UTOPÍA, ANARQUÍA Y DERECHOS HUMANOS
2. Utopía y Derechos Humanos
Effective 03 July 2013, the Company has established a Mphasis Provident Fund Trust („the Trust‟) to which contributions towards provident fund are made each month which have been invested in Government bonds with average returns more than guaranteed return. On 23 April 2014, an amount of ` 5,052.27 millions which was held by Regional Provident Fund Commissioner has been transferred from Recognised Provident Fund to the Mphasis Provident Fund Trust effective 01 April 2014. The Company has carried out actuarial valuation as at 31 March 2015.
The actuary has provided a valuation and based on the assumption mentioned below, there is no shortfall as at 31 March 2015. The details of the fund and plan asset position are given below:
(` millions) 31 March 2015
Plan assets at the year end 5,636.68
Present value of benefit obligation at year end 5,636.68
Asset recognized in balance sheet -
Assumptions used in determining the present value obligation of the interest rate guarantee under the Deterministic Approach.
Government of India (GOI) bond yield 7.81%
Remaining term of maturity (in years) 13
Expected guaranteed interest rate 8.75%
The Company contributed ` 456.56 millions during the year ended 31 March 2015 (five months ended 31 March 2014: ` 199.87 millions).
33. The details in respect of the jointly controlled operations entered into by the Company as on 31 March 2015 are as follows:
Sl No. Name of Joint Ventures Nature of Project Capital Commitments
1 TechSmart India Private
Limited The principal activity of this project is setting up enrolment stations, supply/installation of hardware, maintenance, and biometric data entry for National Population Register project of India.
Mphasis Limited is committed to procure the required fixed assets to service the customers and also provide performance bank guarantees / earnest money deposits, wherever required. 2 Swathy Smart Cards Hi-tech
Private Limited
3 Swathy Smart Cards Hi-tech
Private Limited The principal activity of this project is to deploy equipment/manpower, and give technology support for collection of door to door data entry for Social Economic Caste Census project in India.
4 JMK Infosoft Limited
5 E - Governance Private Limited
The principal activity of this project is to supply equipment conduct enrollment operations and collect demographic data for issuance of Unique Identification cards in India.
6 Strategic Outsourcing Services Private Limited 7 CSS Techenergy Limited
In respect of the above activities, the Company has advanced ` 10.00 millions (31 March 2014: ` 10.00 millions) to the said joint venturers.
During the current year, there are no transactions with the above parties. 34. The movement in provisions during the year is as below:
Claims 31 March 2015 31 March 2014
Opening balance 48.03 48.03
Additions - -
Amounts reversed / paid - -
Closing balance 48.03 48.03
35. The Company has incurred losses, in respect of certain long term non-cancellable revenue contracts, as the operations are in its stabilisation phase. The management has initiated various cost optimisation and revenue enhancement initiatives and is confident of making profits over the period of the contract.
36. The Company has entered into international and specified domestic transactions with its associated enterprises within the meaning of section 92B and section 92BA respectively of the Income Tax Act, 1961. The Company is of the view that all the aforesaid transactions have been made at arms' length terms.
37. The Boards of Directors in its meeting held on 27 September 2013 had approved the scheme of amalgamation („the scheme‟) of Mphasis Finsource Limited, a wholly owned subsidiary of the Company, carrying on the business of business process outsourcing, into the Company with effect from 1 April 2013. The Honourable High Court of Karnataka had passed orders approving the scheme on 19 June 2014. Upon filing of the orders of the Honourable High Court of Karnataka with the Registrar of Companies on 04 September 2014, the scheme became effective and accordingly, the Company has given effect to the merger in the financial statements during the year ended 31 March 2015.
Notes to the Financial Statements for the year ended 31 March 2015
37
Pursuant to the terms of the approved merger scheme, the amalgamation has been accounted for under the pooling of interest method as prescribed by Accounting Standard 14 for “Accounting for Amalgamation”, accordingly all the assets and liabilities recorded in the books of Mphasis Finsource Limited as of 31 March 2013 has been recorded by the Company at their respective book values as follows :
(` millions) Fixed Assets 25.36 Deferred tax assets 7.31 Cash and Bank balance 45.47 Loans and advances 40.77 Trade receivables 48.80 Current assets 28.65 Trade payables 183.89 Other Liabilities 7.56 Provisions 3.32 Further, pursuant to the terms of the approved merger scheme:
(i) The Share Capital of Mphasis Finsource Limited and investments of the Company in Mphasis Finsource Limited have been cancelled and no difference arises on such cancellation.
