Notes to Accounts of Gemini Communication Ltd.

Mar 31, 2015

1. Cash and Cash Equivalents represent Cash, Balances with Banks In Current Account and Fixed Deposits

2. Figures in brackets indicate Cash flow

3. Figures for the previous year have been regrouped / rearranged wherever found necessary

4. Shares held by holding company, its subsidiaries and associates

The company does not have any holding company.

5. Rights, preferences and restrictions attached to equity shares

The company has one class of equity shares having a face value of ' 1/- per share. Each shareholder is eligible for one vote for each share held in the company. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

6. The general economic slowdown has affected the telecom industry. The late auction of spectrum by government and the slowdown of 3G and 4G technologies have not brought cheer to the telecom industry. The non-payment of government receivables has resulted into substantial erosion of the Company's net worth and the Company has incurred cash losses. The Company continues to take various measures such as cost optimisation, improving operating efficiency, renegotiation of contracts with customers to improve Company's operating results and cash flows. Further the management believes that new spectrum auction will result in exponential growth in 3G 4G & LTE which are expected to generate incremental cash flows to the Company. In view of the above mentioned factors, the Company continued to prepare its Financial Statements on going concern basis.

7. Contingent liabilities

There are some on-going litigations against the company for the contractual liabilities The monetary value of the aforesaid litigations could not be quantified and the contingent liabilities, which may arise thereto, also could not be determined.

The management of the company retains the litigations stated above shall not have any material/financial impact on Company.

8. Impairment of Assets

As required Under Accounting Standard -28 "Impairment of Assets" the carrying amount of an asset exceeds its recoverable amount and value in use, and hence provision for impairment loss of Rs.974.30 Lakhs , has been provided in the financial statements.

9. Inventory Write off

Inventories worth of Rs. 4088.49 Lakhs have lost its potential of realisation and the cost of maintenance of the said inventories had imposed continual burden on the Company. Therefore, the inventories have been written off as per company's policy.

10. DEFERRED TAX LIABILITY

The provision for deferred tax liability for the year ended March 31, 2015 has been made in accordance with Accounting Standard 22 on Accounting for Taxes on Income. The Deferred Tax Liability as at March 31, 2015 is on account of Depreciation of Rs. 635.76 Lakhs and the Deferred Tax Liability as at 31st March, 2015 is Rs.65.91 Lakhs.

11. LEASE

All operating leases entered into by the company are cancellable on giving a notice of one to three months.

12. Investment details of plan assets:

The Plan assets are maintained by Life Insurance Corporation Gratuity Scheme. The details of investment maintained by Life Insurance Corporation are not available with the company and have not been disclosed.

As per the policy of the company employees are not entitled for leave encashment.

PF & ESI expenses are recognized in the accounts at the actual cost to the company which is deposited with the appropriate Government authorities. Apart from this contribution, the company has no other obligation to provide for in the books.

13. SEGMENT REPORTING

The entire operations of the company relates to one segment viz., network product and services.

TRANSACTIONS WITH RELATED PARTIES:

Key Management Personnel

* R. Ramkumar - Whole-time Director

* B. Sreekrishna - Project Director

* R. Vijaykumar - Managing Director

* B. Srinivasan - Chief Technology Officer

Subsidiary & Associate Companies

*Gemini Traze RFID Private Limited (RFID) (100% Subsidiary)

* Point Red Telecom Limited (Pointred) (100% Subsidiary)

* Gemini Infotech Limited, Hong Kong (100% Subsidiary)

* PR Wireless Tech Limited, Hong Kong (100% Subsidiary of Pointred)

* Gemini FTZ, Dubai (100% Subsidiary)

* Gemini Geoss Energy Private Ltd ( 100% Subsidiary)

14. Figures for the previous year have been regrouped wherever necessary to conform to the current year's classification

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Mar 31, 2014

1. a. Shares held by holding company, its subsidiaries and associates

The company does not have any holding company.

b. Rights, preferences and restrictions attached to equity shares

The company has one class of equity shares having a face value of K 1/- per share. Each shareholder is eligible for one vote for each share held in the company. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

The provision for deferred tax liability for the year ended March 31, 2014 has been made in accordance with Accounting Standard 22 on Accounting for Taxes on Income. The Deferred Tax Liability as at March 31,2014 is on account of Depreciation of Rs. 602.86 Lakhs and the Deferred Tax Liability as at 31st March, 2014 is 285.47 Lakhs.

