

i. We hav e ob tain ed a ll the in fo rm a tion an d exp l an at io ns, wh ich to th e b es t o f ou r


kn owl edg e an d b el ie f wer e ne cessar y for o ur au d it;

ii . In o ur o p in io n , p rop er b o oks o f ac cou n t h av e b een k ep t as r eq u ir ed b y l aw so far as


it ap p ears fro m o ur ex amin a tion o f t he b ook s;

ii i. Th e Balan ce sh ee t and P r o fit & Lo ss A ccou n t de al t w ith b y th i s rep or t ar e in


ag re emen t w ith the b o oks o f acco un ts;

iv. In o ur op in io n and to the b es t o f ou r in for mat io n, th e B alan ce S hee t an d th e P r o fit


an d Lo ss Ac cou n t co mp l y w i th the A ccoun tin g S tand ar ds r e fer r ed to in se ct io n
21 1 (3 C) o f th e Co mp ani es A ct, 1 956 ;

v. O n th e b as is o f wr i tten r ep r es en ta tion r e ce iv ed fr o m th e d ir ector s o f the co mp an y


for th e year ended M ar ch 3 1 s t , 2 0 10 and t ak en on r eco rd b y th e Bo ard o f D ir ec tor s,
we r ep ort th a t no dir e ctor is d isq uali fi ed from b ein g ap p o in ted as d ir ec to r o f th e
comp an y u nd er cl aus e (g) o f su b -sec tion (1 ) o f S ectio n 2 74 of the Comp an ies A ct,
195 6 ;

vi. In o ur op in io n and to th e b es t o f ou r in fo r ma tio n an d accor d in g to th e ex p l ana tion s


given to us, th e sa id ac co unt s giv e th e in fo r m ation req uir ed b y the Co mp ani es A ct,
19 56 , in the m an ner so r eq u ir ed an d g ive a tr u e and fa ir view in co n for m it y w ith th e
Ac cou nting P rincip l es g en era ll y accep ted in Ind i a:

(a) In the case o f B alan ce S heet, o f th e st at e o f a ffai rs o f th e Co mp an y as at 3 1 s t Mar ch,


20 10 ;an d

(b) In the case o f th e P ro fi t & Lo ss A c cou nt , o f th e P r o fit for th e year end ed on that
date .
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Compass Business Process Outsourcing Private Limited

4 . As req u ir ed b y th e C omp ani es (Au di to r 's R ep o rt) O rd er , 2 00 3 , as a mend ed b y th e


Co mp an ies ( Audi tor ’ s Rep ort) (A mend men t) O r der, 2 0 04 , issu ed b y th e C en tral
Gov er n men t o f Ind i a in ter ms o f su b -sec tion ( 4 A) o f s ect ion 2 27 of th e Co mp an ies
Ac t, 1 956 we r ep o rt h ereun der o n th e m a tt er s sp e ci fi ed in p ar ag r ap hs 4 an d 5 o f th e
sa id O rder to th e ex ten t ap p licab le to th e co mp an y.

i a) Th e Comp an y h as m ain t ained p ro p er r ecor d s to sho w fu l l p art icul ar s, inc lud in g


q u anti tativ e d e ta ils an d si tu at io n o f its fix ed assets.

b ) All th e fi xed ass et s o f th e Comp an y h ave b een p h ysi ca ll y v er i fi ed du r ing th e


ye ar b y th e M an age m en t and no m ater i al d iscre p anci es hav e b e en no ticed o n
the p h ysi ca l ver i fi ca tion as con fir m ed b y th e m an age m ent .

c) F ix ed As sets di sp osed o f f du r ing th e ye ar w er e no t su b st an ti al and th er efor e, d o


no t ef fe ct th e g oing con cern assu mp tio n .

ii. Th e comp an y is a s er v ice comp an y p r im ar ily r ender ing b ack o ffic e d ata
p r ocess ing ser vi ces. Accor d ingl y it do es no t h old an y p h ysi ca l in v en tor ies.
Th us clau se 4 ( i i) o f th e co mp ani es ( Aud itor s R ep or t) O r der, 2 003 ( ‘the O r der’ )
is not ap p licab le.

iii . The Co mp an y has n ot t aken an y lo an exc ep t int er es t fr ee un secur ed lo an t aken fr o m


its sh ar e ho ld er, wh i ch is out stan d in g at the B a lance S hee t d ate . The co mp an y h as no t
gr an ted an y lo an s, s ecured or un se cur ed to o r fr om co mp an ies, fir m s or oth er p art ies
co ver ed in th e r egi st er m a in tained und er S ection 301 o f th e Co mp ani es A ct, 1 95 6 .

iv. In o ur op inion and accor ding to in fo rm a tio n an d exp lanat io n g iv en to u s, th er e ar e


ad eq u ate in terna l co ntro l p ro ced ur es co mm en su r at e w i th the si ze o f th e Co mp an y an d
the n a tu re o f i ts b usin ess for p urcha se o f fix ed asse ts and rend er ing o f s er v ices. Th e
ac tiv iti es o f th e co m p an y d o not inv o lv e p u rchase o f inv entor y and th e sa le o f goo ds.
We h av e no t ob ser ved an y con t in u ing fa il ur e to cor rec t major w eak ness in th e in t er n al
co ntro ls d ur ing th e cour se o f th e aud it .

v. In ou r o p in ion and accor d ing to in for matio n and exp l an at io n g iv en to u s, th e


tr an sac tions tha t ne ed to b e ent er ed in the r eg is ter in p u rsuan ce o f S ect ion 3 01 o f th e
Comp ani es Ac t 1 95 6 hav e b e en en ter ed.
In o ur o p in io n and a cco rd ing to th e exp lanat ion given to u s, th e tr an sac tion s mad e in
p u rsuan ce o f con tr act or ar r ang em en t en tered in th e r eg ist er m ain t ained und er S ect io n
30 1 of the Co mp ani es A ct , 1 95 6 and exce ed ing v alu e o f R up ees F ive Lakhs in r esp ect
o f an y p art ies du r ing th e yea r h ave b e en m ad e at p r ices wh ich ar e r easo n ab le , h av in g
r egard to th e p r ev ail in g mark et p r ic e at r elev ant ti me. Th e co mp an y is p ro vid in g
serv ic es to i ts ho lding co mp an y, as exp lained t o us, th e tr ans ac tion ar e mad e at th e
co ntr a ct ed p r ic e. Th e p reva il in g m ark et p rice is not fr e el y asc er tain ab le, con sid er in g
the ter ms o f con tr act and sp ecial iz ed n atur e o f activ i ti es ; ho wev er in our o p in io n
93
Compass Business Process Outsourcing Private Limited

co ntr a ct ed r a te s ar e r ea son ab le hav ing r egar d to the term s o f con tr ac t and n atur e o f
the serv ic es p r ov id ed .
v i. Th e Comp an y ha s not a ccep t ed an y dep osits fr om the p ub lic and co nseq uent l y, th e
dire ct iv es i ssu ed b y the R eserv e B an k o f In d ia, t he p r ov is io n o f th e S ec tion s 5 8 A an d
58 AA o f th e Comp an ies A c t, 1 95 6 and the r u les fr am ed th er e un d er ar e n o t ap p licab le.

v ii . In o ur op in io n, Th e Co mp an y h as an In tern al Au di t s ys t em h owev er th e s am e ne ed s
to b e s tr en gth en ed an d cov erag e n e ed s to b e ex t end ed to m ake i t com m en sur at e w ith
the s ize & n atur e o f i ts b usin ess .
v ii i. A cco rd ing to in fo r mat ion an d exp lan at io n g iven to us, th e C en tr al Gov er n men t ha s
no t p rescr ib ed th e m ain t enan c e o f co st r ecor d s und er se ct io n 2 09 (1 ) (d ) o f th e
Co mp an ies Act , 1 9 56 .
ix. Acco rd in g to th e in for m at io n & ex p lan a tion s g iv en to u s , and on the b asi s o f ou r
exa m in at io n o f th e b oo ks of accou n ts and o th er docu men ts , The Comp an y i s
gen er all y regu l ar in d ep osi ting w ith ap p r op r iate au th or ities und isp ut ed st atu tor y
dues in c lud in g P r ov id en t Fu nd d u es, In co me Tax, S al es Tax , Cus to m s D u t y,
Inv es tor Ed uca tion an d P r ot ect ion F und , We al th Tax an d an y o th er m at er i al
st atuto r y d u es ap p licab le to it.
Acco rd in g to th e in for mat ion & exp lanat ion g iv en to us, n o u ndisp ut ed dues
p ayab l e in r esp ec t o f P r ov id ent F und , In com e t ax, S al es t ax , We al th T ax, S er v ic e
Tax, Custom s D u ty, Ex cise D ut y and C ess w er e in arr ear s, a s at 3 1 s t March 2 01 0
for a p er io d o f mor e th an six mo nth s fr o m th e d a te the y b ec am e p a yab le .
Acco rd in g to th e in for m ation & exp lan at io n s given to u s, th er e ar e n o d ues in
resp ect o f In co m e Tax , S al es T ax, W ea lth T ax , S er v ice T ax , Cus tom s D u t y an d
Excis e D ut y & C es s th at h ave n ot b een d ep osi te d wi th th e ap p r op riated au th or it ies
on ac cou nt o f an y d isp ute w i th the Co mp an y.
x. In our o p inio n, in th e cur ren t fin an ci al ye ar , th e ac cu mu la ted los se s ar e no t more than
fi ft y p er c en t o f its n et wo r th. T he co mp an y h as n ei th er incu r r ed an y cash losses in th e
cu rr en t fin an cial year nor in th e i mm ed iat el y p r o ce ed ing fin an cia l ye ar .
xi. In o ur op inion an d exp lan ation g iven to u s the Com p an y h a s not de fa ul ted in
r ep a ym en t o f d ues to a b ank.
xii . Th e Comp an y ha s no t an y g r anted lo an s & ad van ces on th e b as is o f se cur i t y b y w a y
o f p led g e o f sh ar es, d eb en tu r es & other se cur it i es. Acco rd in g l y, cl au se 4 ( xi i) o f th e
ord er is no t ap p licab le.
xii i . T he Co mp an y is no t a Ch i t Fun d , N id hi Mu tual B en e fi t F und or a S oc iet y.
Ac cor ding l y, c lau se 4 (x ii i) o f th e or d er is n o t ap p licab le .
xiv . A ccord in g to th e in form a tion & exp l an at ion s g iv en to us , th e Co mp an y i s not
dea ling or tr ad ing in sh ar es, secur ities, d eb en tur es & oth er inv es tm en ts. Ac cor d ing l y,
cl aus e 4 ( xiv ) o f th e o rd er is not ap p licab le.

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Compass Business Process Outsourcing Private Limited

xv. Ac co rd ing to th e in for m at ion & exp lan at io ns given to us , th e Com p an y h as n o t giv en
an y gu ar ant ee for lo an s t ak en b y o ther s fro m b an ks o r fin an cial in st itu tio n s.
Acco rd in g l y, clau se 4 ( x v ) o f th e o rd er is no t ap pli cab le .
xvi. Th er e i s no t er m lo an ou tst an d ing du r ing th e cu rr en t fi n an ci al year .
xviii . A ccord in g to th e in for m atio n & exp l an at io n s g iv en to u s and th e ov er all
exa m in at io n o f th e Bal an ce S heet o f th e Co mp an y, we r ep or t th at n o fun d s r aised o n
the shor t- t er m b asis h av e b een used for lon g - te rm inv es tm en ts. N o long -t er m fund s
hav e b een used to fin an ce sh or t- term assets ex ce p t th e p er man en t wor k ing c ap i ta l.
xviii . Th e C o mp an y ha s no t m ade an y p r e fer en tial a llot m en t o f th e sh ar es to p ar ti es &
co mp an ie s cov er ed in th e r eg ist er m ain tain ed u nd er se ct io n 301 of th e Co mp an ie s
Ac t 1 95 6 . Ac cor d ing l y, cl aus e 4 (x v iii) o f th e o r der is no t ap p licab le .
xix . Th e Comp an y ha s no t issu ed an y d eb entu r es . A ccor d in g l y, c lau se 4 (x ix) o f th e or der
is not ap p licab le.
xx. Th e Comp an y h as no t r ai sed an y mon e y b y p ub lic i ssu e dur in g th e fin an cia l ye ar.
Ac cor ding , cl aus e 4 ( xx) o f th e or d er i s no t ap p licab l e.
xxi. A ccor d ing to th e in for m ation & exp lanat ion s to us , no fr au d on or b y th e Co mp an y
has b een n o t iced or r ep ort ed d ur in g th e yea r.
xxii. Th e o th er clau ses o f th e C omp an ies ( Au ditor ’s R ep or t) O r der , 2 00 3 are not
ap p licab l e to th e C omp an y fo r th e fi n anci al year und er aud it .

