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The Directors
Hexaware Technologies México, S. De R.L de C.V.
Av. San Angel #240 Piso 3 D-A
Col. Valle San Agustin, C.P.25215
Saltillo, Coahuila, México
January 20th, 2017
Dear Sirs,
We have reviewed the attached accounts and notes of Hexaware Technologies Mexico, S. de R.L. de C.V. for the year ended
31st December 2016 which have been prepared by the company for the purpose of attachment to the accounts of its Holding
company.
We confirm the attached accounts have been prepared from by the company taking as a reference the information from the
books and records of the same and are in accordance with the statutory accounts of Hexaware Technologies, S. de R.L. de
C.V. as audited by us according to NIF´S (Mexican Gaap)
Javier Fuentes Zambrano y Asociados, SC
Member of International Association of Practicing Accountants and also,
Member of Leading Edge Alliance
C.P.C. Javier Fuentes Zambrano
Monterrey, México
January 20th, 2017
HEXAWARE TECHNOLOGIES MEXICO, S. DE R.L. DE C.V. 5
BALANCE SHEET AS AT 31ST DECEMBER 2016
q3 q4 - -
Particulars
MXN MXN MXN MXN
I. EQUITY AND LIABILITIES
Share Holders' Funds :
a. Share Capital "2" 8,087,502 8,087,502
b. Reserves and Surplus "3" 86,174,773 50,219,079
94,262,275 58,306,581
Non-current liabilities :
a. Long-term provisions "4" 2,137,166 1,941,517
2,137,166 1,941,517
Current liabilities :
a. Trade Payables 2,313,967 2,715,627
b. Other Current Liabilities "5" 17,994,427 18,401,334
c. Short Term Provisions "6" 10,006,528 4,133,335
30,314,922 25,250,296
Total 126,714,363 85,498,394
II. ASSETS
Non-current assets
a. Fixed Assets : "7"
i) Tangible Assets 11,201,090 11,948,920
b. Deferred Tax Asset (net) "8" 4,672,846 3,927,563
c. Long-term loans and advances "9" 1,109,421 569,649
16,983,357 16,446,132
Current Assets :
a. Trade Receivables "10" 92,322,428 42,530,683
b. Cash and Cash Equivalents "11" 2,435,564 5,056,546
c. Short-term Loans and Advances "12" 7,863,508 6,181,792
d. Other Current Assets "13" 7,109,506 15,283,241
109,731,006 69,052,262
Total 126,714,363 85,498,394
III. NOTES FORMING PART OF FINANCIAL STATEMENTS "1 to 22"
In terms of our attached report of even date
For Javier Fuentes Zambrano y Asoc.. S.C For and on behalf of the Board
Chartered Accountants
C.P.C. Javier Fuentes Zambrano Kalpesh Bhatt Rajiv Pant P.R.
Partner (Director) (Director) (Vice
Place : Monterrey, México Place : Place :
Date : January 20, 2017 Date : Date :
31st December 2016 31st December 2015
As at As at
New JerseyJanuary 20, 2017
New Jersey
January 20, 2017
HEXAWARE TECHNOLOGIES MEXICO, S. DE R.L. DE C.V.
STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31ST DECEMBER, 2016
Particulars
MXN MXN MXN MXN
I. INCOME
a. Revenue from Operations 250,355,168 229,043,520
b. Other Income 2,103 -
250,357,271 229,043,520
II. EXPENSES
a. Software and Development Expenses "14" 27,805,990 42,864,045
b. Employee Benefit Expenses "15" 147,645,488 140,507,111
c. Operation and Other Expenses "16" 26,638,761 16,855,495
d. Exchange Rate Difference (net) (10,688,863) (3,013,220)
e. Depreciation and Amortization Expense "7" 7,149,392 4,315,182
198,550,768 201,528,613
Profit Before Tax 51,806,503 27,514,907
Tax expense
- Income Tax - Current Taxes 16,596,092 8,378,586
- Income Tax- Deferred Taxes (745,283) 442,032
15,850,809 8,820,618
Profit for the year 35,955,694 18,694,289
Earnings Per Share
Basic and Diluted "18" 17,977,847 9,347,145
III. NOTES FORMING PART OF FINANCIAL STATEMENTS "1 to 22"
In terms of our attached report of even date
For Javier Fuentes Zambrano y Asoc.. S.C For and on behalf of the Board
Chartered Accountants
C.P.C. Javier Fuentes Zambrano Kalpesh Bhatt Rajiv Pant P.R.