2. LEASE

All operating leases entered into by the company are cancelable on giving a notice of one to three months.

3. Investment details of plan assets:

The Plan assets are maintained by Life Insurance Corporation Gratuity Scheme. The details of investment maintained by Life Insurance Corporation are not available with the company and have not been disclosed. As per the policy of the company employees are not entitled for leave encashment.

PF & ESI expenses are recognized in the accounts at the actual cost to the company which is deposited with the appropriate Government authorities. Apart from this contribution, the company has no other obligation to provide for in the books.

4. SEGMENT REPORTING

The entire operations of the company relates to one segment viz., network product and related services.

5. The estimated amount of contracts remaining to be executed on account of Capital account as at 31st March 2014: Nil

6. Bank Guarantees outstanding as on 31.03.2014 is Rs. 76.74 Lakhs (P.Y Rs.745.21 Lakhs) and the company has extended corporate guarantee to the banks for loans obtained by subsidiary companies. The Bank Guarantee are secured by properties of subsidiary company.

7. INVESTMENTS

Considering Long Term nature of Investments in shares of subsidiary companies, the investments are carried at cost. No provision has been made for any temporary diminution in value of such investments.

8. Sundry Debtors include amount due from subsidiary companies amounting to Rs. NIL lakhs (P.Y Rs. NIL).

9. Sundry Creditors include an amount of Rs. Nil ( Rs.2427 lakhs) due to subsidiary Companies.

10. Figures for the previous year have been regrouped wherever necessary to conform to the current year''s classification.

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Mar 31, 2013

1. DEFERRED TAX LIABILITY

The provision for deferred tax liability for the year ended March 31, 2013 has been made in accordance with Accounting Standard 22 on Accounting for Taxes on Income. The Deferred Tax Liability as at March 31, 2012 is on account of Depreciation of ? 1155.48 Lakhs and the Deferred Tax Liability as at 31st March, 2013 is ? 888.32 Lakhs.

2. LEASE

All operating leases entered into by the company are cancelable on giving a notice of one to three months.

The lease rentals paid during the year and the future lease obligations of HP EMI''s for agreements in vogue as on March 31, 2013 are as follows:

3. Investment details of plan assets:

The Plan assets are maintained by Life Insurance Corporation Gratuity Scheme. The details of investment maintained by Life Insurance Corporation are not available with the company and have not been disclosed.

As per the policy of the company employees are not entitled for leave encashment.

PF & ESI expenses are recognized in the accounts at the actual cost to the company which is deposited with the appropriate Government authorities. Apart from this contribution, the company has no other obligation to provide for in the books.

4. SEGMENT REPORTING

The entire operations of the company relates to one segment viz., network product and related services.

5. RELATED PARTY DISCLOSURE

TRANSACTIONS WITH RELATED PARTIES:

Key Management Personnel

R. Vijaykumar – Chairman & Managing Director R. Ramkumar – Whole-time Director

Subsidiary & Associate Companies

- Gemini Traze RFID Private Limited (RFID) (100% Subsidiary)

- Point Red Telecom Limited (Pointred) (100% Subsidiary)

- Gemini Infotech Limited, Hong Kong (100% Subsidiary)

- PR Wireless Tech Limited, Hong Kong (100% Subsidiary of Pointred)

- Gemini FTZ, Dubai (100% Subsidiary)

- Gemini Geoss Energy Private Ltd ( 100% Subsidiary)

6. The estimated amount of contracts remaining to be executed on account of Capital account as at 31st March 2013: Nil

7. Bank Guarantees outstanding as on 31.03.2013 is Rs. 745.21 Lakhs (P.Y Rs. 5022.485 Lakhs) and the company has extended corporate guarantee to the banks for loans obtained by subsidiary companies. The Bank Guarantee are secured by properties of subsidiary company.

