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ADITYA BIRLA MINACS WORLDWIDE LIMITED

ANNUAL REPORT OF SUBSIDIARIES 2009-2010

Sl. No. Name Page No 1 A V Transworks Limited 1 2 Compass BPO Limited, UK 15 3 Aditya Birla Minacs Philippines Inc. 35 4 Aditya Birla Minacs Worldwide Inc., (Canada) 49 5 Compass BPO FZE (UAE) 72 6 Compass BPO Inc (USA) 85 7 Compass Business Process Outsourcing (P) Ltd (India) 90 8 Minacs Kft (Hungary) 105 9 Minacs Limited (UK) 114

10 Minacs Worldwide S A De C V (Mexico) 121 11 Minacs Worldwide GmbH (Germany) 125 12 The Minacs Group (USA) Inc. 132 13 Transworks Inc (USA) 141

A V Transworks Limited

1

AUDITORS’ REPORT

The Board of Directors of Aditya Birla Minacs Worldwide Limited (Formerly known as Transworks Information Services Limited) 1. We refer to your letter dated March 1, 2010 requesting us to audit the accounts of A V Transworks Limited

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

2. We have audited, in accordance with the accounting policies, the attached Balance Sheet of the Company as

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

3. We conducted our audit in accordance with generally accepted auditing standards in India. These Standards

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

5. In our opinion, based on our audit, and to the best of our information and according to the explanations

given to us, the accompanying financial statements give a true and fair view in conformity with the accounting policies:

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

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

For S. R. Batliboi & Co. Firm Registration No. 301003E Chartered Accountants per Vijay Maniar Partner Membership No.: 36738 Mumbai, April 23, 2010


2

BALANCE SHEET AS AT 31ST MARCH 2010

As At 31st Mar, 2010




Schedule CAD Rs. Lacs CAD Rs. Lacs

I. SOURCES OF FUNDS 1 Shareholders' Funds

Share Capital 1

127,000,001

56,083.20

127,000,001

51,132.61

Preference Share Capital 1

30,000,000

13,248.00

-

-

Foreign exchange on translation

-

(23.68)

-

6.48

2 Unsecured Loan from Bank

30,901,850

13,646.26

30,901,850

12,441.67

3 Loan from Holding Company

21,424,531

9,461.07

20,526,184

8,264.23

Total

209,326,382

92,414.85

178,428,035

71,844.99

II. APPLICATION OF FUNDS

1 Investments 2

207,892,852

91,805.48

177,892,852

71,623.03

2 Current Assets, Loans and Advances :

Accured Interest

106,963

47.23

399,501

160.85

Cash and Bank Balances 3

67,073

29.62

3,506

1.41

174,036

76.85

403,007

162.26

Less: Current Liabilities and Provisions : 4

Current Liabilities

629,334

277.92

448,821

180.70

Provisions

2,607

1.15

2,607

1.05

631,941

279.07

451,428

181.75

Net Current Assets

(457,905)

(202.22)

(48,421)

(19.49)

3 Profit & Loss Account

1,891,435

811.59

583,604

241.45


3

-

Total

209,326,382

92,414.85

178,428,035

71,844.99

1

-

(0)

(0.00)

Notes to Accounts 8 The Schedules referred to above and the notes to accounts form an integral part of the Balance

Sheet.

As per our report of the event date

For and on behalf of the Board of Directors of


For S.R. BATLIBOI & CO. Firm Registration No. 301003E

Chartered Accountants

DEEPAK J. PATEL

per Vijay Maniar Partner

Membership No. 36738

Place: Mumbai

RAMESH KAMATH Date: April 23, 2010

Chief Financial Officer


4

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2010

For the Year Ended 31st Mar 2010

For the Year Ended

31st Mar 2009

Schedule CAD Rs. Lacs CAD Rs. Lacs INCOME :

Other Income 5

157,375

68.61

1,632,336

676.04

Total

157,375

68.61

1,632,336

676.04

EXPENDITURE :

Administrative Expenses 6

(39,723)

(17.31)

615,746

255.02

Financial Charges 7

1,504,930

656.06

1,589,341

658.24

Total

1,465,208

638.75

2,205,087

913.26

Profit / (Loss) before tax for the year

(1,307,833)

(570.14)

(572,751)

(237.21)

-

Less: Provision for Tax

-

-

-

-

-

Profit / (Loss) for the year

(1,307,833)

(570.14)

(572,751)

(237.21)

Profit / (Loss) brought forward from previous year

(583,602)

(241.45)

(10,853)

(4.24)

Accumulated balance carried forward to the Balance Sheet

(1,891,435)

(811.59)

(583,604)

(241.45)

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




For S.R. BATLIBOI & CO. Firm Registration No. 301003E Chartered Accountants

DEEPAK J. PATEL

per Vijay Maniar Partner Membership No. 36738 Place: Mumbai

RAMESH KAMATH Date: April 23, 2010 Chief Financial Officer


5

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

March 31 2010

For the Year ended March 31 2009

CAD Rs. Lacs CAD Rs. Lacs A.

Cash flows from Operating Activities

Net Profit/(Loss) before taxation, and extraordinary items

(1,307,833)

(570.14)

(572,751)

(237.21)

Adjustments for: Interest Income

(157,375)

(68.61)

(1,631,908)

(675.87) Interest Expense

1,497,734

652.92

1,585,191

656.52 Foreign Exchange (Gain)/Loss (Net)

0

6,125.02

5,752,600

4,911.96 Operating Profit before working capital

changes

32,526

6,139.19

5,133,132

4,655.40 Movements in working capital :

(Increase)/Decrease in payable to subsidiary 267,093

121.24

31,222

13.47

(Increase)/Decrease in Loans & Advances -

-

819

0.32

Increase/(Decrease) Current Liabilities & Provisions

(12,534)

(4.04)

31,618

12.84

Cash generated from operations 287,085

6,256.39

5,196,790

4,682.03

Loan to subsdiaries -

-

65,470,971

25,245.61

Cash flow before extraordinary items 287,085

6,256.39

70,667,761

29,927.64

Add/(Less): Extraordinary items -

-

-

-

Net Cash flow from Operating Activities

287,085

6,256.39

70,667,761

29,927.64

B

. Cash Flows from Investing Activities

Investment in Subsidaries (30,000,000)

(20,182.45)

(50,638,021)

(22,553.57)

Interest income received 449,913

182.23

2,852,136

1,139.59

Net Cash from/(for) Investing Activities

(29,550,087)

(20,000.22)

(47,785,886)

(21,413.98)

C

. Cash flow from Financing Activities

Loan from Holding Company

898,346

1,196.84

(20,038,641)

(7,377.56)

Preference Capital from Holding Company

30,000,000

13,248.00

-

-

Interest Payment

(1,571,778)

(672.80)

(2,843,693)

(1,136.20)

Net Cash used in Financing Activities

29,326,569

13,772.04

(22,882,334)

(8,513.76)

Net Decrease in cash and Cash equivalants during the year

63,567

28.21

(458)

(0.10)


6

Cash and cash equivalants at the beginning of the year

3,506

1.41

3,964

1.51

Cash and cash equivalants at the end of the year

67,073

29.62

3,506

1.41

Notes: Components of Cash and Cash Equivalents As At 31st

Mar, 2010




i) Cash Balance on hand

-

-

-

-

ii) Balance with Scheduled and other Banks :

- in Current Account

67,073

29.62

3,506

1.41

Total

67,073

29.62

3,506

1.41

(0)

0.00

0

0



A V Transworks Limited For S.R. BATLIBOI & CO.