Fo r a n d on b eha lf o f
K D S & C o.
Char t er ed Accoun tan ts
K eta n D . S a iy a
P ar tn er
Memb er ship N o . 4 9 176
Fir m R egn . N o. – 1 17 073 W
P lace : - Mu mb ai
D ated : - 2 2 n d Ap ril, 2 0 10

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Compass Business Process Outsourcing Private Limited

BALANCE SHEET AS AT MARCH 31, 2010

Schedule 31.03.2010 31.03.2009


(Rs.) (Rs.)
SOURCES OF FUNDS

Shareholders' Funds

Share Capital 1 17,431,000 17,431,000

Loan Funds

Secured Loans 2 637,140 75,324


Unsecured Loans 3 1,852,283 1,852,283

Total 19,920,423 19,358,607

APPLICATION OF FUNDS

Fixed Assets 4

Gross Block 56,331,620 63,732,756


Less : Depreciation 36,675,776 53,065,478
Net Block 19,655,844 10,667,278

Deffered Tax Asset 1,478,000 1,251,983

Current Assets, Loans and Advances

Sundry Debtors 5 1,334,632 3,908,736


Cash and Bank Balance 6 3,508,934 3,208,695
Loans and Advances 7 25,869,293 25,770,555
30,712,859 32,887,987
Less : Current Liabilities and Provisions

Current Liabilities 8 28,941,241 36,921,669


Provisions 9 4,309,510 3,211,900
33,250,751 40,133,569
Net Current Assets (2,537,892) (7,245,582)

Profit and Loss Account 1,324,471 14,684,928

Total 19,920,423 19,358,607

0
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Compass Business Process Outsourcing Private Limited

-
Significant Accounting Policies 13 0.25
and Notes on Accounts

Schedules referred to herein form an integral part of the Balance Sheet

This is the Balance Sheet referred


to in our report of even date

Mr Deepak Patel Director

Ketan D. Saiya Mr Manoj Kedia Director


Partner
Membership No: 49176
For and on behalf of
KDS
& Co
Chartered Accountants
Firm Registration : 117073W
Place: Mumbai Place: Mumbai
Date : 22nd April 2010 Date : 22nd April 2010

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Compass Business Process Outsourcing Private Limited

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON MARCH 31, 2010

2009-10 2008-2009

Schedule (Rs.) (Rs.)

INCOME

Income from Services 240,634,675 255,153,974

Other Income 10 288,847 703,269

Total Income 240,923,522 255,857,243

EXPENDITURE

Personnel Costs 11 140,669,881 154,343,417


Operating, Administration and other expenses 12 77,104,319 82,233,511
Interest 39,334 132,320
Depreciation 8,864,548 7,458,717
226,678,082 244,167,965

Profit /(Loss) before Taxation 14,245,440 11,689,278

Taxation Current 1,111,000 -


Deffered (226,017) (474,054)
Fringe Benefit Tax - 679,800

Profit /(Loss) After Taxation 13,360,457 11,483,532

Profit / (Loss) Brought Forward (14,684,928) (26,168,460)

Balance carried forward to the Balance Sheet (1,324,471) (14,684,928)

Earnings Per Share ( Basic and Diluted) 17.83 15.12

Significant Accounting Policies 13


and Notes on Accounts

Schedules referred to herein form an integral part of the Profit and Loss Account

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Compass Business Process Outsourcing Private Limited

This is the Profit and Loss Account referred


to in our report of even date
Mr Deepak Patel Director

Ketan D. Saiya Mr Manoj Kedia Director


Partner
Membership No: 49176
For and on behalf of
KDS & Co
Chartered Accountants
Firm Registration : 117073W
Place:
Place: Mumbai Mumbai
Date : 22nd April 2010 Date : 22nd April 2010

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Compass Business Process Outsourcing Private Limited

SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2010


SCHEDULE 1

SHARE CAPITAL
31.03.2010 31.03.2009
Authorised (Rs.) (Rs.)

7,00,000 Equity Shares of Rs.10/-


each 7,000,000 7,000,000

1,05,000 Preference Shares of Rs


100/- each 10,500,000 10,500,000

TOTAL 17,500,000 17,500,000

Issued,Subscribed and Paid-up 31.03.2010 31.03.2009


(Rs.) (Rs.)
6,93,100 Equity Shares of Rs. 10/-
each fully paid 6,931,000 6,931,000

1,05,000 Preference Shares of Rs


100/- each fully paid 10,500,000 10,500,000

TOTAL 17,431,000 17,431,000

Notes:

1. Out of 6,93,100 paid-up equity shares 6,93,080 equity shares are held by the holding company
Compass BPO Limited, UK

2. Out of above 93,100 equity shares are allotted as fully paid-up pursuant to a contract for
consideration other than cash.

3. Preference Shares carry dividend of 10% and are redeemable at par in one installment at any
time before 10 years from 27th March 2000, the date of allotment.

4. The entire 1,05,000 fully paid-up preference shares are held by the holding company Compass
BPO Limited, UK.

SCHEDULE 2

SECURED LOANS 31.03.2010 31.03.2009

(a) Loans from Bank (Rs.) (Rs.)

Cash Credit from IDBI Bank Limited (Note 1 & 2) 637,140 75,324

Total Secured Loans 637,140 75,324

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Compass Business Process Outsourcing Private Limited

Notes:

1. The Cash Credit facility is secured by hypothecation of Fixed Assets, Book Debts, Claims and
other receivables.

2. The Cash Credit is also guaranteed by Mr. Hitesh Dixit and the holding company Compass
BPO Limited, UK.

SCHEDULE 3

UNSECURED LOANS 31.03.2010 31.03.2009


(Rs.) (Rs.)
Interest free loan from Shareholder 1,852,283 1,852,283

SCHEDULE 4
FIXED ASSETS
Gross Block Depreciation Net Block
Additions
As on / Adj. Disposals As on As on Disposals For the As on As on As on
Particulars during during during 31-Mar- 31-Mar- 31-Mar-
1-Apr-09 the the 31-Mar-10 1-Apr-09 the Year 10 10 09
Year Year Year
Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees

Computers 47,403,947 553,898 15,477,416 32,480,429 39,505,268 15,046,734 4,666,133 29,124,667 3,355,762 7,898,679

Office Equipment 6,597,690 8,637,418 4,200,312 11,034,796 5,886,726 4,167,262 1,571,430 3,290,894 7,743,902 710,964

Vehicles 3,046,005 - 493,584 2,552,421 1,886,487 493,586 604,967 1,997,868 554,553 1,159,518

Furniture and Fixtures 6,685,114 6,847,922 5,893,052 7,639,984 5,786,997 5,546,669 1,803,353 2,043,681 5,596,303 898,117

Electrical Fittings - 2,623,990 - 2,623,990 - - 218,666 218,666 2,405,324 -

TOTAL 63,732,756 18,663,228 26,064,364 56,331,620 53,065,478 25,254,252 8,864,548 36,675,776 19,655,844 10,667,278

Previous Year 59,417,895 4,636,958 322,097 63,732,756 45,928,858 322,097 7,458,717 53,065,478 10,667,278 -

SCHEDULE 5
31.03.2010 31.03.2009
SUNDRY
DEBTORS (Rs.) (Rs.)

Debts outstanding for less than six months TOTAL 1,334,632 3,908,736
(Unsecured Considered Good)

Note : The entire outstanding of Rs. 13,34,632 (Last year Rs.39,08,736/-) was due from holding
company Compass BPO Limited, UK

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Compass Business Process Outsourcing Private Limited

SCHEDULE 6
CASH AND BANK BALANCES 31.03.2010 31.03.2009
(Rs.) (Rs.)
Cash on hand (including Foreign currency on hand) 154,152 132,186

Balance with Scheduled Banks


On Current Account 21,574 37,884
Fixed Deposits 2,849,000 2,609,000
Interest Accrued on Fixed Deposits 49,413 74,243

Balance with Non-Scheduled Bank


HSBC Bank - on Current Account 332,557 240,112
- on Fixed Deposit 100,000 100,000
- Interest Accrued on Fixed Deposit 2,238 15,271

3,508,934 3,208,695

Note 1 : Maximum balance in Current Account was Rs. 1,19,23,269 (Prevoius year Rs. 1,37,21,961)

Note 2 : The fixed deposit of Rs. 5,35,000/- is under lien to Bank for issuing bank guarantee in favour
of customs authorities.

SCHEDULE 7
LOANS AND ADVANCES 31.03.2010 31.03.2009
(Unsecured, considered good) (Rs.) (Rs.)

Advances recoverable in Cash or in kind or for Value to be Received 15,587,598 15,338,859


Deposits 9,794,648 9,944,650
Due from fellow subsidiary Compass BPO FZE, UAE. 487,047 487,047

TOTAL 25,869,293 25,770,555

SCHEDULE 8
CURRENT LIABILITIES 31.03.2010 31.03.2009
(Rs.) (Rs.)
Creditors for Expenses 6,167,244 10,256,258
Creditors for Capital Goods* 9,418,710 9,408,537
Due To Holding Company, Compass
BPO Ltd, UK 1,687,594 5,219,749
Other Liabilities 11,667,693 12,037,125

TOTAL 28,941,241 36,921,669


* Includes due to holding company of Rs 94,18,710/- (Last Year Rs. 93,57,913/-)

102
Compass Business Process Outsourcing Private Limited

SCHEDULE 9
PROVISIONS 31.03.2010 31.03.2009
(Rs.) (Rs.)
Provision for Taxation 2,590,800 1,479,800
Provision for Provident Fund Contribution 442,409 480,490
Provision for Gratuity 1,276,301 1,251,610

TOTAL 4,309,510 3,211,900

SCHEDULE 10 31.03.2010 31.03.2009


OTHER INCOME (Rs.) (Rs.)

Interest Received on Fixed Deposit with Bank 202,583 44,090


(Tax deducted 34640/- (Last Year 6074)

Interest accrued, but not due, on Fixed deposit with Bank 51,651 68,480

Profit on sale of assets (Net) 29,502 40,420

Interest on Income Tax refund - 439

Miscelleaneous Income 5,111 -

Foreign Exchange Gain (Loss) - Net - 549,840

TOTAL 288,847 703,269


SCHEDULE 11 31.03.2010 31.03.2009
PERSONNEL COSTS (Rs.) (Rs.)