8. The FCCBs have been converted in to equity shares on 1st November 2012.

9. Sundry Debtors include amount due from subsidiary companies amounting to NIL (P.Y Rs. 9.68 lakhs).

10. Sundry Creditors include an amount of Rs. 2427 Lakhs (P.Y Rs. 20626.17 lakhs) due to subsidiary Companies.

11. Figures for the previous year have been regrouped wherever necessary to conform to the current year''s classification.

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Mar 31, 2012

A. Shares held by holding company, its subsidiaries and associates

The company does not have any holding company.

b. Rights, preferences and restrictions attached to equity shares

The company has one class of equity shares having a face value of ' 1/- per share. Each shareholder is eligible for one vote for each share held in the company. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

c. Shares allotted as fully paid up by way of bonus shares (during the 5 years preceding 31st March 2012)

(96,68,000 shares were issued as fully paid bonus shares during the year 2007-08 by capitalizing Profit & Loss A/c)

1. DEFERRED TAX LIABILITY

The provision for deferred tax liability for the year ended March 31, 2012 has been made in accordance with Accounting Standard 22 on Accounting for Taxes on Income. The Deferred Tax Liability as at March 31, 2012 is on account of Depreciation of Rs.3545.26 Lakhs and the Deferred Tax Liability as at 31st March, 2012 is 1155.48.

2. LEASE

All operating leases entered into by the company are cancelable on giving a notice of one to three months.

The lease rentals paid during the year and the future lease obligations of HP EMI's for agreements in vogue as on March 31, 2012 are as follows:

3. Investment details of plan assets:

The Plan assets are maintained by Life Insurance Corporation Gratuity Scheme. The details of investment maintained by Life Insurance Corporation are not available with the company and have not been disclosed.

As per the policy of the company employees are not entitled for leave encashment.

PF & ESI expenses are recognized in the accounts at the actual cost to the company which is deposited with the appropriate Government authorities. Apart from this contribution, the company has no other obligation to provide for in the books.

4. SEGMENT REPORTING

The entire operations of the company relates to one segment viz., network product and related services.

5. RELATED PARTY DISCLOSURE TRANSACTIONS WITH RELATED PARTIES: Key Management Personnel

- Mr. R. Vjaykumar - Chairman & Managing Director

- Mr. R. Ramkumar - Whole-time Director

- Mr. B. Sreekrishna - Whole-time Director

- Mr. B. Srinivasan - Whole-time Director

Subsidiary & Associate Companies

- Gemini Traze RFID Private Limited (RFID) (100% Subsidiary)

- Point Red Telecom Limited (Pointred) (100% Subsidiary)

- Gemini Infotech Limited, Hong Kong (100% Subsidiary)

- PR Wireless Tech Limited, Hong Kong (100% Subsidiary of Pointred)

- Veeras Infotech Private Limited (51% Subsidiary of Gemini Infotech Limited)

- Gemini Geoss Energy Private Ltd ( 100% Subsidiary)

6. The estimated amount of contracts remaining to be executed on account of Capital account as at 31st March 2012: Nil

7. Bank Guarantees outstanding as on 31.03.2012 is Rs. 5022.48 Lakhs (P.Y Rs. 506.45 Lakhs) and the company has extended corporate guarantee to the banks for loans obtained by subsidiary companies. The Bank Guarantee are secured by properties of subsidiary company.