Firm Registration No. 301003E


DEEPAK J. PATEL

per Vijay Maniar

Partner

Membership No. 36738

Place: Mumbai RAMESH KAMATH Date: April 23, 2010



7

SCHEDULES FOR THE YEAR ENDED 31ST MARCH 2010

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

CAD Rs. Lacs CAD Rs. Lacs

SCHEDULE - 1 SHARE CAPITAL

Authorised Capital

127,000,001 Equity Shares of CAD$ 1 each

127,000,001

56,083.20

127,000,001

51,132.61

Issued, Subscribed & Paid up Capital 127,000,001 Equity Shares of CAD$ 1 each fully paid

up

127,000,001

56,083.20

127,000,001

51,132.61

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

30,000,000

13,248.00

-

-

(All the above equity and Preference shares are held by Holding Company )

- Aditya Birla Minacs Worldwide Limited)

Total

157,000,001

69,331.20

127,000,001

51,132.61

SCHEDULE - 2

INVESTMENTS

Long Term Investments (At Cost)

In Subsidiary Companies Unquoted, fully paid-up

27,945,822 shares (P.Y. 27,945,822 shares) of CAD$ 1 each in Aditya Birla Minacs Worldwide Inc.

157,571,131

69,583.41

157,571,131

63,441.12

20,321,721 Preference shares (P.Y. 20,321,721 shares) of CAD$ 1 each in Aditya Birla Minacs Worldwide Inc.

20,321,721

8,974.07

20,321,721

8,181.91

30,000,000 Preference shares (P.Y. Nil) of CAD$ 1 each in Aditya Birla Minacs Worldwide Inc.

30,000,000

13,248.00

-

-

Total

207,892,852

91,805.48

177,892,852

71,623.03


8

SCHEDULE - 3 For the Year Ended

31st Mar 2010 For the Year Ended

31st Mar 2009

CASH AND BANK BALANCES CAD Rs. Lacs CAD Rs. Lacs

Balance with other Banks :

- On Current Account

67,073

29.62

3,506

1.41

Total

67,073

29.62

3,506

1.41

SCHEDULE - 4

CURRENT LIABILITIES & PROVISIONS

i) Sundry Creditors

3,864

1.71

3,864

1.56

ii) Acrrued Interest on Secured Loan from Bank

83,926

37.06

318,856

128.38

iii) Acrrued Interest on Loan from Holding Company

171,041

75.53

10,155

4.09

iv) Payable to Subsidiary Company

351,422

155.19

84,329

33.95

v) TDS Payable

19,081

8.43

31,617

12.73

629,334

277.92

448,821

180.71

PROVISIONS

i) Provision for Taxation / Minimum Alternative Tax

2,607

1.15

2,607

1.05

Total

631,941

279.07

451,428

181.76

SCHEDULE - 5 OTHER INCOME Interest received

i) Bank interest

-

-

416

0.17

ii) DBS Loan

-

-

971,607

402.40

iii) Intercompany Loan

157,375

68.61

660,301

273.47

iv) Others

-

-

12

0.01

Total

157,375

68.61

1,632,336

676.05


9

SCHEDULE - 6



ADMINISTRATIVE EXPENSES

CAD Rs. Lacs CAD Rs. Lacs

i) Foreign Exchange Loss /(Income)

(43,050)

(18.76)

585,551

242.51

ii) Legal & Professional Charges

-

-

6,257

2.59

iii) Telephone Expenses

-

-

2,929

1.21

iv) Rates & Taxes

3,327

1.45

7,389

3.06

v) Miscellaneous Expenses

-

-

13,620

5.65

Total

(39,723)

(17.31)

615,746

255.02

SCHEDULE - 7

FINANCIAL CHARGES

i) Bank charges

7,196

3.14

4,150

1.72

ii) Interest on DBS loan

1,040,947

453.79

971,607

402.40

iii) Interest on Intercompany Loan

456,787

199.13

613,584

254.12

Total

1,504,930

656.06

1,589,341

658.24

SCHEDULE – 8: Notes to Accounts

1. ACCOUNTING POLICIES a. Basis of preparation

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

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

c. Transactions in Foreign Currency

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

ii) Conversion

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


10

iii) Exchange Differences

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

d. Provision

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

e. Investments

i) Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments.

ii) Long-term investments are valued at cost. Any decline in the value of investments other than temporary, is provided for and charged to the profit & loss account.

f. Conversion of Financial Statements

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


11

2. Related Party Transactions

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

Ultimate Holding Company Aditya Birla Nuvo Limited

Holding Company Aditya Birla Minacs Worldwide Limited (ABMWL)

Fellow Subsidiaries TransWorks Inc., USA

Aditya Birla Minacs Philippines Inc. (formerly TransWorks BPO Philippines Inc.) (ABMPI) (Subsidiary of ABMWL) (w.e.f November 03, 2006)

Subsidiaries

Aditya Birla Minacs Worldwide Inc. Canada (ABMWI) (Subsidiary of AV TransWorks) (w.e.f August 18, 2006)

Minacs Kft., Hungary (Subsidiary of Minacs GmbH) (w.e.f August 18, 2006)

Minacs Limited , UK, (Subsidiary of MWI) (w.e.f August 18, 2006)

Minacs Worldwide S.A. de C.V., Mexico (Subsidiary of MWI) (w.e.f August 18, 2006)

The Minacs GmbH, Germany (Subsidiary of Minacs Ltd) (w.e.f August 18, 2006)

The Minacs Group, USA (Subsidiary of MWI) (w.e.f August 18, 2006)

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

Compass BPO, Inc, U.S.A (Subsidiary of Compass BPO Limited, U.K) (w.e.f. March 9, 2010 )

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

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


12

(b) Summary of transactions with related parties:

(In CAD) Particulars As at March 31,

2010 As at March 31,

2009 Holding Company

Loan Repayment 7,500,000 20,038,641 Loan Taken 8,450,000 Nil Interest on loan from ABMWL 456,787 613,584

Subsidiary (ABMWI) Investment 30,000,000 50,638,021 Loan repayment from subsidiary 7,500,000 65,470,971 Loan given to subsidiary 7,500,000 Nil Interest on loan given 157,375 660,301

