Notes to Accounts of Spanco Ltd.

Mar 31, 2013

1) Nature of Operations

Spanco Limited (''Spanco'' or ''the Company'') is in the business of creating Technology Infrastructure to help drive governance efficiency across key sectors. Spanco is SEI CMM Level 3 and ISO 9001:2008 certified.

Spanco caters to large complex Technology Infrastructure projects across Government, Power, Transport and Telecom Service Provider''s space. Spanco has been an active player in creation of Technology Infrastructure for over a decade and today ranks amongst the best in India. It has presence across India and provides high quality, cost effective scalable Technology Infrastructure solutions. Spanco has recently entered into business of Power Distribution. It already has a formidable presence over a decade in the BPO space catering to India, US/Europe, Middle East and African markets.

Spanco''s Business Unit in Government, governance and Transport are predominantly focused on building core infrastructure and providing services to help drive better and more effective governance.

Service Provider Business Unit of Spanco caters to carriers in India providing solutions to meet networking infrastructure requirements of its clients using cutting-edge technologies.

1.1 Rights, Preferences and Restrictions attached to Equity Shares

The Company has one class of equity shares having a par value of Rs. 10 each. Each shareholder is eligible for dividend and one vote per share held. In case of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amount, in proportion to their shareholding.

2) Convertible Warrants and issue of Equity Shares

During previous financial years, the Company had issued 1,500,000 warrants to Mrs. Kavita Puri from promoter group carrying an option /entitlement to subscribe for equivalent number of equity shares on a future date, not exceeding 18 (Eighteen) months from the date of issue of such warrants, on preferential basis in terms of Chapter VII of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 ("ICDR Regulations") for cash at a price of Rs. 155/- per share (including a premium of Rs. 145/- per share). Accordingly, 1,500,000 equity shares of Rs. 10/- each were allotted to Mrs. Kavita Puri at a price of Rs. 155/- per share upon conversion of 1,500,000 convertible warrants.

1.1 Particulars of Security:

a. The debentures are secured by a legal mortgage in English form in favor of the trustees on all the Company''s properties situated at C01/5008, 5th Row, Ground Floor, A wing, City Mall situated at Plot No 4, Sector 19, Vashi Navi Mumbai, Maharashtra. The debentures are further secured by way of first charge, ranking pari passu, on all the fixed assets (movable and immoveable) except all assets having exclusive charge in favor of respective lenders.

b. Term loan from Lakshmi Vilas Bank is secured by first charge by way of hypothecation of the OSWAN project assets and further by personal guarantee of Mr. Kapil Puri. Term loan from State Bank of Hyderabad is secured by subservient charge on all the moveable fixed assets of the Company and also by way of personal guarantee of Mr. Kapil Puri.

Term loan from SREI Equipment Finance Private Limited is secured by charge on the specific IT Equipment acquired out of the said loan.

c. Vehicle Loans are secured by way of hypothecation of vehicles acquired out of the said loans.

d. Finance Lease obligations are secured against leased assets.

1.2 The Company has created Debenture Redemption Reserve in accordance with the provisions of section 117C (1) of the Companies Act, 1956.

1.3 Particulars of Security:

a. Working Capital facilities from banks are secured by way of first charge on all the movable fixed assets, stock, entire book debts, receivables and other current assets of the Company both present and future ranking pari passu with all banks and also by way of personal guarantee of Mr. Kapil Puri. Loan from State Bank of Mysore is further secured by First exclusive Equitable Mortgage charge over the premises comprising Unit nos 801 and 802 on the 8th floor, in the building Godrej Coliseum.

b. Personal guarantee of Mr. Kapil Puri has been given for unsecured loans from other parties amounting to Rs. 6.36 Crores.

c. Inter Corporate Deposits of Rs. 6.12 Crores are secured by way of pledge of shares of the Company held by Mr. Kapil Puri.

3) During the year, the Company, based on the report of an independent value, revalued its Land and Office Premises by an amount Rs. 21.05 Crores and Rs. 23.10 Crores respectively, to disclose its true and fair value and an equivalent amount is credited to Revaluation Reserve Account. As a result there is an additional charge of depreciation amounting to Rs. 0.23 Crores and an equivalent amount has been withdrawn from Revaluation Reserve Account and credited to Statement of Profit and Loss. This has no impact on Loss for the year.

4) The Board of Directors in its meeting held on 10th November, 2012 had decided to approach the banks through the Corporate Debt Restructuring (CDR) process for restructuring of the Company''s debt. The application to that effect was submitted to the CDR Empowered Group (CDR EG) on 28th January, 2013. The same is under consideration of the CDR EG.

5) During the year, borrowing costs of Rs. 0.75 Crores (P Period. Rs. 0.60 Crores) were capitalised.

6) Segment Information

The Company is operating in single segment i.e. ''Technology Infrastructure''. As stated in paragraph 4 of Accounting Standard 17 - Segment Reporting, the Company has disclosed segment information in its Consolidated Financial Statements and hence it is not disclosed in these financial statements.