Salaries, Wages and Bonus etc. 129,655,511 141,102,421


Contribution to Provident and Other Funds 5,576,148 5,960,440
Staff Welfare 2,489,446 3,613,409
Staff Training Expenses 972,625 1,734,774
Administration Charges for Provident Fund 699,850 680,763
Gratuity 1,276,301 1,251,610

TOTAL 140,669,881 154,343,417


SCHEDULE 12 31.03.2010 31.03.2009
OPERATING, ADMINISTRATION AND OTHER EXPENSES
(Rs.) (Rs.)
Rent 22,147,603 23,931,133
Rates & Taxes 46,012 58,524
Office Expenses 217,694 113,986
Electricity & Water Charges 10,971,011 11,317,575
103
Compass Business Process Outsourcing Private Limited

Travelling Expenses 3,369,738 5,248,163


Conveyance Expenses 4,474,930 5,204,182
Printing and Stationery 924,696 1,104,005
Telephone Charges 1,175,959 1,596,930
Communication Cost 7,002,939 7,278,518
Payment to Auditors
Statutory Audit Fees 275,000 225,000
Management Audit Fees 150,000 -
Tax Audit Fees 50,000 25,000
Taxation Matters 25,000 69,738
Other Services 219,323 73,033
Computer & Software Expenses 9,862,351 7,992,269
Legal and Professional Charges 3,640,396 7,650,527
Car Expenses 523,636 507,014
Business Promotion/Entertainment 112,107 258,779
Repairs & Maintenance 7,725,519 8,416,857
ROC and Stamp Duty Charges 2,500 9,920
Insurance Expenses 821,854 727,746
STPI Annual Charges 585,000 200,000
Bank Charges 235,974 224,613
Foreign Exchange Gain (Loss) - Net 2,545,077 -

TOTAL 77,104,319 82,233,511

104
Minacs Kft.

Unaudited Balance Sheet As at 31st March, 2010


March 31 2010 March 31 2009
HUF INR/Cr HUF INR/Cr

Sources of Funds
I Shareholders' funds

Share capital 3,000,000 0.07 3,000,000 0.07

Retained earnings 69,544,015 1.63 54,892,850 1.27

Exchange fluctuation on FX translation - (0.05) - (0.05)

72,544,015 1.65 57,892,850 1.29

II Loan Funds - - - -

Total 72,544,015 1.65 57,892,850 1.29

Application of Funds
I Fixed Assets
Property, plant and equipment, net 166,354 0.00 - -
Deferred development costs 134,936 0.00 - -
301,290 0.01 - -
II Current assets

Cash and cash equivalents 84,120,524 1.92 18,446,838 0.41

Accounts receivable 97,421,621 2.22 101,797,475 2.27

Prepaid expenses 1,425,968 0.03 1,143,245 0.03

Other Receivables 13,759,783 0.31 16,683,599 0.37

196,727,895 4.48 138,071,157 3.07


Less Liabilities

Accounts payable and accrued liabilities 10,742,265 0.24 11,949,196 0.27

Due to Inter-Companies 113,742,906 2.59 68,229,111 1.52

Total 124,485,170 2.84 80,178,307 1.78

72,242,725 1.65 57,892,850 1.29

Total 72,544,015 1.65 57,892,850 1.29

Notes
FE Conversion Rate for HUF to INR as at the end of the year 0.2279 0.2226

105
Minacs Kft.

Unaudited Profit and Loss Account for the year ended 31st March, 2010

April 1 2009 April 1 April 1 2008 April 1 2008


March 31 2009 March 31 to
2010 March 2009 March 31
31 2010 2009
HUF INR/Cr HUF INR/Cr

Revenues 401,959,291 9.91 402,552,405 10.27

Expenditure

Labour & Employee Related Remuneration 173,385,630 4.28 193,368,826 4.93

Payroll Related 61,359,280 1.51 71,893,567 1.83

Group Insurance 780,006 0.02 943,500 0.02

Telecommunications 500,990 0.01 668,133 0.02

Training and seminars 2,568,498 0.06 3,488,418 0.09

Other dierct costs 32,373,811 0.80 15,937,937 0.41

Total 270,968,215 6.68 286,300,381 7.30

Gross profit 130,991,076 3.23 116,252,024 2.97

Selling, general and administrative expenses

Professional Services 7,300,170 0.18 12,615,539 0.32

Recruiting 225,294 0.01 931,408 0.02

Office Cost 537,987 0.01 480,841 0.01

Other General and Admin 6,331,476 0.16 4,212,918 0.11

Total 14,394,927 0.35 18,240,706 0.47


Earnings before interest expense, income

taxes, depreciation and amortization 116,596,149 2.88 98,011,318 2.50

Depreciation and amortization - - 7,746 0.00

Interest and financing expenses 1,781,984 0.04 14,518,411 0.37

Management fee 90,072,000 2.22 63,550,000 1.62

Income (loss) before income taxes 24,742,165 0.61 19,935,161 0.51

106
Minacs Kft.

Provision for (recovery of) income taxes

Current 10,091,000 0.25 9,398,000 0.24

Future - - - -

10,091,000 0.25 9,398,000 0.23

Net income (loss) for the period 14,651,165 0.36 10,537,161 0.28

Earnings/('Deficit), beginning of period 54,892,850 1.27 44,355,689 0.99

Retained earnings, end of period 69,544,015 1.63 54,892,850 1.27

Notes
Average FE Conversion Rate for HUF to INR
for the Financial Year 0.2466 0.2552

107
Minacs Kft.

Notes to Financial Statements as of March 31, 2010

I. General information

1. Business name:
The name of the Company
In Hungarian: MINACS Telefoninformációs Szolgáltatások Kft
In English: MINACS Call Center Services Limited

Tax registration number: 1311764974-2-41

The abbreviated name of the


Company in Hungarian: MINACS Kft.

The abbreviated name of the


Company in English: MINACS Ltd.

Seat: Hungary 1114 Budapest, Ulaszlo Street 27.

The registered headquarter of


the company: Hungary 1138 Budapest, Váci út 169.

2. The FORM OF THE COMPANY: Limited Liability Company

The company was established in 2003


by the following owners:

MINACS Worldwide GmbH 96,66 %


Julius Minacs 3,33 %

The Company’s share capital is THUF 3.000, which exclusively


consists cash deposits. The amount of it hasn’t changed compared to
the last year.

The managing director of the Company: Paul Lonford Niewoehner


US-6115 Waterford, Grace K. DR. MI 48329-1328

The Company’s representation, registration:

The executives are entitled to register and represent the Company


independently; the managers appointed by the General meeting are
jointly entitled.

The Company’s present owners:


Member Nominal Value THUF

MINACS Worldwide GmbH 2.900.000 HUF


Julius Minacs 100.000 HUF

The MINACS Ltd. is going to consolidate by the Minacs Worldwide GmbH. The consolidated report can be seen at
the seat of the Company.

108
Minacs Kft.

THE COMPANY’S ACTIVITIES INCLUDE:

82.20 Call center activities – main activity


62.02 Computer consultancy activities
63.11 Data processing hosting and related activities
58.12 Publishing of directories and mailing lists
62.09 Other information tec and service activities
73.20 Market research and public opinion polling
70.22 Business and management consulting
82.99 Other business support services

The Company is only pursuing authorised activities owning the administrative license.

Other:

The financial year of the Company differs from the calendar year. The statement date is March 31, 2010. The date of
the preparation of the annual report is April 10, 2010.

Under the principle of completeness, the annual report includes those business activities which happened between
the year end and the date of report preparation, and could affect the financial figures in the balance sheet and the
profit & loss.

The form of the financial statement

The Company prepares a simplified annual report, accordingly it keeps double entry. The Company prepares an ‘A’
type annual financial statement, with the so called balance-like arrangement. The company prepares its profit and
loss statement by the ‘A’ method, the cost summary method. It has formed its inner registrations, sub ledger and
chart of accounts, and their joining points in accordance with it.

The data of the annual report are expressed in thousand HUF, if not indicated otherwise.

II. MAJOR ELEMENTS OF THE ACCOUNTING POLICY

The Company performs its activity in compliance with the regulations of the accounting law. The Company has
established its policy for cash treatment, inventory taking, and asset and liability valuation in accordance with the
accounting law.

The Company’s Accounting Policy has set out that under the principle of going concern the enforcement of (the
principle of integrity, authenticity, transparency, comparison, continuity, consistence, prudence, gross accounting,
individual valuation, accrual and deferral, priority of content over form, materiality and comparison of cost and
profit) should be ensured.

It is considered to be a significant error if in the year of revealing the error during different checks considering a
given business year (separately each year), the value of the revealed errors and margins of error (independent of
indication), increasing – decreasing profit and equity, the joint amount is above the 1% of the gross sum.

It is considered an error influencing true and fair picture to a great extent if the contracted value of the errors and
margins significantly alters the equity. It is considered to be such an error in all cases when following the settling out
there is more than 20% change in the equity reported in the balance sheet of the previous financial year.

In the case of the year-end assets and liabilities incurred in foreign currency or exchange are going to be revaluated
irrespective of the amount according to published exchange rates of the HNB.

109
Minacs Kft.

Evaluation of the assets in the financial statement

1/ Intangible assets

Intangible assets are disclosed at purchase or production value, reduced by accumulated depreciation, and at a value
not exceeding their known market value. The calculation of depreciation is to be performed on a straight-line basis,
by the application of the depreciation rates required for writing-off the intangible assets over a period equal to the
expected useful life of the assets. The expected useful life of the intangible assets by categories:

Rights representing value 7 years


Software 3 years

2/ Tangible assets

Tangible assets are disclosed in the balance sheet at purchase or production value, reduced by accumulated
deprecation. The calculation of deprecation is performed on a straight line basis, by the application of the
deprecation rates required for the writing off of the tangible assets over a period equal to the expected useful life of
the assets:

Land and buildings 20 years


Technical equipment, machinery 3-7 years
Other equipment 5-7 years

3/ Financial investments

Investments representing ownership share in economic associations are disclosed at purchased price in the case of
acquisition, while in the case of establishment at the value set out in the Articles of Association, until their market
value does not permanently decrease below book value. In this case they are valued at the market value known as
the date of preparation of the balance sheet.

4/ Recognition of transactions in foreign currency

Transactions in foreign currency are accounted at the exchange rate of MNB as the date of the transaction. The
exchange gain or loss arising from the difference between the exchange rate as at the date of the financial fulfilment
and the transaction are disclosed in the profit and loss statement.

5/ Sales revenue

Net sales revenues are accounted as at the date of fulfillment, and are exclusively of VAT.

6/ Corporate tax

The corporate tax liability of the Company is accounted in the profit and loss statement on the basis of the
regulations in the reported year.

7/ Changes in the Company’s accounting policy

The Company’s accounting policy did not change during the year.

110
Minacs Kft.

III. FINANCIAL POSITION AND LIQUIDITY

There has been no such event since the date of the balance sheet, which would have a material impact on the
Company’s financial statement as at 31 March, 2010. The liquidity of the Company was during the financial year
insured.

IV. Notes to Balance Sheet as at March 31st, 2010

April 1 2009 April 1 April 1 2008 April 1


March 31 2009 March 31 2009 2008 to
2010 March 31 March 31
2010 2009
HUF INR/Cr HUF INR/Cr
1 Equity
Share capital 3,000,000 0.07 3,000,000 0.07

2 Accumulated profit reserve


Balance at beginning of the year 44,355,689
54,892,850 1.27 0.99
Profits during the year from P&L 10,537,161
14,651,165 0.36 0.28
Balance at the end of the year 69,544,015 1.63 54,892,850 1.27

3 Liquid assets
18,377,616
Commerzbank Hungary 83,147,371 1.89 0.41
Petty cash 69,222
973,153 0.02 0.00
Total: 84,120,524 1.92 18,446,838 0.41

4 Receivables
Trade Receivables 101,752,475
97,421,621 2.22 2.27
Employee Advances Receivables - - 45,000
0.00
Total: 97,421,621 2.22 101,797,475 2.27

5 Other Receivable
Value added tax 16,003,513
12,267,783 0.28 0.36
Income & Other Taxes Payable 680,086
1,492,000 0.03 0.02
Total: 13,759,783 0.31 16,683,599 0.37
6 Liabilities
Current Liabilities

Trade Creditors 371,861 0.01 (696,215) (0.02)

Accruals - General 1,000,370 0.02 2,551,950 0.06

Accruals - Payroll 9,370,034 0.21 10,093,461 0.22


Total: 10,742,265 0.24 11,949,196 0.27

111
Minacs Kft.

7 Due to Inter Company

Due to GmbH Germany 32,345 0.00 26,646,254 0.59

Due to MXW Canada 112,123,337 2.56 15,732,057 0.35

Due to Minacs UK 1,587,223 0.04 25,850,800 0.58


Total: 113,742,906 2.59 68,229,111 1.52

V. Notes to Profit & Loss account year ending March 31st, 2010

April 1 2009 April 1 April 1 2008 April 1


March 31 2009 March 31 2009 2008 to
2010 March 31 March 31
2010 2009
HUF INR/Cr HUF INR/Cr
1 Labour & Employee Related Remuneration