Related Party Balances Holding

Equity Contribution from holding Co 127,000,001 127,000,001 Preference Contribution from holding Co 30,000,000 Nil Loan from Holding Co. 21,424,531 20,526,184 Interest Payable to Holding Co 171,041 10,155 Corporate guarantee given by Holding Co 30,901,850 30,901,850

Subsidiary (ABMWI)

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

Balance as at the year end

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


13

(In Rs. Lacs)

Particulars As at March 31, 2010

As at March 31, 2009

Holding Company Loan Repayment 3,269.51 7,377.56 Loan Taken 3,683.65 Nil Interest on loan from ABMWL 199.13 254.12

Subsidiary (ABMWI) Investment 20,182.44 22,553.58 Loan repayment from subsidiary 3,269.51 25,245.61 Loan given to subsidiary 3,269.51 Nil Interest on loan given 68.61 273.47

Related Party Balances Holding

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

Subsidiary (ABMWI)

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

Balance as at the year end

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

3. Derivative Instruments

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

Derivative Outstanding as at March 31 2010

Particulars Currency Amount in Foreign Currency (in lacs) Purpose

Cross Currency Swap CAD 203.21

(203.21) To hedge Loan Payable

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

As at March 31, 2010 all the foreign currency exposure stands hedged by derivative instrument or otherwise. The Company, time to time, holds financial derivatives instruments primarily for hedging purpose. In pursuance of the announcement dated 29th March 2008 of ICAI, The Company has decided to account for losses, if any, on derivatives transactions, on net basis, after considering effect of underlying exposure / commitments / obligations. As there was no such loss at the end of the year, the above changes does not have any effect on the profit for the year.


14

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

figures.

For S. R. BATLIBOI & CO. For and on behalf of the Board of Directors of Firm Registration No. 301003E A V Transworks Limited Chartered Accountants DEEPAK J. PATEL Per VIJAY MANIAR Partner Membership No. 36738

Place: Mumbai RAMESH KAMATH Date: April 23, 2010 Chief Financial Officer

Compass BPO Limited

15

REPORT OF THE DIRECTORS FOR THE YEAR ENDED 31 MARCH 2010 The directors have pleasure in submitting their annual report with the audited accounts of the group for the year. PRINCIPAL ACTIVITY The principal activity of the group during the year under review was the provision of personnel and related consultancy services from Asia. REVIEW OF BUSINESS Despite the global economic slowdown, the group, through alignment, focus and relentless execution, has been able to generate revenue of £4.37m for the current year (2009 :£5.06m). Earnings before interest, tax, depreciation and gain/losses on foreign exchange was £93,837 (2009 : £ 426,028). Cash on the balance sheet at the year end was £197,484 (2009 : £461,155). On 9 March 2010 the entire issued share capital of the group was acquired by Aditya Birla Minacs Worldwide Inc. (a Canadian company), a part of the US$29.2 billion Aditya Birla Group that today employs 130,000 people of 30 different nationalities. Minacs has a history that goes back three decades. Today, they serve clients across 3 continents, 8 countries, in 41 languages - several of them Fortune 500 corporations. Minacs has 12,500 people across 29 centres to serve clients in the verticals of BFSI (banking, financial services and insurance), TIME (telecom, technology infrastructure, media, and entertainment), manufacturing and the public sector. On 9 March 2010, the 10% convertible loan notes of £350,000 were converted into ordinary shares at 1 ordinary share per £53.75 of nominal loan value. DIVIDEND The directors do not recommend the payment of a dividend. (2009: £Nil). DIRECTORS The directors who served during the year were: - R Tice (Chairman) (resigned 9 March 2010) M Atkins (resigned 9 March 2010) D McCullough (resigned 9 March 2010) N Godrej (resigned 9 March 2010) C T Newberry (resigned 9 March 2010) D Patel (appointed 9 March 2010) M Kedia (appointed 9 March 2010) STATEMENT OF DIRECTORS' RESPONSIBILITIES The directors are responsible for preparing the Directors’ Report and the financial statements in accordance with applicable law and regulations.

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

Compass BPO Limited

16

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

select suitable accounting policies and then apply them consistently; make judgments and accounting estimates that are reasonable and prudent; state whether applicable UK Accounting Standards have been followed, subject to any material departures

disclosed and explained in the financial statements; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the

company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. So far as each of the directors is aware at the time the report is approved: there is no relevant audit information of which the company's auditors are unaware; and the directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit

information and to establish that the auditors are aware of that information. AUDITORS The auditors, haysmacintyre, will be proposed for re-appointment in accordance with S485 of the Companies Act 2006. The Directors report has been prepared in accordance with the special provisions of Part 15 sections 416 and 417 of the Companies Act 2006 relating to small entities. By order of the Board

D Patel

Director Registered Office Fairfax House 15 Fulwood Place London WC1V 6AY

Compass BPO Limited

17

INDEPENDENT REPORT OF THE AUDITORS TO THE SHAREHOLDERS OF COMPASS BPO LIMITED We have audited the financial statements of Compass BPO Limited for the year ended 31 March 2010 which comprise the Profit and Loss Account, the Consolidated and Company Balance Sheets, the Consolidated Statement of Total Recognised Gains and Losses and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an Auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors As explained more fully in the Directors’ Responsibilities Statement set out on page 3, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. Opinion on financial statements In our opinion the financial statements:

give a true and fair view of the state of the company’s affairs as at 31 March 2010 and of its loss for the year then ended;

have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

have been prepared in accordance with the requirements of the Companies Act 2006. Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

the financial statements are not in agreement with the accounting records and returns; or

Compass BPO Limited

18

certain disclosures of directors’ remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit.

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

Compass BPO Limited

19

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2010 2010 2009 Notes £ £ TURNOVER 1 4,370,362 5,057,531 COST OF SALES (2,156,475) (2,370,049) ---------------------- ---------------------- GROSS PROFIT 2,213,887 2,687,482 Administrative expenses (2,327,243) (2,216,816) -------------------- -------------------- OPERATING (LOSS)/PROFIT 2 (113,356) 470,666 (Loss)/profit on sale of assets (4,457) 545 Interest receivable 4,290 2,069 Interest payable 3 (56,400) (54,251) ------------------- ------------------- (LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION (169,923) 419,029 TAXATION 5 (1,525) (53,767) ------------------- ------------------- (LOSS)/PROFIT FOR THE FINANCIAL YEAR AFTER TAXATION 12 £(171,448) £365,262 ========= ========= All results relate to continuing activities. STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 2010 2009 £ £ (Loss)/profit for the financial year (171,448) 365,262 Exchange translation differences 11,505 66 -------------------- ----------------- Total recognised gains and losses relating to the year £(159,943) £365,328 ========= ========= The attached notes form an integral part of these accounts.