7) Related party disclosures under Accounting Standard 18 issued by the Institute of Chartered Accountants of India (This information is compiled by management on the basis of information available and relied upon by auditors).

a. The following are the names of related parties and description of relationship

i. Subsidiaries

a. Spanco BPO Ventures Limited

b. Spanco BPO Services Limited *

c. Spanco Respondez BPO Private Limited *

d. Spanco Global Solutions Private Limited ***

e. Spanco Great IT Private Limited ***

f. Skandsoft Technologies Private Limited ***

g. Spanco Infratel Private Limited

h. Spanco IT Infrastructure Private Limited

i. New Delhi Teletech Private Limited

j. Spanco CSC Limited

k. Spanco Power Distribution Limited

l. Spanco Nagpur Discom Limited (upto August 31, 2012) **

m. Spanco Europe Limited, U.K.

n. Spanco Limited, Dubai, U.A.E.

o. Spanco (S) Pte. Limited, Singapore

p. Global Respondez Inc, U.S.A.

q. Spanco Holdings Inc.,U.S.A*

r. Spanco BPO Ventures Mauritius Limited (w.e.f. May 07, 2012)*

s. Spanco BPO Africa Limited (up to December 31, 2012) *

t. Spanco Channel BPO Limited (up to December 31, 2012) ****

u. Spanco Raps Uganda Limited (up to December 31, 2012) *****

v. Spanco Raps Tanzania Limited (up to December 31, 2012) *****

w. Spanco Raps Kenya Limited (up to December 31, 2012) *****

x. Spanco Raps Tchad SARL (up to December 31, 2012) *****

y. Spanco Raps Niger Limited (up to December 31, 2012) *****

z. Spanco Raps Burkina Faso (SARL) (up to December 31, 2012) *****

* This companies was subsidiaries of Spanco BPO Ventures Limited up to September 30, 2012 and further subsidiary of Spanco BPO Venture Mauritius Limited from October 1, 2012 to December 31, 2012 and from January 1, 2013 Associate of Spanco BPO Venture Mauritius Limited.

** This is wholly owned subsidiary of Sapnco Power Distribution Limited

*** These companies are subsidiaries of Spanco CSC Limited.

**** This company is wholly owned subsidiary of Spanco BPO Africa Limited.

***** These companies are subsidiaries of Spanco BPO Africa Limited.

ii. Joint Ventures

a. Bharat BPO Services Limited

b. MP Border Checkpost Development Company Limited

iii. Associates

a. Spanco BPO Africa Limited (w.e.f. January 01, 2013)

b. Spanco Channel BPO Limited (w.e.f. January 01, 2013)**

c. Spanco Raps Uganda Limited (w.e.f. January 01, 2013) ***

d. Spanco Raps Tanzania Limited (w.e.f. January 01, 2013) ***

e. Spanco Raps Kenya Limited (w.e.f. January 01, 2013) ***

f. Spanco Raps Tchad SARL (w.e.f. January 01, 2013) ***

g. Spanco Raps Niger Limited (w.e.f. January 01, 2013) ***

h. Spanco Raps Burkina Faso (SARL) (w.e.f. January 01, 2013) ***

** This company is wholly owned subsidiary of Spanco BPO Africa Limited.

*** These companies are subsidiaries of Spanco BPO Africa Limited.

4. Key Management Personnel

a. Mr. Kapil Puri (Chairman and Managing Director)

b. Mr. Adarsh Bagaria (Whole Time Director) (upto November 10, 2012)

v. Relatives of Key Management Personnel

a. Mrs. Kavita Kapil Puri

b. Mrs. Sarika Adarsh Bagaria (up to November 10, 2012)

5. Enterprise owned or significantly influenced by group of individuals or their relatives

a. Percept Trading Private Limited

b. Steady Growth Properties Private Limited

c. Global Respondez Services Limited

Figures in brackets indicate previous year numbers.

1. Corporate guarantee of Rs. 52 Crores [PY. Rs. 52 Crores] given in favour of Cisco Systems Capital India Private Limited on behalf of wholly owned subsidiary New Delhi Teletech Private Limited.

2. Corporate guarantee and undertaking given to One North East, NY for making an offer of grant to wholly owned subsidiary Spanco Europe Limited of Rs. 0.75 Crore (90,000 pounds) [PY. Rs. 0.70 Crore (90,000 pounds)].

3. Corporate guarantee of Rs. 0.95 Crore [PY. Rs. 0.95 Crore] given in favor of Rentworks India Private Limited for availing operating lease on behalf of subsidiary Spanco BPO Services Limited.

4. Corporate guarantee of Rs. 40 Crores [PY. Rs. 40 Crores] given in favor of IDBI Bank for providing cash credit facility on behalf of subsidiary Spanco BPO Services Limited.