Regular Wages Paid 169,865,267 4.19 188,885,390 4.82

Sick Pay 3,520,363 0.09 4,483,436 0.11


173,385,630 4.28 193,368,826 4.93

2 Payroll Related

Payroll Taxes Direct 13,149,007 0.32 15,677,128 0.40

Medicare (US) 48,210,273 1.19 56,216,439 1.43


61,359,280 1.51 71,893,567 1.83

3 Other Costs

Travel - Direct Cost 8,053,014 0.20 11,444,930 0.29

Project Disbursements 24,320,797 0.60 4,493,007 0.11


32,373,811 0.80 15,937,937 0.41

4 Professional Services

Accounting Fees 6,922,255 0.17 11,009,953 0.28

Corporate Legal Fees 377,915 0.01 1,605,586 0.04


7,300,170 0.18 12,615,539 0.32

5 Office Cost

Office Supplies & Minor Equipment 319,801 0.01 409,224 0.01

112
Minacs Kft.

Other Supplies 202,476 0.00 44,680 0.00

Postage 15,710 0.00 26,937 0.00


537,987 0.01 480,841 0.01

6 Other General and Admin Cost

Non-Cash Incentives - Indirect - - 8,130 0.00

Other SG&A 6,319,280 0.16 4,186,785 0.10

Penalty and Fine Charges 12,196 0.00 18,003 0.00


6,331,476 0.16 4,212,918 0.10

7 Interest and financing expenses

Bank Service Charges 785,504 0.02 1,737,862 0.04

Foreign Currency Unrealised Gain 2,867 0.00 12,771,715 0.33

Foreign Currency realised Gain 1,229,518 0.03 153,096 0.00

Other Interest Expenses (235,905) (0.01) (144,262) (0.00)


1,781,984 0.04 14,518,411 0.37

8 Provision for (recovery of) income taxes

Current Income Tax 2,056,000 0.05 1,057,000 0.03

State Tax 8,035,000 0.20 8,341,000 0.21


10,091,000 0.25 9,398,000 0.24

113
Minacs Limited

BALANCE SHEET AS AT 31ST MARCH 2010

Notes As At 31st March 2010 As At 31st March 2009


£ INR/Cr £ INR/Cr
I Sources of Funds

Shareholders' funds
Called up share capital 4 1,000 0.01 1,000 0.01
Profit and loss account 267,698 2.04 183,796 1.45
Exchange fluctuation on Translation (0.23) (0.09)
268,698 1.82 # 184,796 1.37

Loan Funds - - - -

Total 268,698 1.82 184,796 1.37

I
I Application of Funds

Fixed assets - - - -

Investments 5 15,277 0.10 15,277 0.11

Current assets
Debtors 6 707,809 4.80 942,614 6.99
Cash at bank and in hand 146,936 1.00 141,644 1.05
854,745 5.80 1,084,258 8.04
Less Current liabilities 7 (601,324) (4.08) (914,739) (6.78)
Net Current Assets 253,421 1.72 169,519 1.26

Total 268,698 1.82 184,796 1.37

Notes:
See accompanying notes to the financial statements
FE Conversion Rate for GBP to INR as at year
end 67.87 74.16

Deepak
Place: Toronto Patel
Date: April 23, 2010 CEO

114
Minacs Limited

Profit and Loss Account for the year ended 31st March, 2010

Year ended 31/03/2010 Year ended 31/03/2009


£ INR/Cr £ INR/Cr

Sales 2,392,193 18.23 2,355,259 18.64


Total 2,392,193 18.23 2,355,259 18.64

Direct costs
Wages and salaries 1,574,508 12.00 1,584,086 12.54
Employer's NI contributions 152,017 1.16 162,570 1.29
Staff pension scheme costs 10,127 0.08 10,998 0.09
Placement & interview expenses 3,800 0.03 8,839 0.07
Staff training 1,168 0.01 5,622 0.04
Travel expenses 27,035 0.21 55,924 0.44
Health & safety costs 1,676 0.01 1,938 0.02
Total 1,770,332 13.49 1,829,976 14.48
Gross profit 621,862 4.74 525,283 4.16
Administration
Wages and salaries 244,300 1.86 270,268 2.14
Rent payable 29,100 0.22 10,150 0.08
Printing, postage and stationery 4,539 0.03 2,586 0.02
Telephone 3,602 0.03 7,193 0.06
Motor vehicle leasing - - 1,774 0.01
Entertaining 2,443 0.02 1,144 0.01
Legal and professional 5,430 0.04 9,475 0.07
Accountancy 38,210 0.29 44,390 0.35
Audit 6,000 0.05 6,000 0.05
Bank charges 9 0.00 262 0.00
Exchange rate (gain)/loss 639 0.00 (59,276) (0.47)
Payroll services 6,000 0.05 6,500 0.05
General expenses (240,918) (1.84) (238,219) (1.89)
Recruitment costs - - 603 0.00
Subscriptions 4,681 0.04 1,044 0.01
Management Charges 401,500 3.06 375,000 2.97
505,534 3.85 438,894 3.47
Financial
Other operating income (142) (0.00) (6,514) (0.05)
(142) (0.00) (6,514) (0.05)
Total expenses 505,392 3.85 432,380 3.42

Net profit/(loss) before taxation 116,470 0.89 92,903 0.74


Less :Corporation tax based on profits for the
period (32,567) (0.25) (26,106) (0.21)
Net Profits/(Loss) for the year 83,902 0.64 66,798 0.53
Balance brought forward 183,796 1.40 116,998 0.93

115
Minacs Limited

Balance carried forward 267,698 2.04 183,796 1.45

Notes
Please see accompanying notes to the financials
FE Conversion Rate for GBP to INR for the
Financial Year 76.1983 79.1328

Place: Toronto Deepak Patel


Date: April 23, 2010 CEO

116
Minacs Limited

1. Accounting policies

1.1. Accounting convention


The financial statements are prepared under the historical cost convention and in accordance with applicable
accounting standards, and in accordance with the Financial Reporting Standard for Smaller Entities (effective
April 2008).
1.2. Turnover
Turnover represents the total invoice value of sales made during the year stated net of value added tax.
1.3. Leasing
Rentals payable under operating leases are charged against income on a straight line basis over the lease term.
1.4. Investments
Fixed asset investments are stated at cost less provision for permanent diminution in value.
1.5. Pensions
The pension costs charged in the financial statements represent the contribution payable by the company
during the period.
The regular cost of providing retirement pensions and related benefits is charged to the profit and loss
account over the employees' service lives on the basis of a constant percentage of earnings.
1.6. Foreign currencies
Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of
exchange prevailing at the accounting date. Transactions in foreign currencies are recorded at the date of the
transactions. All differences are taken to the Profit and Loss account
1.7. Group accounts
The company is entitled to the exemption under Section 398 of the Companies Act 2006 from the obligation
to prepare group accounts.
2. Turnover
The total turnover of the company for the year has been derived from its principal activity wholly undertaken
in the UK and Ireland.
3. Pension costs
The company operates a defined contribution pension scheme in respect of the employees. The Scheme and
its assets are held by independent managers. The pension charge represents contributions due from the
company and amounted to £10,127; INR 0.8 mn (Previous Year £10,998 ; INR 0.9 Mn )

117
Minacs Limited

4 Share capital As At 31st March 2010 As At 31st March 2009


£ INR/Cr £ INR/Cr

Authorised

1000 Ordinary shares of £1 each 1,000 0.01 1,000 0.01

Allotted, called up and fully paid

1000 Ordinary shares of £1 each 1,000 0.01 1,000 0.01

Equity Shares

1000 Ordinary shares of £1 each 1,000 0.01 1,000 0.01

5 Investments in Subsidiary undertakings


Cost of Shares

Opening balance 15,277 0.10 15,277 0.11

Additions/(deletions during the year) - - - -

Closing Balance 15,277 0.10 15,277 0.11

Net book Values

Opening balance 15,277 0.10 15,277 0.11

Additions/(deletions during the year) - - - -

Closing Balance 15,277 0.10 15,277 0.11

Holdings of 20% or more


The company holds 20% or more of the share capital of the following companies:
Minacs Worldwide
Subsidiary undertaking GmbH Minacs Worldwide GmbH
Country of Registration Germany Germany
Nature of Business Provider of Outsourced solutions Provider of Outsouced solutions
Euro
Class of Shares held Euro Share Share
Proportion of shares held 100% 100%

118
Minacs Limited

6 Debtors
Trade Debtors 700,210 4.75 697,316 5.17
Amounts owed by group undertakings 5,104 0.03 148,182 1.10
Other debtors 1,126 0.01 82,355 0.61
Prepayments and accrued income 1,369 0.01 14,761 0.11

707,809 4.80 942,614 6.99

7 Current lilabilites
Amount falling due within one year
Trade Creditors 5,923 0.04 12,188 0.09
Amounts owed by group undertakings 359,437 2.44 705,009 5.23
Corporation Tax 32,651 0.22 26,080 0.19
Other taxes and social security costs 153,452 1.04 151,022 1.12
Accruals and deferred income 49,861 0.34 20,440 0.15

601,324 4.08 914,739 6.78

Year ended 31st March Year ended 31st March


2010 2009
£ INR/Cr £ INR/Cr

8 Operating profit / (loss)


Operating profit/(loss) is stated after charging:
Auditors' remuneration 6,000 0.05 6,000 0.05

Pension Costs 10,127 0.08 10,998 0.09

9 Tax on profit/ (loss) on ordinary activities


Analysis of charge in period
Current Tax
UK corporation tax 32,567 0.25 26,106 0.21

10 Related Party Transactions


Sales to
Minacs Kft, Hungary 61,887 0.47 50,662 0.40
Minacs GmbH, Germany 3,155 0.02 46,993 0.37
Reimbursement of Expenses/Fees
Minacs GmbH, Germany 70,031 0.53 51,906 0.41
Miancs Worldwide Inc, Canada 160,582 1.22 245,888 1.95

Receivables from
Minacs Kft, Hungary 5,104 0.03 76,659 0.57
Minacs GmbH, Germany (8,846) (0.06) 71,523 0.53
(3,742) (0.03) 148,182 1.10
Payable to

119
Minacs Limited

Minacs Worldwide Inc, Canada 359,437 2.44 705,009 5.23

11 Ultimate Parent Undertaking


The Company is wholly owned subsidiary of Minacs Worldwide Inc, a company incorporated in Canada. The
ultimate parent Company is Aditya Birla Nuvo Limited, a Company incorporated in India.

120
Minacs Worldwide S A De C V

Balance Sheet
As at March 31 2010 As at March 31 2009
Pesos INR/ Cr Pesos INR/Cr

I Sources of Funds
Shareholders' funds
Share capital
Shares issued 50,000 0.02 50,000 0.02
Cumulative translation adjustment - -
Deficit (50,000) (0.02) (50,000) (0.02)
- - - -

Debt - - - -

Total - - - -

II Application of Funds
Fixed Assets - - - -

Current assets
Cash and cash equivalents - - - -
Accounts receivable - - - -
Prepaid expenses - - - -
- - - -
Less Current liabilities - - - -
Bank Indebtedness - - - -
Other liabilities - - - -
Net current Assets - - - -

Total - - - -

See accompanying notes to the financial statements.