Compass BPO Limited

20

COMPANY PROFIT AND LOSS ACCOUNT

FOR THE PERIOD ENDED 31 MARCH 2010

31-Mar-10

31-Mar-09

Company

Company

£

£

SALES

2,049,167

2,487,680

LESS: COST OF SALES

(1,803,959)

(2,161,362)

GROSS PROFIT

245,208

326,318

Profit on sale of assets

(60)

-

Interest Received

41

570

Interest Payable / Guarantee Commission

(55,858)

(52,605) Exchange Gain / (Loss)

(35,818)

82,077

153,513

356,360

LESS: OVERHEADS

Telephone

31,323

34,472

Insurance

33,348

31,938

Printing, postage and stationary

2,580

816

Entertaining and staff welfare

133

733

Rent and electricity for premises

34,282

36,956

Rent for Data Centre

4,680

3,900

Accountancy Fees

15,050

7,900

Bank Charges

10,699

9,920

Legal and professional fees

121,086

58,612

Marketing Costs

35,844

18,652

Commission Charges

21,819

20,492

Sales support

24,000

31,133

Salaries

23,535

27,312

Social Security

2,227

2,822

Meetings and Conferences

1,657

1,880

Compass BPO Limited

21

Office expenses

2,185

6,996

Depreciation

1,749

2,213

Travel Expenses

1,647

4,993

Computer maintenance and support

7,448

9,779

Bad debts

-

5,018

(375,292)

(316,537)

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

39,823

Compass BPO Limited

22

CONSOLIDATED BALANCE SHEET

AS AT 31 MARCH 2010

31-Mar-10 31-Mar-09

£ £ £ £

Notes

FIXED ASSETS

Tangible Assets 6

299,210

174,187

CURRENT ASSETS

Debtors 8

946,096

1,037,990

Cash at bank and in hand

197,484

461,155

1,143,580

1,499,145

CREDITORS: amount falling due within

one year 9a (556,705)

(570,771)

NET CURRENT ASSETS

586,875

928,374

TOTAL ASSETS LESS CURRENT

LIABILITIES

886,085

1,102,561

CREDITORS: amount falling due 9b

-

(407,313)

after one year

NET ASSETS

886,085

695,248

CAPITAL AND RESERVES

Called up share capital 10

18,967

16,560

Share premium 11

1,145,207

765,174

Equity element of the convertible loan 13

-

31,661

Profit and Loss account 12

(278,089)

(118,146)

Compass BPO Limited

23

TOTAL SHAREHOLDERS' FUNDS 14

886,085

695,248

These accounts are prepared in accordance with the special provisions of Part 15 of the Companies Act 2006 relating to small entities. The financial statements were approved and authorised for issue by the Board on and were signed below on its behalf by:- D Patel M Kedia Director Director The attached notes form an integral part of these accounts.

Compass BPO Limited

24

COMPANY BALANCE SHEET AS AT 31 MARCH 2010 2010 2009 Notes £ £ £ £ FIXED ASSETS Tangible assets 6 1,507 1,573 Investments 7 268,548 268,548 ------------------ ------------------ 270,055 270,121CURRENT ASSETS Debtors 8 698,620 717,945 Cash at bank and in hand 144,669 313,396 -------------------- -------------------- 843,289 1,031,341 CREDITORS: amounts falling due within one year 9a (185,960) (119,960) -------------------- -------------------- NET CURRENT ASSETS 657,329 911,381 ------------------ ------------------TOTAL ASSETS LESS CURRENT LIABILITIES 927,384 1,181,502 CREDITORS: amounts falling due greater than one year 9b - (407,313) ------------------- -------------------NET ASSETS £927,384 £774,189 ========= =========CAPITAL AND RESERVES Called up share capital 10 18,967 16,560Share premium 11 1,145,206 765,173Other reserve 13 - 31,661Profit and loss account 12 (236,789) (39,205) -------------------- ------------------TOTAL SHAREHOLDERS’ FUNDS 14 £927,384 £774,189 ========= ========= These accounts are prepared in accordance with the special provisions of Part 15 of the Companies Act 2006 relating to small entities. The financial statements were approved and authorised for issue by the Board on and were signed below on its behalf by:- D Patel M Kedia Director Director The attached notes form an integral part of these accounts.

Compass BPO Limited

25

STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDED 31 MARCH 2010 The financial statements have been prepared in accordance with applicable accounting standards. The particular accounting policies adopted are described below: (a) Basis of accounting

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

(b) Basis of consolidation

The group financial statements consolidate the accounts of Compass BPO Limited and its subsidiary undertaking made up to 31 March each year; the group profit and loss account includes the results of the subsidiary undertaking for the period from the date of their incorporation or acquisition and up to the date of disposal. No profit and loss account is presented for Compass BPO Limited as provided by S408 of the Companies Act 2006. The holding company’s loss for the year was £197,584 (2009: profit £21,981).

(c) Turnover

Turnover arises from the principal activity of the company.

(d) Foreign Currency Company

Assets and liabilities on foreign currencies are translated at the rates of exchange ruling at the balance sheet date. Transactions on foreign currencies are recorded at the rate of exchange ruling at the date of the transaction. All differences are taken to the profit and loss account. Group The balance sheets of overseas subsidiary undertakings are translated at the rate of exchange ruling at the balance sheet date and the profit and loss accounts are translated at the average rates for the year. The exchange differences arising on the re-translation of opening net assets is taken directly to reserves.

(e) Deferred Taxation

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

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

Compass BPO Limited

26

STATEMENT OF ACCOUNTING POLICIES (continued) FOR THE YEAR ENDED 31 MARCH 2010 (g) Operating Lease Agreements

(h) Pension Costs

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

(i) Tangible Fixed Assets and Depreciation

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

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

(j) Investments Fixed asset investments are shown at the lower of cost or directors’ valuation.

(k) Taxation

Corporation tax is provided for at the current rates.

(l) Cash Flow Statement

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

(m) Compound Financial Instruments

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

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

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

Compass BPO Limited

27

NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2010 1. TURNOVER

Turnover is attributable to the principal activity of the group, net of Value Added Tax. A geographical analysis of turnover is as follows:

2010 2009 Group Group £ £ United Kingdom 2,098,751 2,487,680 Rest of the world 2,271,611 2,569,851 ----------------------- ----------------------- £4,370,362 £5,057,531 ========== ==========

2. OPERATING LOSS

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

3. INTEREST PAYABLE

2010 2009 Group Group £ £ 10% convertible loan stock interest 47,725 45,257 Guarantee Commission 4,896 5,500 Bank loan interest 3,779 3,478 Hire purchase interest - 16 ---------------- ---------------- £56,400 £54,251 ======== ========

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

4. EMPLOYEES

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

==========

Compass BPO Limited

28

No.

No. The average weekly number of Employees during the year was: 363 402 ==== ====

DIRECTORS’ REMUNERATION 2010 2009 Group Group £ £ Directors’ fees (paid through subsidiary undertakings) £411,009 £482,250 ======== ========

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

group.