5. Corporate guarantee of Rs. 12 Crores [PY. Rs. 12 Crores] given in favor of Bank of Maharashtra for obtaining cash credit facility on behalf of subsidiary Spanco Respondez BPO Private Limited.

6. Corporate guarantee of Rs. 37.46 Crores [PY. Rs. 37.46 Crores] given in favor of SREI Equipment Finance Private Limited for availing operating lease assistances / facilities on behalf of subsidiary Spanco BPO Services Limited.

7. Corporate guarantee of Rs. 25 Crores [PY. Rs. 25 Crores] given in favor of UCO Bank for availing short term loan on behalf of subsidiary Spanco BPO Services Limited.

8. Corporate guarantee of Rs. 9 Crores [PY. Rs. 9 Crores] given in favor of Indusind Bank for obtaining short term loan on behalf of subsidiary Spanco Respondez BPO Private Limited.

9. Corporate guarantee of Rs. 75 Crores [PY. Nil] given in favor of Essel Utilities Distribution Company for Spanco Nagpur Discom Limited.

10. Corporate guarantee of Rs. 1 Crore [PY. Nil] given in favor of Bank of Maharashtra for obtaining short term loan on behalf of subsidiary Spanco Respondez BPO Private Limited.

7) Particulars of assets acquired given under lease

Operating leases

Premises for office / godown / flat are obtained on operating lease. The lease term for different agreements are from 11 months to 36 months and renewable for further period at the option of the Company. Out of these contracts, only one contract contains an escalation clause with 6% after every 11 months. There are no restrictions imposed by lease arrangements. There are no sub-leases.

8) Interest in Joint Ventures

a) The Company has a 49.75% interest in assets, liabilities, expenses and income of Bharat BPO Services Limited, incorporated in India, which is involved in Domestic Call Centre Services.

b) The Company has a 49.00% interest in assets, liabilities, expenses and income of MP Border Check post Development Company Limited, incorporated in India. The said Company has entered into a Concession Agreement (CA) on November 10, 2010 with MP Road Development Corporation Limited (MPRDCL) for construction, operation and maintenance of the Border Check post at 24 locations in Madhya Pradesh on build, operate and transfer ("BOT") basis.

c) The aggregate of the Company''s share of the assets, liabilities as at March 31, 2013 and expenses and income for the period ended March 31, 2013 of jointly controlled entity based on provisional financial statements is as follows :

9) Capital Commitments

Estimated amount of contracts remaining to be executed on capital account not provided for (net of advances) Rs. 0.04 Crore [PY. Rs. 47.05 Crores].

10) Contingent Liabilities

(Rs. in Crores)

Sr. Particulars As at As at No. March 31, 2013 March 31, 2012

1 Letters of Credit issued by bankers 2.11 24.86

2 Guarantees given by banks on behalf of the Company 124.25 207.09

3 Guarantees and counter guarantees given by the Company 273.37 177.14

4 Income Tax Demand - 0.72

11) There are no amounts due and outstanding to be credited to investor education and protection fund.

12) The figures for current financial year are for 12 months as against 6 months in the previous year. Hence, the figures are not comparable with those of previous year.

13) The figures of the previous year have been regrouped, rearranged and reclassified wherever necessary to conform to current year''s classification.

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Mar 31, 2012

1) Nature of Operations

Spanco Limited ('Spanco' or 'the Company') is in the business of creating Technology Infrastructure to help drive governance efficiency across key sectors. Spanco is SEI CMM Level 3 and ISO 9001:2008 certified.

Spanco caters to large complex Technology Infrastructure projects across Government, Power, Transport and Telecom Service Provider's space. Spanco has been an active player in creation of Technology Infrastructure for over a decade and today ranks amongst the best in India. It has presence across India and provides high quality, cost effective scalable Technology Infrastructure solutions. Spanco has recently entered into business of Power Distribution. It already has a formidable presence over a decade in the BPO space catering to India, US / Europe, Middle East and African markets.

Spanco's Business Unit in Government, e-Governance and Transport are predominantly focused on building core infrastructure and providing services to help drive better and more effective governance.

Service Provider Business Unit of Spanco caters to carriers in India providing solutions to meet networking infrastructure requirements of its clients using cutting-edge technologies.

Spanco's offerings within the Power space revolve around utilizing information technology to increase the efficiency of power distribution. Spanco is empanelled as a System Integrator with Power Finance Corporation (PFC) and aggressively participating in modernization programs like RAPDRP and Distribution Franchise.

1.1 Rights, Preferences and Restrictions attached to Shares

The company has one class of equity shares having a par value of Rs. 10/- each. Each shareholder is eligible for one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amount, in proportion to their shareholding.

2) Money received against Convertible Share Warrants

The Company has issued 1,500,000 warrants to Mrs. Kavita Puri (member of promoter group) carrying an option / entitlement to subscribe for equivalent number of equity shares on a future date, not exceeding 18 (Eighteen) months from the date of issue of such warrants, on preferential basis in terms of Chapter VII of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 ("ICDR Regulations") for cash at a price of Rs. 155/- per share (including a premium of Rs. 145/- per share). Rs. 5.81 Crores were received during FY 2010-11 and the balance consideration of Rs. 17.44 Crores was received during current period. The proceeds of convertible share warrants were fully utilised by the Company for the purpose for which the money was raised.