Note :-

a. The FCCB's outstanding as at 31st March,2012 are anti dilutive and hence ignored for the purpose of computing diluted earning per share.

8. INVESTMENTS

Considering Long Term nature of Investments in shares of subsidiary companies, the investments are carried at cost. No provision has been made for any temporary diminution in value of such investments.

9. The company raised money by issue of 6% Unsecured

Convertible Bonds due in 2012 (FCCB) amounting to

€ 15,000,000 during July 2007. The terms of the

issues as per the offer document includes:

i. Issue date 17.07.2007 and maturity date is 18.10.2012

ii. Conversion price is Rs. 51.31/-(of Re 1/- each) (subject to adjustment to conversion price) with a fixed rate of exchange of conversion of Rs.54.87 per € 1. As per this the conversion price has been reset to 41.68 (of Re 1/- each).

iii. Conversion price is subject to suitable adjustment for the issue of bonus, subdivision and capitalization of reserves etc. The maximum adjustment to conversion price is subject to SEBI approved minimum conversion price, i.e., floor price of Rs.5/- Paid up or Rs. 41.68 for Rs. 1/- Paid up.

iv. The bonds can be converted at the option of the company at any time on or after 3 years from the issue date.

v. Up to the year ended 31.03.2012, the bond holders have not exercised conversion option or not opted for early redemption and the company has met the interest commitment till date.

10. Sundry Debtors include amount due from subsidiary companies amounting to Rs.9.68 lakhs (P.Y Rs. Nil).

11. Sundry Creditors include an amount of Rs. 20,626.17 Lakhs (P.Y Rs.19455.23 Lakhs) due to subsidiary Companies.

12. Figures for the previous year have been regrouped wherever necessary to conform to the current year's classification.

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Mar 31, 2011

1. A) SHARE WARRANT

i) Share Warrant 2007 – 08

During the year ended March, 31, 2008 the company had allotted 10, 00,000 convertible equity share warrants to one of the promoter of the company entitling to obtain allotment. The holder of the said equity warrants have had the option to apply for and be allotted one equity share of the company per equity warrant at any time after the allotment but on or before the expiry of 18 months from the date of allotment of the warrant. Further in case the investors who do not opt for conversion of the warrants, the upfront amount so paid stands forfeited by the Company and all the rights attached to the warrants lapse automatically. None of the warrant holders exercised the option to convert any of the aforesaid warrants till the last date of conversion within 18 months from their respective entitlements. Accordingly, during the financial year under review, the Company forfeited the amount of Rs 2, 01, 00,000. This amount has been credited to Capital Reserve Account.

ii) Share Warrant 2009 – 10

96,68,000 partly paid share warrants of Rs.18 had been converted into Equity Shares of Re.1 at a premium of Rs 17 on 18th October,2010.

B) SECURED LOANS

The working capital facilities from banks are secured by first charge on the Fixed Assets land & building of the Company and further secured by inventories, book debts and all other assets of the company. The loan is also personally guaranteed by the directors of the company in their personal capacity.

The term loan borrowed from banks is secured against by pari – passu charge on all Fixed Assets, inventories, book debts and equitable mortgage of land & buildings and other assets of the company.

C) UNSECURED LOANS

Vehicle loans from banks financial institutions are secured by the hypothecation of respective vehicles as per the Hire purchase agreement and the company holds the ownership on those vehicles is subject to the Hire Purchase agreements. As at the year end all vehicle loans were closed.

Unsecured loans from others represent the loan amount borrowed under FCCB as per the regulations of RBI.

2) DEFERRED TAX LIABILITY

The provision for deferred tax liability for the year ended March 31, 2011 has been made in accordance with Accounting Standard 22 on Accounting for Taxes on Income. The Deferred Tax Liability as at March 31, 2011 is on account of Depreciation of Rs.3522.39 Lakhs and the Deferred Tax Assets as at 31st March, 2011 is on account of timing difference on provision for Gratuity of Rs.5.59 Lakhs.