Note
Conversion rate for Pesos to INR 3.62 3.62

121
Minacs Worldwide S A De C V

Statements of Operations and Deficit


Year ended Year ended
March 31 2010 March 31 2009
Pesos INR/ Cr Pesos INR/Cr

Revenues - - - -

Direct expenses - - - -

Selling, general and administrative expenses - - - -

Earnings before interest expense, income taxes,


depreciation and amortization - - - -

Depreciation and amortization - - - -

Interest and financing expenses - - - -

Provision for (recovery of) income taxes - - - -

Net income (loss) for the period - - - -

Deficit, beginning of period (50,000) (0.02) (50,000) (0.02)

Deficit, end of period (50,000) (0.02) (50,000) (0.02)

Note
Conversion rate for Pesos to INR at 31 March, 2010 3.619 3.620

122
Minacs Worldwide S A De C V

Notes to Financial Statements MARCH 31, 2010

1 NATURE OF BUSINESS

Minacs Worldwide SA de CV (the “Company” or “Minacs Mexico”) is a provider of business process


outsourcing (“BPO”) solutions. The Company is a subsidiary of Minacs Worldwide Inc. (“Minacs”). Minacs
Mexico is an inactive subsidiary.

2 SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of these financial statements in conformity with Canadian generally accepted accounting
principles requires management to make estimates and assumptions. These estimates and assumptions affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses during the year. Actual results
could differ from those estimates.

Revenue Recognition

The Company derives revenues through the provision of direct resources to its customers and consulting
arrangements. Payment terms may vary by contract. The Company recognizes revenues at the time services
are performed and when the price is fixed or determinable and collection is reasonably assured.

The majority of revenues are recognized based on the billable hours or minutes rendered as defined in the
client contract. The rate per billable hour or minute charged is based on a predetermined contractual rate as
agreed in the underlying contract. This contractual rate fluctuates based on the Company’s performance
against certain predetermined criteria related to quality and performance. Some clients are entitled to
penalties when the Company is not in compliance with certain obligations as defined in the client contract.
Such penalties are recorded as a reduction of revenues as incurred based on a measurement of the
Company’s obligation under the terms of the client contract.

For some contracts the Company is paid by its customer based on achievement of certain level of revenues
or other client-determined criteria specified in the client contract such as full time equivalents, units
processed or completed contacts. The Company recognizes this performance-based revenue by measuring
its actual results against the performance criteria specified in the contracts.

The Company classifies reimbursements received from customers for out-of-pocket expenditures as
revenues. The Company incurs out-of-pocket expenditures such as expenses related to travel, postage and
telecommunications costs for which customers have agreed to reimburse Minacs. The corresponding cost
associated with this revenue is recorded within direct expenses. Some customers agree to reimburse the
Company for initial training and recruiting costs over a specified period of time. The revenue for these costs
are recorded over the period of time stipulated within the contract with a corresponding cost recorded within
direct expenses.

Income Taxes

The Company follows the liability method of accounting for income taxes. Under this method, future tax
assets and liabilities are determined based on differences between the financial reporting and tax bases of
assets and liabilities, and are measured using substantively enacted tax rates and laws that are expected to be

123
Minacs Worldwide S A De C V

in effect when the differences are expected to reverse. Valuation allowances are established when necessary
to reduce future income tax assets to the estimated amount that is more likely than not to be realized.

Foreign Exchange Translation

Assets and liabilities are translated using the exchange rate in effect at the balance sheet date and revenues
and expenses are translated at the average rate of the month the transaction is recorded.

Cash and Cash Equivalents

Cash and cash equivalents consist of unrestricted cash and short-term deposits having an initial maturity of
three months or less.

3 SHARE CAPITAL

2010 2009
Pesos INR/Cr Pesos INR/Cr
Common shares 50,000 0.02 50,000 0.02
50,000 0.02 50,000 0.02

Authorized Share Capital

The Company is authorized to issue an unlimited number of common shares.

124
Minacs Worldwide GmbH

Unaudited Balance Sheet As at 31st March, 2010


31.03.2010 31.03.2010 31.03.2009 31.03.2009
€ INR/Cr € INR/Cr
Sources of Funds
I Shareholders’ funds
1. Share capital authorized and fully paid in 25,000 0.15 25,000 0.17
2. Profit carried forward 1,783,414 11.85 1,445,595 9.66
3. Profit current year 310,833 2.04 337,819 2.19
4. Exchange fluctuations on conversion - (0.96) - 0.07
Total equity 2,119,247 13.08 1,808,414 12.08
II Loan Funds - - - -
2,119,247 13.08 1,808,414 12.08
Application of Funds
I Fixed assets
1. EDP software 998 0.01 569 0.00
2. Leasehold improvements 12,553 0.08 12,553 0.08
3. Furniture and equipment 27,422 0.17 20,297 0.14
4. Office equipment 37,980 0.23 36,181 0.24
5. Deferred Development Costs 2,442 0.02 - -
Gross block 81,395 0.50 69,600 0.46
6. Accumulated depreciation (61,114) (0.38) (53,738) (0.36)
Total Net Block 20,281 0.13 15,863 0.11
II Investments
1. Investments in Subsidiary Company -
Hungary 11,050 0.07 11,050 0.07
III Current assets
1. Cash at bank and on hand 166,461 1.03 102,409 0.68
2. Accounts receivable 1,752,586 10.82 1,997,877 13.35
3. Intercompany receivables 499,957 3.09 143,340 0.96
4. Prepaid expenses 42,249 0.26 45,519 0.30
5. Other assets 2,500 0.02 400 0.00
Total current assets 2,463,753 15.21 2,289,546 15.29
Less Liabilities
1. Accounts payable 3,219 0.02 10,494 0.07
2. Intercompany payables - - 77,243 0.52
3. Accrued expenses 368,169 2.27 458,080 3.06
4. Other liabilities 4,449 0.03 (37,772) (0.25)
Total liabilities 375,837 2.32 508,045 3.39
Net Current Assets 2,087,916 12.89 1,781,501 11.90

Total 2,119,247 13.08 1,808,414 12.08

The accompanying notes to the Financial


Statements are an intergral part of this balance
sheet
Conversion Rate for Euro to INR as at year end rates 61.74 66.80

125
Minacs Worldwide GmbH

Unaudited Profit and Loss Account for the period from April 01 2009 to March 31, 2010
April 1 April 1 April 1 April 1 2008 to
2009 2009 2008 March 31 2009
March 31 March 31 March 31
2010 2010 2009
€ INR/Cr € INR/Cr
Income
1. Revenues 7,363,240 48.31 8,441,642 54.72
2. Interest income 59 0.00 1,701 0.01
7,363,299 48.31 8,443,343 54.73
Expenditure
3. Staff cost 5,213,485 34.20 6,169,127 39.99
4. Selling, general and
administrative expenses 444,458 2.92 513,931 3.33
5. Management fees 1,267,897 8.32 1,298,049 8.41
Total 6,925,840 45.44 7,981,107 51.74
6. Earnings before interest, income taxes
and 437,459 2.87 462,236 3.00
depreciation
7. Depreciation on fixed assets 7,377 0.05 6,576 0.04
9. Interest expenses - - - -
10. Earnings before income taxes 430,082 2.82 455,660 2.95
11. Income taxes 119,249 0.78 117,841 0.76
12. Net income 310,833 2.04 337,819 2.19

The accompanying notes to the Financial Statements are an integral part of this statement of income

The average conversion rates for Euro to INR for the financial year 65.60 64.83

126
Minacs Worldwide GmbH

Unaudited Cash Flow for the year ended March 31, 2010
April 1 April 1 April 1 April 1
2009 2009 2008 to 2008 to
March 31 March 31 March March
2010 2010 31 2009 31 2009
€ INR/Cr € INR/Cr
Net earnings (Incl FE Rate difference) 310,833 2.04 337,819 2.26
Depreciation of fixed assets 7,377 0.05 6,576 0.04
Changes in operating assets and liabilities
- Accounts receivables and intercompany
receivables (111,326) (0.69) (436,879) (2.92)
- Prepaid expenses and other assets 1,170 0.01 61,274 0.41
- Accounts payables and intercompany payables (84,519) (0.52) (781,662) (5.22)
- Accrued expenses and other liabilities (47,689) (0.29) 13,122 0.09
Cash flow used in operating activities 75,847 0.59 (799,750) (5.34)
Purchase of fixed assets / deferred expenses (11,795) (0.07) (6,339) (0.04)
Correction profit carried forward - - - -
Decrease/increase in cash during the year 64,052 0.52 (806,089) (5.38)
Cash at the beginning of the year 102,409 0.69 908,498 6.07
Cash at the end of the year 166,461 1.03 102,409 0.69

127
Minacs Worldwide GmbH

Notes to Financial Statements as of March 31, 2010

I. General information

The company was set up on May 17, 2000 through notarized contract under the former firm Insartor Holding
SECHZEHNTE GmbH and was registered on July 04, 2000 with the commercial register at the district court in
Munich (HRB 131937).

The firm Insartor Holding SECHZEHNTE GmbH was changed in Minacs Worldwide GmbH with the shareholders
resolution dated August 04, 2000. AT the same time it was concluded to transfer the company’s residence from
Munich to Russelsheim. The change of the former firm Insartor Holding SECHZEHNTE GmbH in Minacs
Worldwide GmbH as well as the residence transfer were registered on March 07, 2001 under HRB 3872 with the
commercial register at the district court in Russelsheim.

Within the course of concentration of keeping the commercial-, cooperative association- and partnership register and
the step by step establishment of an electronic register Minacs Worldwide GmbH is registered from January 01,
2002 with the commercial register at the district court in Darmstadt under HRB 83872.

The subscribed capital of the company amounts to EUR 25.000,00 and is paid in totally.

The solely shareholder is Minacs Ltd., London.

The purpose of the company is to act as a provider of outsourced solutions incorporating customer contact center
management and other professional services. The company designs and delivers solutions that enable the customer
relationship management of its clients.

During the period 01.04.2009 to 31.03.2010 most of the company’s revenue has been generated by one major
customer.

II. Financial information

1. General accounting policy

The financial statements had been prepared in accordance with German Generally Accepted Accounting Principles
which are laid down in the Commercial Code.

Fixed assets were carried at historical acquisition costs less accumulated depreciation according to the straight-line
method

The accrued expenses consider all recognized risks and uncertain commitments, based on reasonable commercial
judgment.

Liabilities were valued with their anticipated future settlement amounts

The provision for income taxes was calculated on the basis of the German taxable income.

128
Minacs Worldwide GmbH

2. Other information

a) Contingent liabilities

There were no contingent liabilities on the balance-sheet date.

b) Subsequent events

There have been no events occurred since March 31, 2010 which require adjustments to the figures submitted in this
report.