5. TAX ON ORDINARY ACTIVITIES

(a) Analysis of tax charge for the year: 2010 2009 £ £ UK corporation tax at current rates (23,896) 13,596 Overseas taxation 28,986 33,776 Under/(over) provision of UK corporation tax in previous year (300) 4,246 -------------- -------------- Total current tax (note b) 4,790 51,618 Overseas deferred taxation (3,265) (6,393) Overseas fringe benefit tax - 8,542 --------------- --------------- Total tax charge for the year £1,525 £53,767 ======= ======= (b) Factors affecting tax charge for year:

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

2010 2009 £ £ Profit on ordinary activities before tax £(169,923) £419,029 ========= ========= Profit on ordinary activities before tax multiplied by the small

rate of corporation tax in the UK of 28% (2009: 21%)

(47,578)

87,996

Compass BPO Limited

29

5. TAX ON ORDINARY ACTIVITIES (continued) 2010 2009 £ £ Effects of: Amounts not subject to UK corporation tax (14,520) (79,634) Expenses not deducible for tax purposes 21,531 5,049 Capital allowances for the year in excess of depreciation (327) 206 Effect of change in tax rates 8,232 (21) Losses carried forward 17,134 - Other timing differences (8,368) - -------------- -------------- Current tax charge for the year £(23,896) £13,596 ======= ======= The company is carrying forward tax losses of £61,193 to offset against future profits.

6. TANGIBLE FIXED ASSETS

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

Compass BPO Limited

30

7. INVESTMENT IN SUBSIDIARY UNDERTAKINGS

Company COST £

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

The company's investments are comprised of the following:

Company of Class of shares % Cost of Incorporation Held held Investment Compass Business Process Outsourcing Private Limited India Ordinary 100% 101,188 Compass Business Process Outsourcing Private Limited India 10% Preference 100% 153,640 Compass BPO Inc US Ordinary 100% 65 Compass BPO FZE UAE Ordinary 100% 13,665

The 10% Preference Shares are redeemable at par any time between 5 and 10 years from 27 March 2000, the date of allotment. However there is a put and call option anytime after 36 months from the date of allotment. The principal activities of Compass Business Process Outsourcing Pvt. Ltd and Compass BPO Inc. are the provision of personnel and related consultancy services from Asia. The company holds 100% of the issued share capital of Compass BPO FZE, consisting of 1 share acquired for AED100,000.

8. DEBTORS

2010 2009 Group Company Group Company £ £ £ £ Trade debtors 471,776 160,165 623,732 165,743 Other debtors 321,934 15,818 275,273 15,232 Due from subsidiary undertakings - 488,611 - 524,374 Prepayments and accrued income 128,490 10,130 138,985 12,596 Corporation tax recoverable 23,896 23,896 - - --------------------- ------------------- --------------------- ------------------- £946,096 £698,620 £1,037,990 £717,945 ========= ======== ========= ========

Compass BPO Limited

31

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

2010 2009 Group Company Group Company £ £ £ £ Trade creditors 214,450 97,831 180,458 12,957 Due to subsidiary undertakings - 19,665 - 14,437 Other taxation and social security 60,110 41,038 87,031 59,702 Other creditors 83,206 - 137,855 - Bank loan - - 1,016 - Corporation tax 54,230 - 67,608 13,596 Accruals 144,709 27,426 96,803 19,268 ------------------- ------------------ ------------------- ------------------ £556,705 £185,960 £570,771 £119,960 ========= ======== ========= =========

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

2010 2009 Group Company Group Company £ £ £ £ 10% Convertible Loan Stock - - 407,313 407,313 ------------------- ------------------- ------------------- ------------------- - - £407,313 £407,313 ========= ========= ========= ========= Repayable as follows: Between one and two years - - 407,313 407,313 Between two and five years - - - - ------------------- ------------------- ------------------- ------------------- - - £407,313 £407,313 ========= ========= ======== ========= On 27 February 2007 the Group issued convertible loan notes, redeemable by 1 April 2010, carrying a coupon rate of 10% interest payable on redemption or conversion of the relevant note. At any time after 1 April 2009, the holders have the option to convert the face value of their holdings to shares at a price of £53.75 for one ordinary £0.25 share. On 9 March 2010, the convertible loan notes were converted into 6,511 ordinary shares at a price of £53.75 for each £0.25 share.

Compass BPO Limited

32

10. SHARE CAPITAL

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

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

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

At 1 April Number of Exercise 2009 shares exercised/ Date of At 31 March price £ cancelled Grant 2010 £ Exercise dates 7,750 (7,750) 27/2/07 - 48.73 27/2/07 – 27/2/2011 3,531 (3,531) 15/1/07 - 45.44 15/1/07 – 15/1/2011

The share options were granted to 7 employees and one consultant of the group. There are no performance conditions attached to any of the options. On 9 March 2010, share options were exercised resulting in the issue of 3,117 ordinary £0.25 shares at £65.91 per share.

11. SHARE PREMIUM 2010 2009 Group and Company Group Group £ £ Share premium brought forward at 1 April 2009 765,173 760,157 Premium on issue of shares 348,372 5,016 Transfer from other reserves on conversion of loan notes 31,661 - ---------------------- -------------------- Share premium at 31 March 2010 £1,145,206 £765,173 ========== =========

12. PROFIT AND LOSS ACCOUNT

2010 2009 Group Company Group Company £ £ £ £ Balance brought forward at 1 April 2009 (118,146) (39,205) (483,474) (61,186) (Loss)/profit for the financial year (171,448) (197,584) 365,262 21,981 Exchange gain on currency translation 11,505 - 66 - ------------------- ------------------- ------------------- ------------------- Carried forward at 31 March 2010 £(278,089) £(236,789) £(118,146) £(39,205) ========= ========= ========= =========

Compass BPO Limited

33

13. OTHER RESERVES Group and Company £ Equity component of 10% convertible loan notes At 1 April 2009 31,661 Transferred to share premium on conversion of the loan notes (31,661) ----------------- At 31 March 2010 £ - ========

The loan notes are more fully described in note 9b. 14. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS

2010 2009 Group Company Group Company £ £ £ £ New share capital (including share premium) 350,779 350,779 5,044 5,044 (Loss)/Profit for the financial year (171,448) (197,584) 365,262 21,981 Exchange gain on currency translation 11,505 - 66 - Opening shareholders’ funds 695,248 774,189 324,876 747,164 ------------------- ------------------- ------------------- ------------------- Closing shareholders' funds £886,084 £927,384 £695,248 £774,189 ========= ========= ========= =========

15. PENSION COMMITMENTS Compass Business Process Outsourcing Pvt Ltd, operates a defined benefit pension scheme, for eligible staff.

It is funded by the payment of contributions to a separately administered trust fund. The assets of the scheme are held separately from those of the group. The Group adopts the valuation and disclosure requirements of FRS 17 “Retirement Benefits”, as amended by the FRSSE 2007. The Group includes the assets and liabilities of the pension fund in the Group’s balance sheet, with a subsequent effect on reserves.