3) LEASE

All operating leases entered into by the company are cancelable on giving a notice of one to three months.

4) RETIREMENT BENEFITS

Investment details of plan assets:

The Plan assets are maintained by Life Insurance Corporation Gratuity Scheme. The details of investment maintained by Life Insurance Corporation are not available with the company and have not been disclosed.

As per the policy of the company employees are not entitled for leave encashment.

PF & ESI expenses are recognized in the accounts at the actual cost to the company which is deposited with the appropriate Government authorities. Apart from this contribution, the company has no other obligation to provide for in the books.

5) SEGMENT REPORTING

The entire operations of the company relates to one segment viz., network product and related services.

6) RELATED PARTY DISCLOSURE TRANSACTIONS WITH RELATED PARTIES:

Key Management Personnel

- R. Ram Kumar – Chairman

- R. Vijay Kumar – Managing Director

- B. Sreekrishna – Director

- B. Srinivasan – Director

Other Non – Executive Directors

- Eswaran Annamalai

- K. Hariharan - upto 03/05/2010

- L. Satyanarayan

- V.K.Venugopal - from 03/05/2010

- Hari Sethuraman

Subsidiary & Associate Companies

- Gemini Traze RFID Private Limited (RFID) (100% Subsidiary)

- PointRed Telecom Limited (Pointred) (100% Subsidiary)

- Gemini Infotech Limited, Hong Kong (100% Subsidiary)

- PR Wireless Tech Limited, Hong Kong (100% Subsidiary of Pointred)

- Veeras Infotek Private Limited (51% Subsidiary of Gemini Infotech Limited)

- Gemini Geoss Energy Private Ltd ( 100% Subsidiary)

7) The company is in the process of identification of Micro, Small and Medium Enterprises under the Micro,Small & Medium Enterprises Development Act, 2006.

8) The estimated amount of contracts remaining to be executed on account of Capital account as at 31st March 2011: Nil

9) Bank Guarantees outstanding as on 31.03.2011 is Rs.5022.48 Lakhs (P.Y 506.45 Lakhs) and the company has extended corporate guarantee to the banks for loans obtained by subsidiary companies. The Bank Guarantee are secured by properties of subsidiary company.

10) Contingent Liabilities

a) The revision demand for A.Y 2001 – 02 amounting to Rs.5.33 Lakhs is pending for payment.

b) The company's Income tax appeal for Assessment Year 2002 – 03 was partially allowed in favor of the company by ITAT. For the balance demand of Rs.10.45 Lakhs the company has filed appeals before Honorable High Court of Madras. Against this, the company has paid a sum of Rs.4.00 Lakhs under protest. Considering the Company's chance of success in appeal the disputed amount is not provided for in the books of accounts.

c) The Income Tax department has made an order for the Asst. Year 2006-07 demanding a sum of Rs.419.69 Lakhs which is stayed by the Honorable High Court of Madras. The tax demand is on account of disallowance of deduction u/s.80IC claimed by the company. Considering the Company's chance of success in appeal the disputed amount is not provided for in the books of accounts

d) Assessment Year 2007 – 08 the A.O made an order u/s 143(1)(a) demanding Rs. 62.07 lakhs for disallowance of TDS certificates for which the company has filed rectification petition before the A.O. Considering the company's chance of reduction in demand the amount has not been provided for.

e) AO made an order, for the Assessment Year 2008 -09 u/s 143(1) demanding a sum of Rs.344.31 lakhs, which was disputed before High Court of Chennai and as per the directions of High Court the company has preferred representation before the A.O for rectification / modification. Considering the company's chance of success the amount has not been provided for. Further a demand by AO for the AY 2008-09 under section 143(3) demanding a sum of Rs 29.38 Lacs vide order dt 1st March 2011 and Rs 1.84 Lacs towards FBT demand raised vide order under section 115WE(3) dt 31.12.2010

f) The Central Excise department has made an order demanding a sum of Rs.56.80 Lakhs for the year 2000-01 against which the company has filed an appeal before CCE (A). Considering the company's chance of success in appeal the disputed amount is not provided for in the books of accounts.