III. Notes to Balance Sheet as at March 31st, 2010

April 1 April 1 April 1 April 1


2009 2009 2008 to 2008 to
March 31 March March March
2010 31 2010 31 2009 31 2009
€ INR/Cr € INR/Cr
Assets
I Fixed Assets (WDV) 20,281 0.13 15,863 0.11

II Investment 11,050 0.07 11,050 0.07


III Current Assets
1.Cash at Bank and on hand
a) Cash at Bank
Commerz bank AG EUR-Account 00 47,783 0.29 95,298 0.64
Deutschebank 114,968 0.71 - -
UniCredit Banca Italy 3,512 0.02 1,534 0.01
Rent Deposit - - 5,448 0.04
b) Cash on Hand
Petty Cash in Germany 198 0.00 130 0.00
166,461 1.03 102,409 0.68

2. Accounts Receivables 1,752,586 10.82 1,997,877 13.35


3. Intercompany Receivables
a) Minacs Worldwide Inc., Ontario, Canada 489,813 3.02 56,714 0.38
b) Minacs Ltd., London, England 10,023 0.06 (77,243) (0.52)
b) Minacs Hungary 122 0.00 86,626 0.58
499,957 3.09 66,097 0.44

4. Prepaid Expenses 42,249 0.26 45,519 0.30

129
Minacs Worldwide GmbH

5. Other Assets
Accounts receivables against employees 2,500 0.02 400 0.00
2,500 0.02 400 0.00

April 1 April 1 April 1 April 1


2009 2009 2008 to 2008 to
March 31 March March 31 March
2010 31 2010 2009 31 2009
€ INR/Cr € INR/Cr
IV Liabilities
6. Accounts Payable 3,219 0.02 10,494 0.07

7. Accrued Expenses
Audit and Legal Expenses 36,650 0.23 66,000 0.44
Disability 4,500 0.03 5,200 0.03
Personnel Expenses 6,000 0.04 144,000 0.96
Workmen's compensation 25,000 0.15 25,000 0.17
Outstanding holiday pay 190,000 1.17 145,000 0.97
Other Personnel Liabilities 46,060 0.28 51,280 0.34
Other Accruals 59,959 0.37 21,600 0.14
Total 368,169 2.27 458,080 3.06

8. Other Liability
Sales Tax Payable (2,652) (0.02) (4,545) (0.03)
Income and Other Taxes Payable 7,101 0.04 (33,228) (0.22)
4,449 0.03 (37,772) (0.25)

Total 375,837 2.32 430,801 2.88

9. Staff Cost
Wages and salaries (4,245,153) (27.85) (4,994,769) (32.38)
Social security, pensions and other
personnel expenses (941,884) (6.18) (1,089,929) (7.07)
Subcontractors staff and minor services (26,448) (0.17) (84,429) (0.55)
(5,213,485) (34.20) (6,169,127) (39.99)

Wages and Salaries (4,245,153) (27.85) (4,994,769) (32.38)


Social Security, pensions and other personnel
expenses (941,884) (6.18) (1,089,929) (7.07)
Subcontractor staff and minor services (26,448) (0.17) (84,429) (0.55)
Total (5,213,485) (34.20) (6,169,127) (39.99)

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Minacs Worldwide GmbH

10. Selling, General & Administration Expenses


Rent (34,384) (0.23) (36,734) (0.24)
Gas, Electricity & Water (2,939) (0.02) (2,553) (0.02)
Cleaning (3,315) (0.02) (2,692) (0.02)
Insurances (583) (0.00) (583) (0.00)
Other Personnel Expenses (229,574) (1.51) (274,825) (1.78)
Representation & Entertainment Expenses (5,505) (0.04) (1,675) (0.01)
Travel Expenses (8,652) (0.06) (2,979) (0.02)
Freight - out (905) (0.01) (873) (0.01)
Other Repair & Maintenance Costs (1,013) (0.01) (273) (0.00)
Mailing Expenses (710) (0.00) (539) (0.00)
Telephone, Internet (10,384) (0.07) (10,798) (0.07)
Office Supplies (3,313) (0.02) (5,193) (0.03)
Magazines, Books, Contributions (3,132) (0.02) (2,111) (0.01)
Training Expenses (18,861) (0.12) (6,443) (0.04)
Legal, Consulting & Accounting Expenses (90,481) (0.59) (140,707) (0.91)
Rent of Equipment (4,424) (0.03) (4,390) (0.03)
Bank Charges (13,658) (0.09) (13,113) (0.09)
Exchange Losses (2,076) (0.01) (2,816) (0.02)
Other Supplies (10,549) (0.07) (4,633) (0.03)
Total (444,458) (2.92) (513,931) (3.33)

131
The Minacs Group (USA) Inc.

Consolidated Balance Sheet (Unaudited in US$)

As At March 31 2010 As At March 31 2009


US$ INR/Cr US$ INR/Cr

Sources of Funds
I Shareholders' fund
1. Share capital $302,040 1.36 $302,040 1.58
2. Retained earnings $8,102,244 37.61 $6,711,455 31.19
3. Exchange Fluctuation on
Transaltion - (1.13) - 3.83
$8,404,284 37.84 $7,013,495 36.59

II Debt
1. Long-term debt from
holding company $20,768,591 93.52 $20,768,591 108.36

$29,172,875 131.36 $27,782,086 144.95


Application of funds

I Fixed Assets
1. Property, plant and
equipment, net $5,410,781 24.36 $6,245,114 32.58
2. Deferred Development costs $1,480,070 6.66 - -
3. Intangibles $101,961 0.46 $166,357 0.87
4. Goodwill $1,900,000 8.56 $1,900,000 9.91
$8,892,812 40.04 $8,311,471 43.36

II Investments - - - -

III Current assets


1. Cash and cash equivalents $1,038,954 4.68 $1,203,632 6.28
2. Accounts receivable $12,759,501 57.46 $15,377,669 80.23
3. Due from parent company $14,550,822 65.52 $10,368,103 54.09
4. Prepaid expenses $867,898 3.91 $580,327 3.03
5. Future income taxes - Long
term $361,234 1.63 $456,493 2.38
6. Future income taxes - Short
term $256,472 1.15 $1,434 0.01
$29,834,881 134.35 $27,987,659 146.02
Less liabilities
I Short term
1. Accounts payable and
accrued liabilities $7,625,908 34.34 $6,277,087 32.75
2. Income and other taxes
payable (29,082) (0.13) (246,779) (1.29)
3. Obligations under capital
leases $321,213 1.45 $693,037 3.62

132
The Minacs Group (USA) Inc.

$7,918,039 35.66 $6,723,345 35.08


II Long term
1. Accounts payable and
accrued liabilities $527,081 2.37 $704,779 3.68
2. Obligations under capital
leases - - $321,213 1.68
3. Future income taxes $1,109,698 5.00 $767,707 4.01
Total liabilities $9,554,818 43.03 $8,517,044 44.44
Net Assets $20,280,063 91.32 $19,470,615 101.59
Total $29,172,875 131.37 $27,782,086 144.95

Notes :
See accompanying notes to the financial
statements.
FE Conversion Rate for US$ to INR as at end of
year 45.03 52.17

Place: Toronto Deepak J. Patel


Chief Executive
Date: April 23, 2010 Officer

133
The Minacs Group (USA) Inc.

Statement of Operations and Deficit Unaudited in US $

31/3/2010 31/3/2010 31/3/2009 31/3/2009


US$ INR/Cr US$ INR/Cr

Revenues $97,017,763 448.13 $118,834,456 552.20

Expenditures
Direct expenses $72,406,782 334.45 $92,167,048 428.28
Selling, general and administrative expenses $12,268,172 56.67 $12,188,117 56.64
$84,674,953 391.12 $104,355,165 484.92
Earnings before interest, income taxes,
depreciation,
amortization and restructuring and other
charges $12,342,810 57.01 $14,479,290 67.28

Management fee $6,857,000 31.67 $7,792,900 36.21


Restructuring and other charges $113,188 0.52 273,179 1.27
Interest and financing expenses $944,475 4.36 $987,779 4.59
Depreciation and amortization $2,177,429 10.06 $2,291,937 10.65
Provision for (recovery of) income taxes
Current $677,717 3.13 $1,239,612 5.76
Future $182,212 0.84 387,021 1.80
Net income (loss) for the period $1,390,789 6.42 $1,506,863 7.00

Earnings/('Deficit), beginning of period $6,711,455 31.19 $5,204,593 24.18

Retained earnings, end of period $8,102,244 37.61 $6,711,455 31.19

Notes:
See accompanying notes to the financial
statements.
Average FE Conversion Rate for US$ to INR for the
Financial year 46.19 46.47

Place: Toronto Deepak J. Patel


Chief Executive
Date: April 23, 2010 Officer

134
The Minacs Group (USA) Inc.

Notes To Financial Statements March 31, 2010

1 NATURE OF BUSINESS

Minacs Group (USA) Inc. (the “Company” or “Minacs USA”) is a provider of business process outsourcing
(“BPO”) solutions. These incorporate contact centre solutions, integrated marketing services and back office
administration. Minacs USA is a subsidiary of Minacs Worldwide Inc. (“Minacs”).

2 SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of these financial statements in conformity with Canadian generally accepted accounting
principles requires management to make estimates and assumptions. These estimates and assumptions affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses during the year. Actual results
could differ from those estimates.

Revenue Recognition

The Company derives revenues through the provision of direct resources to its customers and consulting
arrangements. Payment terms may vary by contract. The Company recognizes revenues at the time services
are performed and when the price is fixed or determinable and collection is reasonably assured.

The majority of revenues are recognized based on the billable hours or minutes rendered as defined in the
client contract. The rate per billable hour or minute charged is based on a predetermined contractual rate as
agreed in the underlying contract. This contractual rate fluctuates based on the Company’s performance
against certain predetermined criteria related to quality and performance. Some clients are entitled to
penalties when the Company is not in compliance with certain obligations as defined in the client contract.
Such penalties are recorded as a reduction of revenues as incurred based on a measurement of the
Company’s obligation under the terms of the client contract.

For some contracts the Company is paid by its customer based on achievement of certain level of revenues
or other client-determined criteria specified in the client contract such as full time equivalents, units
processed or completed contacts. The Company recognizes this performance-based revenue by measuring
its actual results against the performance criteria specified in the contracts.

Amounts collected from customers prior to the performance of services are recorded as deferred revenue.
These advances are amortized to revenues in accordance with the Company’s policy on revenue recognition.

The Company classifies reimbursements received from customers for out-of-pocket expenditures as
revenues. The Company incurs out-of-pocket expenditures such as expenses related to travel, postage and
telecommunications costs for which customers have agreed to reimburse Minacs USA. The corresponding
cost associated with this revenue is recorded within direct expenses. Some customers agree to reimburse the
Company for initial training and recruiting costs over a specified period of time. The revenue for these costs
is recorded over the period of time stipulated within the contract with a corresponding cost recorded within
direct expenses.

Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is provided
from the first day of the month following the date the assets are placed into service, on a straight-line basis.
135
The Minacs Group (USA) Inc.

Computer software is depreciated over four to five-year lives. Computer equipment is depreciated over a
four-year life. Communications equipment is depreciated over five to seven-year lives. Furniture and
fixtures are depreciated over seven to ten-year lives. Leasehold improvements are depreciated over the term
of the lease.

Goodwill

Goodwill is not amortized and is tested for impairment on an annual basis. Such evaluation determines an y
impairment in value, taking into account the ability to recover the carrying amount of goodwill from
discounted cash flows. The Company also considers projected future operating results, trends, and other
circumstances in making such evaluations.

In addition to the annual impairment test, the Company will perform an impairment test if an event occurs or
circumstances change that would more likely than not reduce the fair value of the reporting unit below its
carrying amount.

Intangibles

The Company allocates value to intangible assets acquired relating to customer and supplier contracts,
proprietary processes, and certain business relationships. Amortization of intangibles is provided on a
straight-line basis over 10 years.

Impairment of Long-lived Assets

The Company reviews its long-lived assets such as property, plant and equipment and intangibles for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. When
indicators of impairment of the carrying value of the asset exist, and the carrying value is greater than the net
recoverable value (as determined on an undiscounted basis), an impairment loss is recognized to the extent that the
fair value (measured as the discounted cash flows over the remaining life of the asset when quoted market values are
not readily available) is below the carrying value.

Income Taxes

The Company follows the liability method of accounting for income taxes. Under this method, future tax
assets and liabilities are determined based on differences between the financial reporting and tax bases of
assets and liabilities, and are measured using substantively enacted tax rates and laws that are expected to be
in effect when the differences are expected to reverse. Valuation allowances are established when necessary
to reduce future income tax assets to the estimated amount that is more likely than not to be realized.

Foreign Exchange Translation

Assets and liabilities are translated using the exchange rate in effect at the balance sheet date and revenues
and expenses are translated at the average rate of the month the transaction is recorded.

Cash and Cash Equivalents

Cash and cash equivalents consist of unrestricted cash and short-term deposits having an initial maturity of
three months or less.

136
The Minacs Group (USA) Inc.

As At March 31 2010 As At March 31 2009


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

3 Share Capital
Common shares 100 0.00 $100 0.00
Contributed surplus 301,940 1.36 $301,940 1.58
302,040 1.36 $302,040 1.58

The Company is authorized to issue an unlimited number of common shares.

4 Long-Term Debt
Loan from Parent Company 20,768,591 93.52 20,768,591 108.36

The loan from parent company bears interest at specified margins over bank prime and is payable to
the Parent Company over a 25 year period.