Partner. (Director) (Director) (Vice
Place : Monterrey, México Place : Place :Date : January 20, 2017 Date : Date :
31st December 2016 31st December 2015
For the Year ended For the Year ended
New Jersey
January 20, 2017
HEXAWARE TECHNOLOGIES MEXICO, S. DE R.L. DE C.V. 4.7220
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST DECEMBER, 2016
4.00 -
Particulars
MXN MXN
A Cash Flow from operating activities
Net profit before tax 51,806,503 27,514,907
Adjustments for:
Depreciation and amortisation 7,149,392 4,315,182
Exchange rate difference (net) 236,696 (2,477,387)
Operating profit before working capital changes 59,192,591 29,352,702
Adjustments for:
Trade and other receivables (43,839,498) (8,256,034)
Trade and other payables / provisions (67,370) (7,929,588)
Cash generated from operations 15,285,723 13,167,080
Direct Taxes Paid (11,268,448) (9,573,497)
Net cash from operating activities 4,017,275 3,593,583
B Cash flow from investing activities
Purchase of fixed assets (6,401,561) (11,078,376)
Net cash used in investing activities (6,401,561) (11,078,376)
Net decrease in cash and cash equivalents (2,384,286) (7,484,793)
Cash and cash equivalents at the beginning of the year 4,789,752 12,274,545
Cash and cash equivalents at the end of the year 2,405,466 4,789,752
0 (5,136,854) 0
Notes: (2,405,466)
1. Components of cash and cash equivalents comprise the following (2,405,466)
MXN MXN
Cash and Bank Balances ( refer note "11") 2,435,564 5,056,546
Less: Effect of changes in exchange rate 30,098 266,794
Total Cash and Cash equivalents 2,405,466 4,789,752
(0)
In terms of our attached Report of even date
For Javier Fuentes Zambrano y Asoc.. S.C For and on behalf of the Board
Chartered Accountants
C.P.C. Javier Fuentes Zambrano Kalpesh Bhatt Rajiv Pant
Partner (Director) (Director)
Place : Monterrey, México Place : Place :
Date : January 20, 2017 Date : Date :
For Year ended
31st December,
2016
For Year ended
31st December,
2015
For Year ended
31st December,
2016
For Year ended
31st December,
2015
New Jersey
January 20, 2017
Hexaware Technologies México, S. De R.L de C.V.
Notes Forming Part of the Condensed Financial Statements
Note "1"
A. Company Overview
Hexaware Technologies Mexico S de RL de CV (the Company), incorporated in Mexico on 8th May 2007, is a
wholly owned subsidiary of Hexaware Technologies Limited a foreign corporation incorporated in India. These
accounts have been prepared and audited for the purpose of consolidation, with the holding company.
The company is engaged in information technology consulting, software development and business process
management. The Company provides multiple service offerings to its clients across various industries comprising
travel, transportation, hospitality, logistics, banking, financial services, insurance, healthcare, manufacturing,
consumer and services. The various service offerings comprise application development and management, enterprise
package solutions, infrastructure management, business intelligence and analytics, business process, digital assurance
and testing.
B. Basis of preparation and significant accounting policies
Basis of preparation
1 a) These financial statements have been prepared under the historical cost convention in accordance with
generally accepted accounting principles in India, and the applicable accounting standards.
b) The local accounts are maintained in local and functional currency, which is the Mexican Peso (‘MXN’).
Significant accounting policies
2 Use of Estimates
The preparation of the financial statements, in conformity with the generally accepted accounting principles, requires
estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosures
relating to contingent liabilities on the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Differences between actual results and estimates are recognised in the period
in which the results are known/materialise. Example of such estimates include provision for doubtful debts,
employee benefits, provision for income taxes, accounting for contract costs expected to be incurred to complete,
software solutions and consulting contracts, the useful lives of depreciable fixed assets and provisions for
impairment.
3 Revenue Recognition
a) Revenues from software solutions and consulting services are recognised on specified terms of contract. In case
of contract on time and material basis revenue is recognised when the related services are performed and in case
of fixed price contracts revenue is recognised using the percentage of completion method of accounting. The
cumulative impact of any revision in estimates of percentage of work completed is reflected in the year in which
the change becomes known. Provisions for estimated losses on such engagements are made during the year in
which a loss becomes probable and can be reasonably estimated. Amount received or billed in advance of
services performed are recorded as unearned revenue. Unbilled services included in other current assets,
represents amount recognised based on services performed in advance of billing in accordance with contract
terms. Revenue is reported net of discount / incentive.
Revenue from Business Process Management arises from unit – priced contracts, time based contracts, cost
based projects and engagement services. Such revenue is recognized on completion of the related services and is
billed in accordance with the specific terms of the contracts with the customers.
b) Dividend income is recognised when right to receive is established.
c) Interest income is recognised on the time proportion basis.
4 Fixed Assets
Fixed assets stated at cost of acquisition less accumulated depreciation, amortization and impairment loss, if any.
Cost includes all expenses incurred for acquisition of assets.
5 Depreciation
Depreciation and amortization on fixed assets is provided on straight-line method on pro rata basis, based on the
estimated useful lives of the assets as under.
Asset Class Estimated useful Life
Computer Systems (included in Plant and Machinery) 3 years
Furniture and Fixtures 8 years
Leasehold Improvement Over the period of lease
Office Equipment 5 years
6 Impairment of assets
An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is
charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment
loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable
amount.
7 Foreign Currency Transactions
Transactions in foreign currency are recorded at the original rate of exchange in force at the time transactions are
affected. Exchange differences arising on settlement of foreign currency transactions are recognized in the Statement
of Profit and Loss.