g) Following Corporate guarantees have been given to Point Red Telecom Ltd, a group company:

- Rs 50 Crores in favour of L&T Infrastructure Finance Company Ltd (NBFC) towards term loan facilities

- Rs 90 Crores in favour of Punjab National Bank towards working capital facilities

- Rs 16.50 Crores in favour of State Bank of India towards Working capital facilities

- Rs 50 Crores in favour of Central Bank of India Limited towards working capital facilities

h) A Corporate guarantee has been given to Veeras Infotek Pvt Ltd to the tune of Rs 58.75 Lakhs in favour of

EASYACCESS Financial Services Ltd towards Credit facility availed from Redington India Ltd for purchase of equipments.

11) Obtaining of Confirmation of balances from Sundry Debtors, Sundry Creditors, Loans & Advances, Deposits & Other Current Assets are pending. Considering the huge volume of Government Departments outstanding not being confirmed by the respective departments, the confirmations and reconciliation of balances as on 31st March, 2011 is still in progress.

12) In the opinion of the Management, all current assets including Sundry Debtors, Loans & Advances, Deposits and Other Current Assets are realizable in the ordinary course of the business at the values stated.

13) The company has appointed Branch Auditors u/s 228 of the Companies Act to audit the accounts of the overseas branches. The Branch Audit reports on the accounts of the branches have been obtained, which are included in the financials of the Company under report.

14) INVESTMENTS

Considering Long Term nature of Investments in shares of subsidiary companies, the investments are carried at cost. No provision has been made for any temporary diminution in value of such investments.

15) The company raised money by issue of 6% Unsecured Convertible Bonds due in 2012 (FCCB) amounting to € 15,000,000 during July 2007. The terms of the issues as per the offer document includes:

- Issue date 17.07.2007 and maturity date 18.07.2012

- Conversion price is Rs. 102.62(of Re 1/- each) (subject to adjustment to conversion price) with a fixed rate of exchange of conversion of Rs.54.87 per € 1. As per this the conversion price has been reset to 83.36 (of Re 1/- each).

- Conversion price is subject to suitable adjustment for the issue of bonus, subdivision and capitalization of reserves etc. The maximum adjustment to conversion price is subject to SEBI approved minimum conversion price, i.e., floor price of Rs. 416.80 per share.

- The bonds can be converted at the option of the company at any time on or after 3 years from the issue date.

- Up to the year ended 31.03.2011, the bond holders have not exercised conversion option or not opted for early redemption.

16) Balance in the other banks (Non Scheduled Banks) represents the balances with RBS Coutts Bank Von Ernst Ltd, Singapore.

In Current Account outstanding and Maximum Balance held at any time during the year is Rs.7.22 Lakhs. None of the Directors are interested in the above bank.

17) Sundry Debtors include amount due from subsidiary companies amounting to Rs. Nil (P.Y Rs. Nil).

18) Sundry Creditors include an amount of Rs.19916.00 Lakhs (P.Y Rs. 2191.78 Lakhs) due to subsidiary Companies.

19) Figures for the previous year have been regrouped wherever necessary to conform to the current year's classification.

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Mar 31, 2010

1) A) SHARE WARRANT

Share Warrant 2007 - 08

Pending approval from Stock Exchange the Shares have not been allotted to Share Warrant holders and hence kept under

Share warrant money received pending allotment.

Share Warrant 2009-10

On 25/06/2009 the company has allotted 97,18,000 Equity Warrants of Re. 1/- each at a premium of Rs.17/- each. The allotment money at 25% has been received. The equity warrant holders have the option to convert the warrants into same number of equity shares within 18 months from the date of allotment. During this year one share warrant holder has opted to apply and convert 29,62,900 equity shares at Re. 1 /¦ each with premium of Rs. 17/- each. The balance money collected pending allotment are kept under Share warrant 2009 -10.