5 PROPERTY, PLANT AND EQUIPMENT


As At 31st March, 2010 As At 31st March, 2009
Gross Cost Accumulated Gross Accumulated Gross Cost Accumulated Gross Accumulated
Depreciation Cost Depreciation Depreciation Cost Depreciation
In In
In US$ In US$ INR/Cr In INR/Cr In US$ In US$ INR/Cr In INR/Cr
Computer software 6,367,256 (4,581,077.4) 28.67 (20.63) 5,664,187 (3,752,908) 29.55 (19.58)
Computer equipment 7,601,383 (6,107,934.4) 34.23 (27.50) 7,179,106 (5,282,777) 37.46 (27.56)
Communications equipment 934,194 (905,702.3) 4.21 (4.08) 934,194 (891,613) 4.87 (4.65)
Furniture and fixtures 2,388,900 (1,458,331.9) 10.76 (6.57) 2,269,690 (1,291,276) 11.84 (6.74)
Leasehold improvements 2,494,614 (1,322,518.9) 11.23 (5.96) 2,460,469 (1,043,958) 12.84 (5.45)
19,786,346 (14,375,564.9) 89.10 (64.73) 18,507,646 (12,262,531.8) 96.56 (63.98)
Less: accumulated
depreciation (14,375,565) (64.73) (12,262,532) (63.98)
5,410,781 24.36 6,245,114 32.58

Included in these figures are assets under capital leases as follows

INR
In US$ INR (Cr) In US$ (Cr)
Cost 5,034,046 22.67 5,216,260 27.22
Less: accumulated
depreciation (4,289,108) (19.31) (3,880,866) (20.25)
Net book value $744,938 3.35 $1,335,394 6.97

Conversion rates for US$ to INR 45.03 52.17

137
The Minacs Group (USA) Inc.

The assets under capital leases are held as security for the capital lease obligations. Included within
depreciation and amortization is $513,877 relating to assets under capital leases.

As At March 31 2010 As At March 31 2009


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

6 INTANGIBLES
Cost 643,962 2.90 $643,962 3.36
Less: accumulated depreciation (542,001) (2.44) (477,605) (2.49)
Net book value 101,961 0.46 $166,357 0.87

7 GOODWILL
Balance, beginning of period 1,900,000 8.56 $1,900,000 9.91
Foreign currency translation adjustment - - - -
Balance, end of period 1,900,000 8.56 $1,900,000 9.91

8 Future Income Taxes


Accounts payable and accrued liabilities 512,340 2.31 $352,347 1.84
Other 105,366 0.47 $105,580 0.55
617,706 2.78 $457,927 2.39
Valuation allowance - - - -
Less: current portion (256,472) (1.15) ($1,434) (0.01)
361,234 1.63 $456,493 2.38

Future tax liabilities consist of the following temporary differences

Property, plant and equipment (299,690) (1.35) $699,913 3.65


Other assets (810,008) (3.65) $67,795 0.35
(1,109,698) (5.00) $767,708 4.01

9 COMMITMENTS AND CONTINGENCIES

Capital Leases

Interest on obligations under capital leases accrues at various rates ranging from 8.3% to 9.1%.

The following is a schedule of future minimum lease payments for these capital leases:

138
The Minacs Group (USA) Inc.

As At March 31 2010 As At March 31 2009


Capital Leases US$ INR (Cr) US$ INR (Cr)
2008 - - - -
2009 - - - -
2010 - - $753,410 3.93
2011 329,278 1.48 $329,278 1.72
Total minimum lease payments 329,278 1.48 $1,082,688 5.65
Less: amount representing interest (8,066) (0.04) ($68,439) (0.36)
Present value of net minimum lease payments 321,212 1.45 $1,014,249 5.29
Less: current portion 321,212 1.45 $693,037 3.62
Total capital lease obligations - - $321,212 1.68
Commitments

The Company has operating leases for its premises, furniture and fixtures and certain computer and
communications equipment as well as minimum purchase commitments for telephone services. The
minimum annual payments for the next five years and thereafter are as follows:

As At March 31 2010 As At March 31 2009


US$ INR (Cr) US$ INR (Cr)
2010 - - $1,632,250 8.52
2011 1,457,358 6.56 $1,451,958 7.58
2012 1,402,668 6.32 $1,402,668 7.32
2013 1,402,668 6.32 $1,402,668 7.32
2014 1,402,668 6.32 $1,402,668 6.32
2015 467,556 2.11 - -
Thereafter - - $467,554 2.11
Total commitments 6,132,918 27.62 $7,759,766 39.15

Contingent Liabilities

During the ordinary course of business activities, the Company may be a party to claims and may be
contingently liable for litigation. Management believes that adequate provisions have been made in the
accounts where required. Although it is not possible to estimate the extent of potential costs and losses, if
any, management believes that the ultimate resolution of such contingencies will not have a material adverse
effect on the financial position of the Company.

10 RELATED PARTY TRANSACTIONS

Transactions with Related Parties are as follows:

139
The Minacs Group (USA) Inc.

As At March 31 2010 As At March 31 2009


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

Management fees charged by Minacs Worldwide


Inc 6,857,000 31.67 $7,792,900 36.21
Interest charged by Minacs Worldwide Inc 712,666 3.29 $952,921 4.43
Interest charged to IT Services (794,836) (3.67) - -
Reimbursable expenses - Aditya Birla Minacs
Worldwide Ltd 149,428 0.69 $215,615 1.00

These transactions are measured at the exchange amounts of consideration established and agreed to by the related
parties.

11 EMPLOYEE BENEFIT PLANS

The Company has defined contribution pension plans. The Company’s pension plan expenditures were
$4,160 (Previous Year $430,563) (INR .02 Cr) (Previous Year INR 1.94 Cr) during 2010.

12 INTEREST AND FINANCING EXPENSES


Interest and financing expenses are comprised of the following amounts:

As At March 31 2010 As At March 31 2009


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

Interest expense on long-term debt 712,666 3.29 $952,921 4.43


Interest expense on obligations under capital leases 60,373 0.28 $127,287 0.59
Other interest expense (income) 21,850 0.10 $15,882 0.07
Interest expense 794,888 3.67 $1,096,090 5.09
Amortization of deferred finance charges - - - -
Bank charges 42,868 0.20 $53,578 0.25
Foreign exchange loss (gain) 106,718 0.49 (161,889) (0.75)
Total 944,475 4.36 $987,779 4.59

140
Transworks Inc (USA)

AUDITORS’ REPORT

The Board of Directors of Aditya Birla Minacs Worldwide Limited


(Formerly known as Transworks Information Services Limited)

1. In terms of your letter dated March 1, 2010 requesting us to audit the accounts of Transworks Inc. (“the
Company”), a wholly owned subsidiary of Aditya Birla Minacs Worldwide Limited (“the Parent”),
incorporated in the United States of America, based on records including photocopies of some records,
received from the said Company in Mumbai and in accordance with the accounting policies described in Note
1 of Schedule 14 to the attached financial statements (“the accounting policies”). We have not performed a
statutory audit, the objective of which would be the expression of an opinion on the financial statements in
conformity with generally accepted accounting practices and accordingly, we do not express such an opinion.

2. We have audited, in accordance with the accounting policies, the attached Balance Sheet of the Company as at
March 31, 2010 and also the Profit and Loss account and cash flow statement for the year ended on that date
annexed thereto, which are in agreement with the books of account verified by us. These financial statements
are the responsibility of the Company’s management and have been prepared in accordance with the accounting
policies, for the purpose of consolidation with the financial statements of the Parent. Our responsibility is to
express an opinion on these financial statements based on our audit.

3. We conducted our audit in accordance with generally accepted auditing standards in India. These Standards
require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are
free of material misstatements. An audit includes, examining on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statements. We believe
that our audit provides a reasonable basis for our opinion.

4. In our opinion, based on our audit, and to the best of our information and according to the explanations given to
us, the accompanying financial statements give a true and fair view in conformity with the accounting policies:

a. in the case of the Balance Sheet, of the state of affairs of Company as at 31st March, 2010;
b. in the case of the Profit and Loss Account, of the profit for the year ended on that date; and
c. in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

5. This report is furnished solely for the purpose of meeting the requirement if consolidation of the attached
financial statements with the financial statement of the Parent and hence should not to be used for any other
purpose.

For S. R. Batliboi & Co.


Firm Registration No. 301003E
Chartered Accountants

per Vijay Maniar


Partner
Membership No.: 36738
Mumbai,
April 23, 2010

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Transworks Inc (USA)

BALANCE SHEET AS AT 31ST MARCH 2010


As At As At As At
As At 31st 31st 31st
31st Mar'10 Mar'10 Mar'09 Mar'09
Schedule (US$) (INR) (US$) (INR)

I. SOURCES OF FUNDS

1 Shareholders' Funds
Share Capital 1 - - 200,000 9,680,000

2 Reserves and Surplus


Profit and Loss Account 47,416 2,140,350 200,673 10,646,132

3 Deferred Tax Liability - - 65,000 3,297,450

TOTAL 47,416 2,140,350 465,673 23,623,582

II. APPLICATION OF
FUNDS

1 Current Assets, Loans and


Advances :
Sundry Debtors 2 - - 98,560 4,999,950
Cash and Bank Balances 3 53,762 2,426,810 368,200 18,678,805
53,762 2,426,810 466,760 23,678,755
Less: Current Liabilities and
Provisions :
Current Liabilities 4 6,346 286,460 1,087 55,173

Net Current Assets 47,416 2,140,350 465,673 23,623,582

TOTAL 47,416 2,140,350 465,673 23,623,582

Notes to Accounts 10

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

As per our Report of even date


FOR S.R. BATLIBOI & CO. For Transworks Inc.
Firm Registration No.
301003E
Chartered Accountants Deepak J. Patel

per Vijay Maniar


Partner
Membership No. 36738

Place: Mumbai Ramesh Kamath


Date: April 23, 2010 Chief Financial Officer

142
Transworks Inc (USA)

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2010
For the year For the year For the year For the year
ended Mar, 31 ended Mar, 31 ended Mar, 31 ended Mar, 31
2010 2010 2009 2009
Schedule (US$) (INR) (US$) (INR)

INCOME :
Mark up Fees - - (57) (2,629)
Reimbursement of Expenses
Business Development &
Marketing 5 - - (807) (37,563)
Utilization of Fixed Assets - - 131,268 6,107,449
Financing Charges 6 - - 1,856 86,374
- - 132,260 6,153,631
Bank Interest - - 11 520
Exchange Rate Fluctuations on
coversion - (1,235,015) - 6,552,522

TOTAL - (1,235,015) 132,271 12,706,673

EXPENDITURE :
Travelling & other Expenses 7 - - 2,087 97,109
Rent 8 - - 7,589 353,073
Other Expenses 9 - - 86,046 4,003,454
Depreciation / Amortization - - 34,738 1,630,724

Total - - 130,460 6,084,360


Profit / (Loss) before tax for the
year - (1,235,015) 1,811 6,622,313
Less : Provision for the
Deferred Tax 3,257 154,517 24,894 1,158,235
Less : Withholding Tax Written
Off - - 13,405 623,702
3,257 154,517 38,299 1,781,936
Profit / (Loss) after tax
provision for the year (3,257) (1,389,532) (36,488) 4,840,376
Dividend paid during the year 150,000 7,116,250 - -
Profit / (Loss) for the year (153,257) (8,505,782) (36,488) 4,840,376
Profit / (Loss) brought forward
from previous year 200,673 10,646,132 237,161 5,805,756
Accumulated balance carried
47,416 2,140,350 200,673 10,646,132
forward to the Balance Sheet

Notes to Accounts 10
.