3.1 Particulars of Security:

a. The debentures are secured by a legal mortgage in English form in favour of the trustees on all the Company's properties situated at C01 / 5008, 5th Row, Ground Floor, A wing, City Mall situated at Plot No 4, Sector 19, Vashi Navi Mumbai, Maharashtra. The debentures are further secured by way of first charge, ranking pari passu, on all the fixed assets (movable and immoveable) except all assets having exclusive charge in favour of respective lenders.

b. Term loan from Lakshmi Vilas Bank is secured by first charge by way of hypothecation of the OSWAN project assets and further by personal guarantee of Mr. Kapil Puri. Term loan from State Bank of Hyderabad is secured by subservient charge on all the moveable fixed assets of the Company and also by way of personal guarantee of Mr. Kapil Puri.

c. Vehicle Loans are secured by way of hypothecation of vehicles acquired out of the said loans.

d. Finance Lease obligations are secured against leased assets.

3.2 The Company has created debenture redemption reserve in accordance with the provisions of section 117C (1) of the Companies Act, 1956.

4.1 Particulars of security provided are as given below:

a. Working capital facilities from banks (repayable on demand) are secured by way of first charge on all the movable fixed assets, stock, entire book debts, receivables and other current assets of the Company both present and future ranking pari passu with all banks and also by way of personal guarantee of Mr. Kapil Puri.

b. Personal guarantee of Mr. Kapil Puri has been given for unsecured loans from banks amounting to Rs. 15.92 Crores and from other parties amounting to Rs. 8.22 Crores.

c. Inter corporate deposits are secured by way of pledge of shares of the Company held by Mr. Kapil Puri.

* The Company does not have any dues payable to any Micro and Small Enterprises as at the year end. The identification of Micro and Small Enterprises is based on management's knowledge of their status. The Company has not received any intimation from suppliers regarding their status under the MSMED Act, 2006. Hence, disclosures, if any, relating to amounts unpaid as at the year end, together with interest paid / payable as required under the said Act have not been given.

* Balances in current accounts include Escrow accounts Rs. 0.04 Crore (P.Y. Rs. 0.06 Crore)

** Margin money with banks maturing after 12 months from balance sheet date are classified as Non-current. (Refer note 16)

Maturity and other post employment plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

5) During the period, borrowing costs of Rs. 0.60 Crore (P.Y. Rs. 8.96 Crores) were capitalised.

6) Segment Information

The Company is operating in two segments i.e. 'Technology Infrastructure' and 'Power'. As stated in paragraph 4 of Accounting Standard 17- Segment Reporting, the Company has disclosed segment information in its Consolidated Financial Statements and hence it is not disclosed in these financial statements.

7) Related party disclosures under Accounting Standard 18 issued by the Institute of Chartered Accountants of India

a) The following are the names of related parties and description of relationship:

i. Subsidiaries

a. Spanco BPO Ventures Limited

b. Spanco BPO Services Limited *

c. Spanco Respondez BPO Private Limited *

d. Spanco Global Solutions Private Limited ***

e. Spanco Great IT Private Limited ***

f. Skandsoft Technologies Private Limited ***

g. Spanco Infratel Private Limited

h. Spanco IT Infrastructure Private Limited

i. New Delhi Teletech Private Limited

j. Spanco CSC Limited

k. Spanco Power Distribution Limited

l. Spanco Nagpur Discom Limited ** m. Spanco Europe Limited, U.K.

n. Spanco Limited, Dubai, U.A.E.

o. Spanco (S) Pte. Limited, Singapore p. Global Respondez Inc, U.S.A. q. Spanco Holdings Inc.,U.S.A*

r. Spanco BPO Africa Limited (w.e.f. November 11, 2011) *

s. Spanco Channel BPO Limited (w.e.f. November 11, 2011) ****

t. Spanco Raps Uganda Limited (w.e.f. November 11, 2011) *****

u. Spanco Raps Tanzania Limited (w.e.f. November 11, 2011) *****

v. Spanco Raps Kenya Limited (w.e.f. November 11, 2011) *****

w. Spanco Raps Tchad SARL (w.e.f. November 11, 2011) *****

x. Spanco Raps Niger Limited (w.e.f. November 11, 2011) *****

y. Spanco Raps Burkina Faso (SARL) (w.e.f. November 11, 2011) *****

* These companies are subsidiaries of Spanco BPO Ventures Limited.