The pension contributions are determined with the advice of a qualified actuary on the basis of annual

valuations using the method. The most recent valuation was conducted as at 31March 2010. The principal assumptions used by the actuaries were that the return on assets would be 9% per annum and salaries would increase by 4% per annum. The market value of the assets at 31 March 2010 was £33,639. The pension charge for the year was £17,017 (2009: £16,219). Contributions to the scheme are expected to remain at this level in the future. The key assumptions were as follows:

Main assumptions % per annum 2010 2009 Rate of return on investments 9% 9% Increase in earnings 4% 4% Discount rate 8% 8%

Compass BPO Limited

34

15. PENSION COMMITMENTS (continued) Value at Value at 31 March 2010 31 March 2009 £’000s £’000s Market value of assets 34 25 Present value of scheme liabilities (53) (42) --------- --------- Net pension scheme liability (19) (17) ==== ==== The movement in the deficit during the year arose as follows: 2010 £’000s Deficit as at 1 April 2009 (17) Movement in present value of scheme liabilities (17) Interest earnt 2 Settlements (12) Employer contributions 17 Exchange gains 8 ---------- Deficit as at 31 March 2010 (19) =====

16. OPERATING LEASE COMMITMENTS

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

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

17.RELATED PARTY TRANSACTIONS

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

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

Aditya Birla Minacs Philippines Inc.

35

BALANCE SHEET Mar-31 2010(PHP) 2010(INR) 2009(PHP) 2009(INR) ASSETS Current Assets Cash 4,294,486 4,299,248 13,055,293 13,703,601 Receivables (Note 4) 33,738,747 33,776,160 22,513,318 26,612,422 Prepaid expenses and other current assets (Notes 5)

5,575,511 5,581,694 3,850,684 1,060,780

Total Current Assets 43,608,744 43,657,101 39,419,295 41,376,802 Noncurrent Assets Property and equipment (Notes 6 and 7) 40,140,748 40,185,260 61,624,662 64,684,856 Other noncurrent assets (Note 14) 3,280,358 3,283,996 3,394,393 3,562,954 Total Noncurrent Assets 43,421,106 43,469,255 65,019,055 68,247,810 TOTAL ASSETS 87,029,850 87,126,357 104,438,350 109,624,612 LIABILITIES AND CAPITAL DEFICIENCY

Current Liabilities Accounts payable and accrued expenses (Note 7)

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

Noncurrent Liabilities Loans from parent company (Note 11) 96,900,408 97,007,860 89,343,650 93,780,330 Accrued retirement benefits (Note 12) 200,500 200,722 261,000 273,961 Total Noncurrent Liabilities 97,100,908 97,208,583 89,604,650 94,054,291 Total Liabilities 133,630,474 133,778,656 128,923,739 135,325,911 Capital Deficiency Capital stock - 100 par value Authorized - 1,000,000 shares Issued and outstanding - 490,000 shares 49,000,000 49,054,336 49,000,000 51,433,271 Deposits for future stock subscription (Note 15)

47,923,213 47,976,355 47,923,213 50,303,013

Deficit -143,523,837 -143,682,990 -121,408,602 -127,437,583 Total Capital Deficiency -46,600,624 -46,652,299 -24,485,389 -25,701,299 TOTAL LIABILITIES AND CAPITAL DEFICIENCY

87,029,850 87,126,357 104,438,350 109,624,612

See accompanying Notes to Financial Statements.


36

STATEMENTS OF INCOME Years Ended March 31 2010(PHP) 2010(INR) 2009(PHP) 2009(INR)

SERVICE INCOME (Note 11) 145,577,147 147,781,703 140,439,885 141,796,611

COST OF SERVICES (Note 8) 151,201,305 153,491,031 163,768,713 165,350,809 GROSS LOSS 5,624,158 5,709,328 23,328,828 23,554,197

General and administrative expenses (Note 9)

19,326,527 19,619,199 29,111,554 29,392,788

Foreign exchange loss (gain) - net -3,506,651 -3,559,754 6,824,094 6,890,018

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

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

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

PROVISION FOR INCOME TAX - Current (Note 13)

3,377 3,428 4,491 4,534

NET LOSS 22,115,235 22,450,138 62,619,231 63,224,167

See accompanying Notes to Financial Statements. STATEMENTS OF CHANGES IN CAPITAL DEFICIENCY FOR THE YEARS ENDED MARCH 31, 2010 AND 2009

Capital Stock

Deposits for Future Stock Subscription

(Note 15)

Deficit

Total

BALANCES AT MARCH 31, 2008 P=49,000,000 P=47,923,213 (P=58,789,371) P=38,133,842

Net loss for the year – – (62,619,231) (62,619,231)

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

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

BALANCES AT MARCH 31, 2010 P=49,000,000 P=47,923,213 (P=143,523,837) (P=46,600,624) See accompanying Notes to Financial Statements.


37

STATEMENT OF CAHS FLOWS Years Ended March 31 2010(PHP) 2010(INR) 2009(PHP) 2009(INR) CASH FLOWS FROM OPERATING ACTIVITIES Loss before income tax -22,111,858 -22,446,710 -62,614,740 -63219633 Adjustments for: Depreciation (Note 6) 29,581,074 29,613,876 28,304,030 10826830 Unrealized foreign exchange loss (gain) - net -3,796,197 -3,800,407 11,527,566 28577462 Interest expense (Note 11) 1,764,308 1,766,264 3,337,380 3369621 Movement in accrued retirement benefits (Note 12) -60,500 -61,416 142,200 149261 Interest income -32,792 -33,289 -74,133 -74849 Operating income (loss) before working capital changes

5,344,035 5,038,319 -19,377,697 -20520568

Decrease (increase) in: Receivables -13,001,452 -13,015,869 -1,697,834 -1782146 Prepaid expenses and other current assets -1,724,827 -1,726,740 203,425 213527 Increase (decrease) in accounts payable and accrued expenses -6,233,507 -6,240,419 21,624,306 22698139 Net cash flows from (used in) operations -15,615,751 -15,944,709 752,200 758213 Income taxes paid -3,377 -3,428 -4,491 -4534 Net cash flows from (used in) operating activities -15,619,128 -15,948,137 747,709 753678 CASH FLOWS FROM INVESTING ACTIVITIES Additions to property and equipment (Notes 6 and 7) -4,599,460 -4,604,560 -18,502,797 -19421620 Decrease (increase) in other noncurrent assets 114,035 114,161 -796,735 -836300 Interest received 32,792 33,289 74,133 74849 Net cash flows used in investing activities -4,452,633 -4,457,110 -19,225,399 -20183071 CASH FLOWS FROM FINANCING ACTIVITY Loans from parent company 12,429,562 12,443,345 27,284,331 -20183071 EFFECT OF EXCHANGE RATE CHANGES IN CASH

-1,118,608 -1,135,548 -853,197 -861439

NET INCREASE (DECREASE) IN CASH -8,760,807 -9,097,450 7,953,444 8348401 CASH AT BEGINNING OF THE YEAR 13,055,293 13,703,601 5,101,849 5355200 CASH AT END OF THE YEAR 4,294,486 4,606,150 13,055,293 13703601 See accompanying Notes to Financial Statements.