(ii) Expenses incurred by the Company in connection with the amalgamation scheme have been charged to the statement of profit and loss of the Company.
The loss for the financial year 2013-2014 pertaining to Mphasis Finsource Limited operations has been adjusted with the surplus in the statement of profit and loss.
38. On 13 February 2014, the Company entered into a definitive agreement subject to fulfilment of certain conditions for sale of a business division on a slump sale basis. Accordingly, the expected loss of ` 64.41 millions (net of tax of ` 33.17 millions) on such sale of business has been provided for and disclosed as an exceptional item during the five months period ended 31 March 2014. The management is confident of completing the sale of business division on fulfilment of the conditions precedent as per the definitive agreement. Pending completion of the transaction, the management has reversed / provided for overdue debtors of ` 379.43 millions.
39. On 22 July 2013, the Board of Directors of Mphasis Lanka (Private) Limited, a wholly owned subsidiary of the Company, resolved to close down its operations. Accordingly, the Company has made provision of ` 55.78 millions (31 March 2014: ` 46.69 millions) towards investment and inter-company receivable as at 31 March 2015.
40. Current tax for the year ended 31 March 2015 includes provision for earlier years amounting to ` 13.19 millions (Five months ended 31 March 2014: ` 47.56 millions) while deferred tax charge for the year ended 31 March 2015 include a reversal of ` 75.48 millions (Five months ended 31 March 2014: ` Nil). On account of said adjustments, the net impact of prior period tax reversal is
` 62.29 millions. (Impact of prior period tax charge for the five months ended 31 March 2014: ` 47.56 millions).
41. The ESOP schemes (“RSU 2010”, “RSU 2011”, “RSU 2014” and “ESOP 2012”) of Mphasis Limited are administrated through the Mphasis Employee Benefit Trust (“MEBT”) and all other ESOP schemes are administrated by BFL Equity Reward Trust (“BERT”). As per the Trust deeds, MEBT and BERT are constituted as irrevocable trusts. In this regard, basis legal advice obtained, the management is of the view that the Company has no right to the assets of MEBT and BERT, hence, the Company has not consolidated the financial statements of MEBT and BERT in the financial statements of the Company.
42. Revenue for the year ended 31 March 2015 are net of reversal of ` 123.80 millions pertaining to earlier periods (five months ended 31 March 2014: ` Nil).
43. As per Section 135 of the Companies Act, 2013, a Corporate Social Responsibility („CSR‟) committee has been formed by Mphasis Limited. The primary function of the Committee is to assist the Board of Directors in formulating a CSR Policy and review the implementation and progress of the same from time to time. The CSR Policy focuses on creating opportunities for the disadvantaged with emphasis on persons with disabilities and Technology driven community development. Gross amount required to be spent by the Company during the year was ` 139.30 millions. The expenses incurred towards CSR activities amounting to ` 21.80 millions has been charged to the statement of profit and loss and is disclosed under other expenses.
Notes to the Financial Statements for the year ended 31 March 2015
44. The Company has changed its accounting year end from October to March, effective 01 November 2013. Consequent to such change, the figures furnished by the management for comparative is five months ended 31 March 2014. Hence, the same is not comparable with the current year‟s figures. Previous year‟s figures have been reclassified to conform to current year‟s classification, wherever applicable.
As per our report of even date.
For S.R. BATLIBOI & ASSOCIATES LLP For and on behalf of the Board of Directors Chartered Accountants
ICAI Firm registration number: 101049W
per Adarsh Ranka Balu Ganesh Ayyar Narayanan Kumar
Partner Chief Executive Officer Director
Membership No. 209567
V. Suryanarayanan A. Sivaram Nair
Executive Vice President & Executive Vice President, Company Secretary Chief Financial Officer General Counsel & Ethics Officer
Santa Clara, U.S.A. Santa Clara, U.S.A. 22 May 2015 22 May 2015