** This is the wholly owned subsidiary of Spanco Power Distribution Limited.

*** These companies are subsidiaries of Spanco CSC Limited.

**** This company is wholly owned subsidiary of Spanco BPO Africa Limited.

***** These companies are subsidiaries of Spanco BPO Africa Limited.

ii. Joint Ventures

a. Bharat BPO Services Limited

b. Spanco Golden Key Solutions LLC #

c. Spanco Golden Key Solutions WLL #

d. MP Border Checkpost Development Company Limited

# These companies are the joint ventures of Spanco Limited, Dubai, U.A.E.

iii. Key Management Personnel

a. Mr. Kapil Puri (Chairman and Managing Director)

b. Mr. Adarsh Bagaria (Whole Time Director)

iv. Relatives of Key Management Personnel

a. Mrs. Kavita Kapil Puri

b. Mrs. Sarika Adarsh Bagaria

v. Enterprise owned or significantly influenced by group of individuals or their relatives

a. Percept Trading Private Limited

b. Steady Growth Properties Private Limited

c. Global Respondez Services Limited

Figures in brackets indicate previous year's figures.

1. Corporate guarantee of Rs. 52 Crores [P.Y. Rs. 52 Crores] given in favour of Cisco Systems Capital India Private Limited on behalf of wholly owned subsidiary New Delhi Teletech Private Limited.

2. Corporate guarantee and undertaking given to One North East, NY for making an offer of grant to wholly owned subsidiary Spanco Europe Limited of Rs. 0.74 Crore (90,000 pounds) [P.Y. Rs. 0.70 Crore (90,000 pounds)].

3. Corporate guarantee of Rs. 0.95 Crore [P.Y. Rs. 0.95 Crore] given in favour of Rentworks India Private Limited for availing operating lease on behalf of subsidiary Spanco BPO Services Limited.

4. Corporate guarantee of Rs. 40 Crores [P.Y. Rs. 40 Crores] given in favour of IDBI Bank for providing cash credit facility on behalf of subsidiary Spanco BPO Services Limited.

5. Corporate guarantee of Rs. 12 Crores [P.Y. Rs. 12 Crores] given in favour of Bank of Maharashtra for obtaining cash credit facility on behalf of subsidiary Spanco Respondez BPO Private Limited.

6. Corporate guarantee of Rs. 37.46 Crores [P.Y. Rs. 37.46 Crores] given in favour of SREI Equipment Finance Private Limited for availing operating lease assistances / facilities on behalf of subsidiary Spanco BPO Services Limited.

7. Corporate guarantee of Rs. 25 Crores [P.Y. Rs. 25 Crores] given in favour of UCO Bank for availing short term loan on behalf of subsidiary Spanco BPO Services Limited.

8. Corporate guarantee of Rs. 9 Crores [P.Y. Rs. 9 Crores] given in favour of Indusind Bank for obtaining short term loan on behalf of subsidiary Spanco Respondez BPO Private Limited.

8) Particulars of assets acquired / given under lease

Operating leases

Premises for office / godown / flat are obtained on operating lease. The lease term for different agreements are from

9 months to 36 months and renewable for further period at the option of the Company. Out of these contracts, only one contract contains an escalation clause with 6% after every 11 months. There are no restrictions imposed by lease arrangements. There are no subleases.

Finance leases

Plant and Machinery and Capital Work-in-Progress includes machinery / equipments obtained on finance lease. Lease term is for 27 to 60 months after which legal title is passed to lessee. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements.

Operating leases - assets given on lease

The Company has leased out Premise and Plant and Machinery on operating lease. The lease term is 60 months. There are escalation clauses in one lease agreement and the lease is renewable at the option of the lessee. There are no restrictions imposed by lease arrangement.

10) Slump sale of division

During the current period, the Company has, pursuant to the provision of section 293(1)(a) of the Companies Act, 1956, and as approved by the Shareholders of the Company though postal ballot as per section 192A of the Companies Act, 1956 read with the Companies (Passing of the Resolution by Postal Ballot) Rules, 2011, transferred its Power Distribution Franchisee division on slump sale basis to its step down subsidiary Spanco Nagpur Discom Limited with effect from November 23, 2011. Hence, the financials include results of Nagpur DF division upto November 22, 2011.

11) Discontinuing Operations

As per slump sale arrangement, the assets and liabilities of the Power Distribution Franchisee division of the Company as of November 22, 201 1 stands transferred to Spanco Nagpur Discom Limited with effect from November 23, 201 1. Comparative information relating to discontinuing operations in accordance with AS 24 - Discontinuing Operations issued by the Institute of Chartered Accountants of India is as follows:

12) Interest in Joint Ventures

a) The Company has a 49.75% interest in assets, liabilities, expenses and income of Bharat BPO Services Limited, incorporated in India, which is involved in Domestic Call Centre Services.

b) The Company has a 49.00% interest in assets, liabilities, expenses and income of MP Border Checkpost Development Company Limited, incorporated in India. The said Company has entered into a Concession Agreement (CA) on November 10, 2010 with MP Road Development Corporation Limited (MPRDCL) for construction, operation and maintenance of the Border Checkpost at 24 locations in Madhya Pradesh on build, operate and transfer ("BOT") basis.

c) The aggregate of the Company's share of the assets, liabilities as at March 31, 2012 and expenses and income for the period ended March 31, 2012 of jointly controlled entity based on provisional financial statements is as follows :

13) Capital and other Commitments

Estimated amount of contracts remaining to be executed on capital account not provided for (net of advances) Rs. 47.05 Crores [P.Y. Rs. 60.12 Crores].