B) SECURED LOANS

The working capital facilities from banks are secured by first charge on the Fixed Assets land & building of the

Company and further secured by inventories, book debts and all other assets of the company. The loan is also personally guaranteed by the directors of the company in their personal capacity.

The term loan borrowed from banks is secured against by pari - passu charge on all Fixed Assets, inventories, book debts, and equitable mortgage of land & buildings and other assets of the company.

C) UNSECURED LOANS

Vehicle loans from banks financial institutions are secured by the hypothecation of respective vehicles as per the Hire purchase agreement and the company holds the ownership on those vehicles is subject to the Hire Purchase agreements. As at the year end all vehicle loans were closed.

Unsecured loans from others represent the loan amount borrowed under FCCB as per the regulations of RBI.

2) DEFERRED TAX LIABILITY

The provision for deferred tax liability for the year ended March 31, 2010 has been made in accordance with Accounting Standard 22 on Accounting for Taxes on Income. The Deferred Tax Liability as at March 31, 2010 is on account of Depreciation of Rs.3283.88 Lakhs and the Deferred Tax Assets as at 31st March, 2010 is on account of timing difference on provision for Gratuity of Rs.45.92 Lakhs.

3) LEASE

All operating leases entered into by the company are cancelable on giving a notice of one to three months.

Investment details of plan assets:

The Plan assets are maintained by Life Insurance Corporation Gratuity Scheme. The details of investment maintained by Life Insurance Corporation are not available with the company and have not been disclosed.

As per the policy of the company employees are not entitled for leave encashment.

PF & ESI expenses are recognized in the accounts at the actual cost to the company which is deposited with the appropriate Government authorities. Apart from this contribution, the company has no other obligation to provide for in the books.

4) SEGMENT REPORTING

The entire operations of the company relates to one segment viz., network product and related services.

5) RELATED PARTY DISCLOSURE TRANSACTIONS WITH RELATED PARTIES: Key Management Personnel

- R. Ram Kumar - Chairman

- R. Vijay Kumar - Director

- B. Sreekrishna - Managing Director

- B. Srinivasan - Director

Other Non - Executive Directors

- C.V. Bhaskar - up to 30/12/2009

- Eswaran Annamalai

- K. Hariharan

- Satyanarayanan

- Harisethuraman - From 30/12/2009

Subsidiary & Associate Companies

- Gemini Traze RFID Private Limited (RFID) (100% Subsidiary)

- Point Red Telecom Private Limited (Pointred) (100% Subsidiary)

- Gemini Infotech Limited, Hong Kong (100% Subsidiary)

- PR Wireless Tech Limited, Hong Kong (100% Subsidiary of Pointred)

- Veeras Infotek Private Limited (51 % Subsidiary of Gemini Infotech Limited)

6) Sundry Creditors outstanding Rs.7646.11 Lakhs as on 31 st March 2010 represents the dues to creditors other than Micro enterprises and Small enterprises. There is no principal or interest due or unpaid their on to any supplier of micro, small and medium enterprises as at the year end.

7) The estimated amount of contracts remaining to be executed on account of Capital account as at 31st March 2010: Nil

8) Bank Guarantees outstanding as on 31.03.2010 is Rs.506.45 Lakhs (P.Y 1715.72 Lakhs) and the company has extended corporate guarantee to the banks for loans obtained by subsidiary companies. The Bank guarantee are secured by properties of subsidiary company.