Monetary items denominated in foreign currency are restated using the exchange rate prevailing at the date of the
Balance Sheet and the resulting net exchange difference is recognized in the Statement of Profit and Loss.
8 Employee Benefits
a) Post-employment benefits and other long term benefit plans
In accordance with Mexican Labor law, the Company provides seniority premium benefits to its employees under
certain circumstances. These benefits consist of a one-time payment equivalent to 12 days wages for each year of
service (at the employees most recent salary but not to exceed twice the legal minimum wage) payable to all
employee´s with 15 or more years of services, as well as to certain employees terminated involuntary prior to the
vesting of their seniority premium benefit. The Company also provides statutorily mandated severance benefits to its
employees terminated under certain circumstances. Such benefits consist of a one-time payment of three months
wages plus 20 days´ wages for each year of service payable upon involuntary termination without just cause.
Provisions for such benefits are charged to Statement of Profit and Loss.
b) Short term employee benefits
The undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered
by employees is recognized as an expense during the period when the employee renders those services. These
benefits include compensated absences such as leave expected to be availed within a year.
9 Leases
Operating Leases
Assets taken on lease under which all risks and rewards of ownership are effectively retained by the lesser are
classified as operating lease. Lease payments under operating leases are recognised as expenses on straight line basis
over the lease term.
10 Income Taxes
Income Taxes are accounted for in accordance with Accounting Standard 22 (AS 22) on “Accounting for Taxes on
Income”. Tax expense comprises both current tax and deferred tax. Current tax is measured at the amount expected
to be paid or recovered from the tax authorities using the applicable tax rates. Deferred tax assets and liabilities are
recognised for future tax consequence attributable to timing difference between taxable income and accounting
income that are measured at relevant enacted or substantively enacted tax rates.
In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognised only to the
extent that there is virtual certainty that sufficient future taxable income will be available to realise such assets. In
other situations, deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient
future taxable income will be available to realise these assets.
Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance
tax paid and income tax provision arising in the same tax jurisdiction and when entity intends to settle the asset and
liability on a net basis.
11 Provisions, Contingent Liabilities and Contingent assets
Provisions involving substantial degree of estimation in measurement are recognized when as a result of past events
there is a present obligation that can be estimated reliably and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognised, but are disclosed in the notes. Contingent assets are neither recognized nor
disclosed in the financial statements.
12 Borrowing Cost
Borrowing cost attributable to the acquisition or construction of qualifying assets is capitalised as part of the cost of
such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended
use or sale. All other borrowing costs are charged to revenue.
Note “17” Related Parties Disclosures
i. Name of Related parties and description of relationship:
Ultimate Holding Company and its subsidiaries - Baring Private Equity Asia GP V. LP
- The Baring Asia Private Equity Fund V, LP
- Baring Private Equity Asia V Mauritius Holding (4) Limited
- HT Global IT solutions Holding Limited
Holding company - Hexaware Technologies Limited
Fellow Subsidiaries - Hexaware Technologies Inc
- Hexaware Technologies UK Limited
Key Management Personnel - Mr. R. Srikrishna
- Mr. Kalpesh Bhatt
- Mr. Rajiv Pant (up to 30th August 2015)
ii. Related Party Transactions:
iii. Outstanding Balances:
Note “18” Earnings Per Share (EPS)
The components of earnings per share are as follows:
Earnings per share is calculated as follows
For the Year
ended December
31, 2016
For the Year
ended December
31, 2015
MXN MXN
Net profit as per Statement of Profit and Loss 35,955,694 18,694,289
Weighted average outstanding participation shares (Nos.) 2 2
Face value of participation shares No par No par
Basic and diluted earnings per participation share 17,977,847 9,347,145
Note “19” Un hedged foreign currency exposure
As of the Balance sheet date the Company has net foreign currency receivable that are not hedged by a derivative
instrument or otherwise amounting to MXN 95,914,080 (Previous year net foreign currency receivable MXN
35,734,376).
Note “20” Employee benefits:
In 2016 the Company recorded expenses in employee benefits of seniority premium and severance benefits of MXN
4,637,265 (Previous year MXN 4,213,039) in the Statement of Profit and Loss. The Company believes any
differences between its calculation of employee benefits of seniority premium and severance benefits and a
calculation provided by an independent actuary would not be material.
Note “21” Lease
Operating Lease:
In The Company takes on lease office space under various operating leases. The lease rental towards non-cancellable
agreement recognized in Statement of Profit and Loss for the year is MXN 8,554,305 (Previous year MXN
4,831,633) The future minimum lease payments and payment profile of operating leases are as follows:
Note “22”-
Previous year figures have been regrouped/reclassified wherever necessary to correspond with the current year
classification/disclosure.
NOTES 1 TO 22 FORM AN INTEGRAL PART OF THE ACCOUNTS
As per our attached Report of even date
For Javier Fuentes Zambrano y Asoc., S.C.
Chartered Accountants For and on behalf of the Board
C.P.C. Javier Fuentes Zambrano Kalpesh Bhatt
Partner (Director)
Place : Monterrey, México Place :
Date : January 20th , 2017 Date :
New Jersey
January 20, 2017