14) Contingent Liabilities

(Rs. in Crores)

Sr. Particulars As at As at No. March 31, 2012 September 30, 2011

1 Letters of Credit issued by bankers 24.86 34.54

2 Guarantees given by banks on behalf of the Company 207.09 250.56

3 Guarantees and counter guarantees given by the Company 177.14 177.23

4 Income Tax Demand 0.72 4.01

*The relevant information regarding turnover, purchases, opening and closing stocks is given only in value terms and no detailed quantitative break-up is given, as either the items are too numerous to be conveniently grouped or quantification not feasible.

15) There are no amounts due and outstanding to be credited to investor education and protection fund.

16) The figures for current period are for 6 months as against 18 months in the previous period. Hence, the figures are not comparable with those of previous period.

17) For the period ended March 31, 2012 the Revised Schedule VI notified under the Companies Act 1956 has become applicable for preparation and presentation of financial statements. The preparation of financial statements based on the Revised Schedule VI does not impact the recognition and measurement principles followed for preparation of the financial statements. However, it has significant impact on the presentation and disclosures made in the financial statements. The Company has regrouped / reclassified the previous period figure in accordance with the requirements applicable in the current period.

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Mar 31, 2010

1) Nature of Operations

Spanco Limited (Spanco or the Company) is a leading Technology Infrastructure Company with dedicated Telecom, System Integration and BPO arms. Spanco is SEI CMM Level 3 and ISO 9001-2008 certified.

Spanco has a dedicated System Integration (SI) unit which ranks amongst the best in the country and caters to very large SI projects across Government, Power and Telecom Service Providers space. The Company provides high quality, cost effective scalable SI solutions. Spanco Limited also has a formidable presence in the BPO space spread over four continents and catering to India, US, Europe and Middle East.

Within the SI Business, the Company has dedicated teams addressing opportunities in e-Governance, Power Sector, Transport, Telecom Service Provider and PSUs. Spanco has a dedicated unit "Government Transformation Services" which utilises its propriety services to help central and various state governments become more efficient by the use of information technology.

The Companys Service Provider Business Unit caters to carriers in India providing solutions to meet the networking infrastructure requirements using cutting- edge technologies.

The Companys offerings within the Power space revolve around utilising information technology to increase the efficiency of power distribution. Spanco is empanelled as a SI with Power Finance Corporation (PFC) and aggressively participating in modernisation programs like R-APDRP and Distribution Franchise.

3) Particulars of security provided and other details of Secured Loans

a. The debentures of Rs. 200,000,000 (P. Y. Rs. 500,000,000) are secured by a legal mortgage in English form in favour of the trustees on all the Companys properties situated at C01 / 5008, 5th Row, Ground Floor, A wing, City Mall situated at Plot No 4, Sector 19, Vashi Navi Mumbai, Maharashtra.

The debentures of Rs. 920,000,000 (P. Y. Rs. 920,000,000) are secured by a legal mortgage in English form in favour of the trustees on all the Companys properties situated at C01 / 5008, 5th Row, Ground Floor, A wing, City Mall situated at plot No 4, Sector 19, Vashi Navi Mumbai, Maharashtra.

The debentures of Rs. 920,000,000 are further secured by way of first charge, ranking pari passu, on all the fixed assets (moveable and immoveable) except all assets having exclusive charge in favour of respective lenders. It is also secured by way of first charge, ranking pari passu, on all the fixed assets (moveable and immoveable) of Spanco BPO Services Limited and Spanco Respondez BPO Private Limited, subsidiaries of the Company. The charge on the assets of the subsidiaries has been subsequently released on August 05, 2010.

b. i) Term loans from banks are secured by first mortgage / equitable mortgage and charges on immovable properties including investment property, second pari passu charge on all moveable assets of the Company and also by way of personal guarantee of a director and pledge of equity shares held by the Company in one of the wholly owned subsidiary.

ii) Term loans from others are secured by respective assets taken on loan.

c. Vehicle Loans are secured by way of hypothecation of vehicles acquired out of the said loans.

d. Working capital facilities from banks are secured by way of first charge on all the movable fixed assets, stock, entire book debts, receivables and other current assets of the Company both present and future ranking pari passu with all banks and also by way of personal guarantee of a director.

e. Amount of secured loans repayable within one year Rs. 1,387,457,663 [P.Y. Rs.2,416,356,761].