38

NOTES TO FINANCIAL STATEMENTS 1. Corporate Information

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

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

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

The financial statements were approved for issue by the Board of Directors (BOD) on

April 21, 2010. 2. Registration with the Philippine Economic Zone Authority (PEZA)

The Company is registered with PEZA as an Ecozone Information Technology (IT) Enterprise, engaged in providing customer contact center services at Eastwood City Cyberpark. The Company is entitled to all incentives granted to pioneer projects under Republic Act (RA) No. 7916, as amended, and the PEZA IT Guidelines, subject to certain terms and conditions, including, among others, the following:

a. The Company’s project shall be entitled to six (6) years income tax holiday (ITH) incentive, as

amended in accordance with the 2006 Investment Priorities Plan. The project’s entitlement to the said incentive shall be subject to validation by PEZA based on the Company’s audited financial statements covering the first year of its operations showing the investment cost per seat for its project is equivalent to at least United States (US) $2,500, inclusive of the cost of equipment, office furniture and fixtures, building improvements and renovations, fixed assets, except land, building and working capital, and complies with the minimum US$2.5 million investment required for pioneer status. In case the Company does not attain the said investment cost per seat, the Company’s project shall be granted 5% gross income incentive and other incentives under RA 7916, as amended, instead of the ITH incentive. On the other hand, if the Company complies with the minimum US$2,500 investment cost per seat but fails to comply with the minimum US$2.5 million investment required for pioneer status, the Company shall instead be entitled to only four (4) years ITH incentive.

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


39

b. The Company’s operations shall be limited to its PEZA-approved projects. Any expansion of this

project or other additional activities to be undertaken by the Company shall require prior PEZA clearance.

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

3. Summary of Significant Accounting and Financial Reporting Policies

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

Basis of Preparation and Statement of Compliance The financial statements of the Company have been prepared in accordance with accounting principles

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

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

Future Changes in Accounting Policy The Philippine Financial Reporting Standard for Small and Medium-sized entities (PFRS for SMEs) has been approved for adoption by the Philippine Financial Reporting Standards Council on October 13, 2009 and by the SEC, on December 3, 2009 and has not been early adopted by the Company. The PFRS for SMEs is effective for annual periods beginning on or after January 1, 2010, and is required to be used by entities that meet the definition of an SME, which include, among others, an entity with total assets of between P=3.0 million and P=350.0 million or total liabilities of between P=3.0 million and P=250.0 million. The PFRS for SME is a self-contained standard that is tailored for the needs and capabilities of smaller businesses. Many of the principles in full PFRSs for recognizing and measuring assets, liabilities, income and expenses have been simplified, topics not relevant to SMEs have been omitted, and the number of required disclosures has been significantly reduced. The Company, which currently follows the accounting principles generally accepted in the Philippines applicable to NPAE, will adopt the PFRS for SMEs in its fiscal year 2011 financial statements. The Company is currently assessing the impact on its financial statements when the PFRS for SME is adopted in fiscal year 2011. Cash

Cash includes cash on hand and in banks.

Receivables Trade receivables are recognized and carried at original invoice amount, less any allowance for

uncollectible accounts. An estimate for doubtful accounts is made when there is objective evidence that the Company will not be able to collect the debts.

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


40

Prepayments

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

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

value. The initial cost of property and equipment consists of its purchase price, including import duties, taxes

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

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

follows:

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

Leasehold improvements are amortized over the life of the assets (average of two years) or the term of

the lease, whichever is shorter. Recognition of depreciation commences when the asset is ready for its intended use.

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

When assets are sold or retired, their cost, accumulated depreciation and any impairment in value are

eliminated from the accounts. Any gain or loss resulting from their disposal is recognized in the statement of income.

Impairment of Assets

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

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


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Construction in progress represents assets under construction and is stated at cost, including cost of

construction and other direct costs. Construction in progress is not depreciated until the relevant assets are completed and ready for their intended operational use. Liabilities Liabilities are recognized when the Company has a present obligation from past events, the settlement of which is expected to result in an outflow of economic benefits from the Company and the amount can be reliably measured. Liabilities expected to be settled in the Company’s normal operating cycle or within 12 months from the balance sheet date are classified as current liabilities. Otherwise, these are classified as noncurrent liabilities. Capital Stock Capital stock is carried at par value of the shares issued. When the shares are sold at a premium, the difference between the proceeds and the par value is credited to additional paid-in capital. When the shares are issued for a consideration other than cash, the proceeds are measured by the fair value of the consideration received. In case the shares are issued to extinguish or settle the liability of the Company, the shares shall be measured either at the fair value of the shares issued or fair value of the liability settled, whichever is more readily determinable.

Deposits for Future Stock Subscription Contributions from stockholders that are intended as payment for future capital stock subscriptions are recognized as deposits for future stock subscription. The deposits are reduced and the corresponding shares of stock are issued when the regulatory requirements have been complied with. Retained Earnings (Deficit) Retained earnings (deficit) represent the cumulative balance of the net income or loss, net of any dividend declaration. Revenue Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the amount of revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable. The following specific recognition criteria must also be met before revenue is recognized: Service income Service income is recognized as related services are performed based on agreements with the customers.

Interest income Interest income is recognized as the interest accrues.

Leases Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are

classified as operating leases. Operating lease expense is recognized in the statement of income on a straight-line basis over the lease term.

Retirement Benefits Cost

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


42

Actuarial gains and losses are recognized as income or expense if the cumulative unrecognized

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

The past service cost is recognized as an expense on a straight-line basis over the average period until

the benefits become vested. If the benefits are already vested immediately following the introduction of, or changes to, a pension plan, past service cost is recognized immediately.

The defined benefit liability is the aggregate of the present value of the defined benefit obligation and

actuarial gains and losses not recognized, reduced by past service cost not yet recognized and the fair value of plan assets out of which the obligations are to be settled directly.

Foreign Currency Transactions Transactions denominated in foreign currencies are recorded in peso using the exchange rate

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

Income Taxes Current income tax

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

Deferred income tax Deferred income tax is provided, using the balance sheet liability method, on all temporary differences

at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognized for all taxable temporary differences. Deferred income

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

The carrying amount of deferred income tax assets (DTA) is reviewed at each balance sheet date and

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

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

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

Borrowing Costs Borrowing costs are generally expensed as incurred. Provisions and Contingencies


43

Provisions are recognized when: (1) the Company has a present obligation (legal or constructive) as a result of a past event; (2) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and (3) a reliable estimate of the amount of the obligation can be made. Contingent liabilities are not recognized in the financial statements. They are disclosed in the notes to financial statements unless the possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is not recognized in the financial statements but is disclosed in the notes to the financial statements when an inflow of economic benefits is probable.