9) Contingent Liabilities

a. The revision demand for A.Y 2001 - 02 amounting to Rs.5.33 is pending for payment.

b. The companys Income tax appeal for Assessment Year 2002 - 03 was partially allowed in favor of the company by ITAT. For the balance demand of Rs.10.45 Lakhs the company has filed appeals before Honorable High Court of Madras. Against this, the company has paid a sum of Rs.4.00 Lakhs under protest. Considering the Companys chance of success in appeal the disputed amount is not provided for in the books of accounts.

c. The Income Tax department has made an order for the Asst. Year 2006-07 demanding a sum of Rs.419.69 Lakhs which is stayed by the Honorable High Court of Madras. The tax demand is on account of disallowance of deduction u/s.80IC claimed by the company. Considering the Companys chance of success in appeal the disputed amount is not provided for in the books of accounts.

d. Assessment Year 2007 - 08 the A.O made an order u/s 143(1)(a) demanding Rs. 62.07 lakhs for disallowance of TDS certificates for which the company has filed rectification petition before the A.O. Considering the Companys chance of reduction in demand the amount has not been provided for.

e. A.O. made an order for the Assessment Year 2008 -09 u/s 143(1)(a) demanding a sum of Rs.344.31 lakhs, which was disputed before High Court of Chennai and as per the directions of High Court the company has preferred representation before the A.O for rectification / modification. Considering the Companys chance of success the amount has not been provided for.

f. The Central Excise department has made an order demanding a sum of Rs.56.80 Lakhs for the year 2000-01 against which the company has filed an appeal before CCE (A). Considering the companys chance of success in appeal the disputed amount is not provided for in the books of accounts.

10) Obtaining of Confirmation of balances from Sundry Debtors, Sundry Creditors, Loans & Advances, Deposits & Other Current Assets are pending. Considering the huge volume of Government Departments outstanding not being confirmed by the respective departments, the confirmations and reconciliation of balances as on 31st March, 2010 is still in progress.

11) In the opinion of the Management, all current assets including Sundry Debtors, Loans & Advances, Deposits and Other Current Assets are realizable in the ordinary course of the business at the values stated. On a conservative basis the management has provided for bad and doubtful debts on receivables overdue for more than 3 years amounting to Rs. 149.97 Lakhs for the year. Against provision for bad and doubtful debts outstanding as on 31.03.09 a sum of Rs. 204.90 lakhs has been collected. The balance provision for bad debts outstanding as on 31.03.10 is Rs. 212.42 lakhs.

12) The company has appointed Branch Auditors u/s 228 of the Companies Act to audit the accounts of the overseas branches. The Branch Audit reports on the accounts of the branches have been obtained, which are included in the financials of the Company under report.

13) The company raised money by issue of 6% Unsecured Convertible Bonds due in 2012 (FCCB) amounting to €15,000,000 during July 2007. The terms of the issues as per the offer document includes:

- Issue date 17.07.2007 and maturity date 18.07.2012

- Conversion price is Rs. 102.62/-(of Re 1/- each) (subject to adjustment to conversion price) with a fixed rate of exchange of conversion of Rs.54.87 per € 1. As per this the conversion price has been reset to 83.36 (of Re 1/- each).

- Conversion price is subject to suitable adjustment for the issue of bonus, subdivision and capitalization of reserves etc. The maximum adjustment to conversion price is subject to SEBI approved minimum conversion price, i.e., floor price of Rs. 416.80 per share.

- The bonds can be converted at the option of the company at any time on or after 3 years from the issue date.

14) Balance in the other banks (llon Scheduled Banks) represents the balances with RBS Coutts Bank Von Ernst Ltd, Singapore.

In Current Account outstanding and Maximum Balance held at any time during the year is Rs.7.33 Lakhs. None of the Directors are interested in the above bank.

15) Sundry Debtors include amount due from subsidiary companies amounting to Rs. NIL (P.Y Rs. 6.29 Lakhs).

16) Sundry Creditors include an amount of Rs. 2191.78 Lakhs (P.Y Rs.799.31 Lakhs) due to subsidiary Companies.

17) Figures for the previous year have been regrouped wherever necessary to conform to the current years classification.