2) Issue of Debentures

During the year 2008-09 the Company had issued 500,000 secured redeemable non-convertible debentures of Rs. 1,000 each amounting to Rs. 500,000,000 carrying an interest at MIBOR plus 800 BPS (floor 13.95% & CAP 14% p.a.) on a private placement basis. During the year, the tenure of debentures amounting Rs. 400,000,000 was restructured by the debenture holder so as to redeem the same in eight equal instalments starting from December 28, 2009 upto June 30, 2010. Out of the restructured debentures, debentures of Rs. 200,000,000 were redeemed during the year along with interest thereon.

The Company had issued 20 secured redeemable non- convertible debentures of Rs.1,000,000 each amounting to Rs. 20,000,000 on a private placement basis during the year 2008-09 carrying an interest at 11% payable half yearly and the same are due for redemption in two equal instalments on 3rd July 2012 and 2013.

The Company had issued 200 secured redeemable non- convertible debentures of Rs. 1,000,000 each amounting to Rs. 200,000,000 on a private placement basis during the year 2008-09 carrying an interest at 11.25% payable monthly and the same are due for redemption in two equal instalments on 3rd July, 2012 and 2013.

The Company had issued 700 secured redeemable non- convertible debentures of Rs. 1,000,000 each amounting to Rs. 700,000,000 on a private placement basis during the year 2008-09 carrying an interest at 11.25% payable half yearly and the same are due for redemption in two equal instalments on 10th July 2012 and 2013.

The Company has created debenture redemption reserve in accordance with the provisions of section 117C (1) of the Companies Act, 1956.

The Company has fully utilised the proceeds of the preferential issue of equity shares, received during the year, for the purpose for which the money was raised.

3) Revaluation of Fixed Assets

On July 01, 2009 the Company has, based on the report of an independent valuer, revalued its Building by an amount of Rs. 332,253,384/- to disclose its true and fair value and an equivalent amount is credited to Revaluation Reserve Account. Consequent to the said revaluation there is an additional charge of depreciation amounting to Rs. 12,470,880/- and an equivalent amount has been withdrawn from Revaluation Reserve Account and credited to Profit and Loss Account. This has no impact on profit for the year.

4) Segment information

The Company is operating in a single segment i.e. System Integration. Further as stated in paragraph 4 of Accounting Standard 17 - Segment Reporting, the Company has disclosed segment information in its Consolidated Financial Statements and hence it is not disclosed in these financial statements.

5) Related party disclosures under Accounting Standard 18 issued by the Institute of Chartered Accountants of India

a. The following are the names of related parties and description of relationship :

I) Where control exists, irrespective of whether transactions have occurred or not:

i. Subsidiaries

a. Spanco BPO Ventures Limited

b. Spanco BPO Services Limited *

c. Spanco Respondez BPO Private Limited *

d. Spanco Europe Limited, U.K.

e. Spanco Limited, Dubai U.A.E.

f. Spanco (S) Pte. Limited, Singapore

g. Global Respondez Inc., U.S.A.

h. Spanco Global Solutions Private Limited

i. Spanco Great IT Private Limited

j. Skandsoft Technologies Private Limited

k. Spanco Holdings Inc.,U.S.A.*

I. Spanco Infratel Private Limited

m. Spanco IT Infrastructure Private Limited

n. New Delhi Teletech Private Limited

o. Spanco CSC Limited (formerly known as New Delhi Tele-Ventures Limited)

p. Spanco International Pte. Limited, Singapore (upto March 30, 2010)

q. Spanco Respondez Services Limited (upto March 30, 2010)

r. Spanco (Mauritius) Limited ** (Upto June 30,2009)

* These companies are the wholly owned subsidiaries of Spanco BPO Ventures Limited.

** This company is wholly owned subsidiary of Spanco (S) Pte., Limited.

ii. Joint Ventures

a. Bharat BPO Services Limited

b. Spanco Golden Key Solutions LLC ***

c. Spanco Golden Key Solutions WLL ***

*** These companies are the joint ventures of Spanco Limited, Dubai U.A.E.

II) Names of related parties with whom transactions have taken place during the year

i. Subsidiaries

a. Spanco BPO Ventures Limited

b. Spanco BPO Services Limited *

c. Spanco Respondez BPO Private Limited *

d. Spanco Europe Limited, U.K.

e. Spanco Limited, Dubai U.A.E.

f. Spanco (S) Pte. Limited, Singapore

g. Global Respondez Inc., U.S.A.

h. Spanco Global Solutions Private Limited

i. Spanco Great IT Private Limited

j. Skandsoft Technologies Private Limited

k. Spanco Infratel Private Limited

I. Spanco IT Infrastructure Private Limited

m. New Delhi Teletech Private Limited

n. Spanco CSC Limited (formerly known as New Delhi Tele-Ventures Limited)

o. Spanco Respondez Services Limited

* These companies are the wholly owned

subsidiaries of Spanco BPO Ventures Limited

ii. Joint Ventures

a. Bharat BPO Services Limited

b. Spanco Golden Key Solutions LLC **

c. Spanco Golden Key Solutions WLL **

** These companies are the joint ventures of Spanco Limited, Dubai UAE

iii. Key Management Personnel

a. Mr. Kapil Puri (Chairman and Managing Director)

b. Mr. Deepak Bhagchandaney (Deputy Managing Director)

c. Mr. Adarsh Bagaria (Whole Time Director)