143
Transworks Inc (USA)

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

As per our Report of even date


FOR S.R. BATLIBOI & CO. For Transworks Inc.
Firm Registration No. 301003E
Chartered Accountants Deepak J. Patel

per Vijay Maniar


Partner
Membership No. 36738

Place: Mumbai Ramesh Kamath


Date: April 23, 2010 Chief Financial Officer

144
Transworks Inc (USA)

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2010

Year Year ended Year Year ended


ended 31.3.2010 ended 31.3.2009
31.3.2010 31.3.2009
(US$) (INR) (US$) (INR)
A.
Cash flows from Operating Activities
Net Profit before taxation, and extraordinary items - (1,235,015) 1,811 6,622,313
Adjustments for :
Depreciation / Amortization - - 34,738 1,630,724
Loss/(Profit) on Sale of Fixed Assets - - 96,529 4,491,200
Financing charges - - (1,856) (86,374)
Reimbursement of utilisation of fixed assets - - (131,268) (6,107,449)
Interest Income - - (11) (520)
Difference on account of exchange rate difference in Deffered
Tax (68,257) (3,451,967) - 536,179
Operating Profit before working capital changes (68,257) (4,686,982) (57) 7,086,073

Movements in working capital :


(Increase)/Decrease in Sundry Debtors 98,560 4,999,950 685,711 26,347,329
(Increase)/Decrease in Loans & Advances - - 52,323 2,091,324
Increase/(Decrease) Current Liabilities & Provisions 5,259 231,288 (104,180) (4,152,382)
Cash generated from operations 35,562 544,256 633,797 31,372,345

Add/(Less): Direct Taxes (including TDS) paid)/Tax


Refunds - - (13,405) (623,702)
Net Cash flow from Operating Activities 35,562 544,256 620,392 30,748,643
B.
Cash Flows from Investing Activities
Proceeds from sale of Fixed Assets - - 110,000 5,165,513
Reimbursement of usage of fixed assets - - 131,268 6,107,449
Interest/investment income received - - 1,867 86,894
Net Cash from/(for) Investing Activities - - 243,135 11,359,855
C.
Cash flow from Financing Activities
Repayment of share capital (200,000) (9,680,000) (500,000) (23,616,485)
Payment of Dividend (150,000) (7,116,250) - -
Net Cash used in Financing Activities (350,000) (16,796,250) (500,000) (23,616,485)

Net Increase in cash and Cash equivalants during the year (314,438) (16,251,994) 363,527 18,492,013
Cash and cash equivalants at the beginning of the year 368,200 18,678,805 4,673 186,792
Cash and cash equivalants at the end of the year 53,762 2,426,810 368,200 18,678,805

Notes:
Components of Cash and Cash Equivalents as at
i) Balance with Banks :
- in Current Account 53,762 2,426,810 368,200 18,678,805
Total 53,762 2,426,810 368,200 18,678,805

145
Transworks Inc (USA)

As per our Report of even date

FOR S.R. BATLIBOI & CO. For Transworks Inc.


Firm Registration No. 301003E
Chartered Accountants Deepak J. Patel

per Vijay Maniar


Partner
Membership No. 36738

Place: Mumbai Ramesh Kamath


Date: April 23, 2010 Chief Financial Officer

146
Transworks Inc (USA)

SCHEDULES FOR THE YEAR ENDED 31ST MARCH 2010


As At As At As At As At
31st 31st 31st 31st
Mar'10 Mar'10 Mar'09 Mar'09
(US$) (INR) (US$) (INR)
SCHEDULE - 1
SHARE CAPITAL
Authorised Capital
1,000,000 Equity Shares of US$ 1/-
each 1,000,000 45,140,000 1,000,000 50,730,000

Issued, Subscribed & Paid up


Capital
NIL (P Y 200,000) Equity Shares of US$ 1/- each fully
paid up - - 200,000 9,680,000
(All the above equity shares are held by the holding
company Aditya Birla Minacs Worldwide Limited)
TOTAL - - 200,000 9,680,000

SCHEDULE - 2
SUNDRY DEBTORS
1 Other Debts
Unsecured, Considered good - - 98,560 4,999,950

TOTAL - - 98,560 4,999,950

SCHEDULE - 3
CASH AND BANK BALANCES
1 Balance with bank
- On Current Account 53,762 2,426,810 368,200 18,678,805

TOTAL 53,762 2,426,810 368,200 18,678,805

SCHEDULE - 4
CURRENT LIABILITIES
1 Sundry Creditors 2,258 101,947 - -
2 Outstanding Liabilities 1,088 49,093 1,087 55,173
3 Provision for Tax 3,000 135,420 - -

TOTAL 6,346 286,460 1,087 55,173

SCHEDULE - 5
REIMBURSEMENT OF BUSINESS
DEVELOPMENT AND MARKETING EXPENSES

1 Reimbursement of Expenses - - 28,761 1,338,182

147
Transworks Inc (USA)

Write-back of Sales
2 Commission - - (27,954) (1,300,619)

TOTAL - - 807 37,563

SCHEDULE - 6
FINANCING CHARGES
1 Interest recoverable on Fixed Assets & LDC - - 1,856 86,374

- - 1,856 86,374

SCHEDULE - 7
TRAVELLING & OTHER EXPENSES
1 Travelling Expenses - - 2,087 97,109

TOTAL - - 2,087 97,109

SCHEDULE – 8
RENT

1 Office Rent - - 4,058 188,804


2 Flat Rent - - 3,531 164,269

TOTAL - - 7,589 353,073

SCHEDULE - 9
OTHER EXPENSES
1 Bank Charges - - 116 5,400
2 Miscellaneous expenses - - 46 2,139
3 Sales Commission (Net of write-back) - - (27,954) (1,300,619)
4 Legal & Professional Fees - - 3,961 184,317
5 Insurance Charges - - 2,740 127,483
6 Maintenance Charges (Net of write-back) - - (18,078) (841,113)
7 Loss on Sale of Fixed Assets - - 96,529 4,491,200
8 US Payroll Taxes (Net of write-back) - - (650) (30,249)
9 Repairs & Maint. - Others - - 326 15,157
Write-back of deposits for Long Distance
10 Charges - - 29,010 1,349,739

TOTAL - - 86,046 4,003,454

SCHEDULE – 10: Notes to Accounts

1. Accounting Policies
The Company is in the process of winding up its operations. Adjustments relating to the recoverability and
the classification of recorded asset amount or to amounts that may be necessary on winding up of the
Company have been made based on management’s assessment of the same. All assets and liabilities have

148
Transworks Inc (USA)

been stated at net realizable value. Accordingly, the financial statements have not been prepared on the going
concern assumption.
a. Basis of preparation

The accounts have been prepared under the historical cost convention on accrual basis in accordance with the
generally accepted accounting principles applicable in India. The accounting policies applied by the company
are consistent with those used in the previous year. As stated above, the financial statements have not been
prepared on the going concern assumption.

b. Revenue recognition

Incomes from services rendered are accounted on accrual basis based on agreements / arrangements with the
concerned parties.

c. Fixed assets

Fixed assets are stated at cost less accumulated depreciation and impairment losses if any. Cost comprises the
purchase price and wherever applicable freight, duties and taxes and expenses incidental to acquisition and
installation.

d. Leased assets

Finance lease, which effectively transfers to the Company substantially all the risks and benefits incidental to
ownership of the leased item, are capitalized at lower of fair value and present value of the minimum lease
payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned
between the finance charges and reduction of the lease liability based on implicit rate of return. Finance
charges are charged directly against income. Lease management fees, lease charges and other initial direct
costs are capitalized.

Leases where lessor effectively retains substantially all the risks and benefits of ownership of the lease term
are classified as operating leases. Operating lease payments are recognized as an expense in the profit & loss
account in accordance with the lease agreement.

e. Depreciation

Depreciation on assets is provided on straight-line basis, based on the useful lives as estimated by the
management. The management estimates seven years as the useful lives of these fixed assets.

f. Income Tax

The Company utilizes the asset and liability method of accounting for Income taxes. Under this method,
deferred income taxes are recorded to reflect the tax consequences of future years differences between the tax
basis of assets and liabilities and there financial reporting amounts at each year end are based on enacted tax
laws and statutory tax rates applicable to the periods in which the differences are expected to effect taxable
income. A valuation allowance is provided against the future benefit of deferred tax asset if it is determined
that it is more likely than not that the future tax benefits associated with the deferred tax assets will not be
realized.

g. Conversion of Financial Statements

For the purpose of consolidation of the financial statements with that of the Parent, the amounts in USD) are
converted into INR as follows:
Equity capital and retained earnings at historical cost, all other balance sheet items at closing rate of
exchange, profit and loss items at average rate and resultant translation gain/loss is adjusted in the profit and
loss account

149
Transworks Inc (USA)

2. Provision for Taxation:

Provision for tax comprises current and deferred taxes. This includes provision for current tax US$ 3,000 (Rs.
1,35,420).

a) There is no Deferred Tax Liability / Deferred Tax Assets as at Mar 31 2010.


(US$)
Particular As at Movement As at
31/3/2009 During the 31/3/2010
year
Timing difference resulting in deferred Tax Liability
Depreciation & deferment of income arising out of cash (205,803) 205,803 Nil
basis of accounting for tax purposes
Timing difference resulting in deferred Tax Asset
Net temporary difference (205,803) 205,803 Nil
Deferred Tax liability (65,000) 65,000 Nil

(INR)
Particular As at Movement As at
31/3/2009 During the 31/3/2010
year
Timing difference resulting in deferred Tax
Liability
Depreciation & deferment of income arising out of
(10,550,687)
cash basis of accounting for tax purposes 10,550,687 Nil
Timing difference resulting in deferred Tax Asset
Net temporary difference
(10,550,687)
10,550,687 Nil
Deferred Tax liability( net of deferred tax asset) (3,297,450) 3,297,450 Nil

3. Related Party Transactions

The Company had transactions with the following related parties:

Ultimate Holding Company Aditya Birla Nuvo Limited


Holding Company Aditya Birla Minacs Worldwide Limited

Summary of transactions with above related parties is as follows:


US$
Particulars Year ended
March 31, Year ended
2010 March 31, 2009
Holding Company
Reimbursement of cost, financing charges & markup fee NIL 132,260
Repayment of Share Capital 200,000 500,000
Payment of dividend 150,000 NIL
Related Party Balances
Receivable from Holding Company NIL 98,560
Payable to Holding Company 2,258 NIL

150
Transworks Inc (USA)

INR
Particulars Year ended Year ended
Mar 31, March 31, 2009
2010
Holding Company
Reimbursement of cost, financing charges & markup fee NIL 6,153,631
Repayment of Share Capital 9,680,000 23,616,485
Payment of dividend 7,116,250 NIL
Related Party Balances
Receivable from Holding Company NIL 4,999,950
Payable to Holding Company 101,947 NIL

4. Segment Information for the period ended 31st March , 2010

(1) Primary business segment

The Company is exclusively in the marketing of Business Process Outsourcing (BPO) services provided
by its Holding Company Aditya Birla Minacs Worldwide Limited and hence its business activities
primarily fall within a single business segment. Therefore, there are no additional disclosures to be
provided in respect of primary segment under Accounting Standard 17 ‘Segment Reporting’, other than
those already provided in the financial statements.

(2) Secondary business segment:

a. Geographical turnover is segregated based on the location of the customer who is invoiced.

b. Assets are segregated based on their location.

c. Information about secondary business segments

US$
Year ended 31st March 2010 India Outside India Total
a Revenue by geographical market - - -
b Carrying amount of segment assets - 53,762 53,762

US$
Year ended 31st March 2009 India Outside India Total
a Revenue by geographical market 132,260 - 132,260
b Carrying amount of segment assets 98,560 368,200 466,760

INR
Year ended 31st March 2010 India Outside India Total
a Revenue by geographical market - - -
b Carrying amount of segment assets - 2,426,810 2,426,810

INR

151
Transworks Inc (USA)

Year ended 31st March 2009 India Outside India Total


a Revenue by geographical market 6,153,631 - 6,153,631
b Carrying amount of segment assets 4,999,950 18,678,805 23,678,755

6. Previous year figures have been regrouped wherever necessary to correspond with current period figures.

For S. R. BATLIBOI & CO. For Transworks Inc.


Firm Registration No. 301003E
Chartered Accountants Deepak J. Patel

per Vijay Maniar


Partner
Membership No. 36738

Place: Mumbai Ramesh Kamath


Date: April , 2010 Chief Financial Officer

152