III) Other related parties

i. Relatives of Key Management Personnel

a. Mrs. Kavita Kapil Puri

b. Mrs. Geeta Deepak Bhagchandaney

c. Mrs. Sarika Adarsh Bagaria

ii. Enterprise owned or significantly influenced by group of individuals or their relatives

a. Percept Trading Private Limited

b. Steady Growth Properties Private Limited

c. Global Respondez Services Limited

Figures in brackets indicate previous year numbers,

1. Corporate guarantee of Rs. 455,800,000 (USD 10.00 Millions) [RY. Rs. 517,601,300 (USD 10.00 Millions)] given in favor of ICICI Bank, Singapore for providing working capital facility to wholly owned subsidiary Spanco (S) Pte. Limited

2. Corporate guarantee of Rs. 520,000,000 [RY. Rs. 520,000,000] given in favor of Cisco Systems Capital India Private Limited on behalf of wholly owned subsidiary New Delhi Teletech Private Limited

3. Corporate guarantee and undertaking given to One North East, NY for making an offer of grant to wholly owned subsidiary Spanco Europe Limited of Rs. 6,204,600 (90,000 pounds) [P.Y Rs. 6,618,998 (90,000 pounds)]

4. Corporate guarantee of Rs. 9,456,000 given in favor of Rentworks India Private Ltd. for availing operating lease on behalf of wholly owned subsidiary Spanco BPO Services Limited

5. Corporate guarantee of Rs. 100,000,000 given in favor of IDBI Bank for providing cash credit facility on behalf of wholly owned subsidiary Spanco BPO Services Limited

6. Corporate guarantee of Rs. 120,000,000 given in favor of Bank of Maharashtra for obtaining cash credit facility on behalf of wholly owned subsidiary Spanco Respondez BPO Private Limited

7. Corporate guarantee of Rs. 374,559,108 given in favor of SREI Equipment Finance Private Limited for availing operating lease assistances / facilities on behalf of wholly owned subsidiary Spanco BPO Services Limited

6) Particulars of assets acquired / given under lease

Operating leases

Office premise and Plant & Machinery are obtained on operating lease. The lease term for different agreements are from 11 months to 36 months and renewable for further period at the option of the Company. Out of the several contracts three of the contracts contain an escalation clause, two of which with 15% after 3 years and the balance one with 6% after every 11 months. There are no restrictions imposed by lease arrangements. There are no subleases.

Finance leases

Plant & Machinery and Capital Work-in-Progress includes machinery / equipments obtained on finance lease. Lease term is for 36 to 60 months after which legal title is passed to lessee. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no subleases.

Operating leases - assets given on lease

The Company has leased out premise, Plant & Machinery and Equipments etc. on operating lease. The lease term is for 36 to 60 months. There are escalation clauses in the certain lease agreement and the lease is renewable at the option of the lessee. There are no restrictions imposed by lease arrangement.

7) Interest in Joint Ventures:

The Company has a 49.75% interest in assets, liabilities, expenses and income of Bharat BPO Services Limited, incorporated in India, which is involved in Domestic Call Centre services.

8) Capital Commitments

Estimated amount of contracts remaining to be executed on capital account not provided for (net of advances) Rs. 512,385,767 [P.Y. Rs. 1,596,180,871]

9) Contingent Liabilities

(Amount in Rupees)

Sr. No. Particulars As at As at

March 31,2010 March 31,2009

1 Letters of Credit issued by bankers 181,190,310 105,217,452

2 Guarantees given by banks on behalf of the Company 1,773,853,232 1,460,186,285

3 Guarantees and counter guarantees given by the Company 1,595,531,456 2,417,226,098

4 Income Tax Demand 40,103,9441 Nil

10) Gratuity and other post employment plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

11) Additional information pursuant to the provision of paragraph 3,4C and 4D of Part II of Schedule VI to the Companies Act, 1956 Similarly, in case of networking equipment the quantity disclosed above pertains only to items quantifiable in units and not other materials.

The Company is also engaged in the development of Computer Software. The production and sale of such software cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and the information as required by paragraph 3, 4C and 4D of Part II of Schedule VI to the Companies Act, 1956.

12) Previous Year Comparatives :

The figures of the previous year have been regrouped, rearranged and reclassified wherever necessary to conform to current years classification.

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Mar 31, 2000

1. Previous years figures have been regrouped and/or re-arranged wherever necessary to confirm to the current years layout.

2. Sundry Debtors and Creditors and Loans & AdvancesJrom customers and advance to suppliers are subject to confirmation and reconciliation.

3. Contingent Liability NIL (Previous Year NIL) as certified by the Directors.