Events after the Balance Sheet Date Post year-end events that provide additional information about the Company’s position at the balance sheet date (adjusting events) are reflected in the financial statements. Post year-end events that are not adjusting events are disclosed in the notes to financial statements when material. 4. Receivables

2010(PHP) 2010(INR) 2009(PHP) 2009(INR) Trade 33,156,570 33,193,337 22,181,591

23,283,098 Advances to employees and others 582,177 582,823 331,727

3,329,324 33,738,747 33,776,160 22,513,318 3,329,324

5. Prepaid Expenses and Other Current Assets

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

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

26,421

Deposits 821,351 822,262 827,797

868,904

Rental and other prepayments (Note 14) 1,358,588 1,360,095 2,997,716

3,146,578 5,575,511 5,581,694 3,850,684 4,041,904

6. Property and Equipment 2010

Computer Furniture

and Office and Commu nication

Leasehold Construction

Total 2010

Equipment Fixtures Equipment Improvements

In Progress (PHP)

Cost Balance at beginning of year P=38613107 P= 26606446 P=15468204 P=15803863 P=10836115 P=107327735 Additions 3821271 301100 - - 3974789 8097160 Reclassification 631621 - - 10204494 (10836115) - End of year 43065999 26907546 15468204 26008357 3974789 115424895


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Accumulated Depreciation Beginning of year 20593516 8794710 4113891 12200956 – 45703073 Depreciation 13107172 5145169 3114283 8214450 – 29581074 End of year 33700688 13939879 7228174 20415406 - 75284147 Net Book Values

P=9365311 P=12967667 P= 8240030 P=5592951 P=3974789 P=

40140748 2009

Computer Equipment

Furniture and

Fixtures

Office and Communica

tion Equipment

Leasehold Improveme

nts

Construction in

Progress

Total

Cost Beginning of year P=35433750 P=26371725 P=10095349 P=14726680 P=- P=86627504 Additions 3179357 234721 5372855 1077183 10836115 20700231 End of year 38613107 26606446 15468204 15803863 10836115 107327735 Accumulated Depreciation Beginning of year 7818339 3700235 1120327 4760142 – 17399043 Depreciation 12775177 5094475 2993564 7440814 – 28304030 End of year 20593516 8794710 4113891 12200956 - 45703073 Net Book Values

P=18019591 P=17811736 P=11354313 P=3602907 P=

10836115 P=61624662

7. Accounts Payable and Accrued Expenses

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

Accounts payable 4,811,527

4,816,862

14,034,217

14,731,137

Accrued expenses (Note 11) 28,897,211

28,929,255

24,112,021

25,309,390

Others 2,820,828

2,823,956

1,172,851

1,231,093

36,529,566

36,570,073

39,319,089

41,271,620 Accounts payable as of March 31, 2010 and 2009 includes unpaid invoices for the acquisition of certain items of property and equipment totaling P=3,497,700 and P=2,197,434, respectively.

8. Cost of Services

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

Personnel costs (Note 10)

66,946,854

67,960,668

83,636,031

84,444,001

Depreciation (Note 6)

29,581,074

30,029,037

28,304,030

28,577,462

Technology charges

23,349,297

23,702,889

26,113,266

26,365,534

Rent and utilities (Note 14)

15,322,959

15,555,003

12,621,461

12,743,391


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Staff welfare

4,992,377

5,067,979

5,875,844

5,932,608 Recruitment

3,725,398

3,781,814

2,695,311

2,721,349

Repairs and maintenance

2,506,195

2,544,148

1,904,251

1,922,647

Training

2,342,528

2,378,002

460,638

465,088

Outside services and others

2,434,623

2,471,492

2,157,881

2,178,727

151,201,305

153,491,031

163,768,713

165,350,809 9. General and Administrative Expenses 2010(PHP) 2010(INR) 2009(PHP) 2009(INR) Personnel costs (Note 10) 8,416,819 8544279.617 15,842,972 15,996,024

Shared cost (Note 11) 4,017,722 4078564.621 1,488,405 1,502,784

Professional fees 1,386,705 1407704.653 1,272,111 1,284,400

Accommodations 1,079,333 1095677.946 711,203 718,074

Transportation and travel 1,051,985 1067915.8 2,274,124 2,296,093

Utilities 849,838 862707.5741 866,915 875,290

Rent (Note 14) 943,046 957327.0752 1,202,972 1,214,593

Insurance 382,936 388735.0149 798,547 806,261

Others 1,198,143 1216287.152 4,654,305 4,699,268

19,326,527 19,619,199 29,111,554

29,392,788

10. Personnel Costs

2010(PHP) 2010(INR) 2009(PHP) 2009(INR) Salaries, wages and bonuses 74,526,731 75,655,331 97,656,319 98,599,733 Retirement benefits cost (income) (Note 12) -60,500 -61,416 142,200 143,574

Other short-term employee benefits 897,442 911,032 1,680,484 1,696,718

75,363,673 76,504,947 99,479,003 100,440,025 11. Related Party Transactions

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


46

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

b. The Company has various service agreements which are carried out together with its affiliates

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

c. Shared costs charged by ABMW amounted to P=4.02 million and P=1.5 million in 2010 and 2009,

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

12. Retirement Benefits Cost The Company provides retirement benefits to all its regular, full time employees in accordance with

RA No. 7641.

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

(34,953.63) -60,500 -60,542 142,200 149,261

The amounts recognized in the balance sheets comprise the following:

2010(Php) 2010(Inr) 2009(Php) 2009(Inr) Defined benefit obligation 394,500 400,474 41,100 41,497 Unrecognized actuarial gains (losses) -194,000 -196,938 219,900 222,024 Accrued retirement benefits 200,500 203,536 261,000 263,521 Changes in the present value of defined benefit obligation are as follows:

2010(Php) 2010(Inr) 2009(Php) 2009(Inr) Beginning balances 41,100 41,146 118,800 124,699 Current service cost 1,800 1,827 164,100 165,685 Interest cost 15,400 15,633 11,400

11,510 Actuarial loss: 0 - Experience adjustments 13,400 13,603 45,100 45,536 Change in assumptions 390,700 396,617 -298,000 -300,879 Curtailment gain -67,900 -68,928 -300 -303 Ending balances 394,500 399,897 41,100 46,249


47

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

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

13. Income Taxes

a. The provision for current income tax represents final tax on interest income. b. The Company did not recognize deferred income tax assets on the following temporary differences

and NOLCO since these were incurred and will expire/reverse within the period when the Company is under ITH (see Note 2).

2010(Php) 2010(Inr) 2009(Php) 2009(Inr) NOLCO 135,665,715 142,838,947 111,292,223 114,795,815 Deferred lease 118,158 118,289 504,703 529,787 Accrued retirement benefits 849,539 850,481 261,000 273,961 Unrealized foreign exchange loss - net 8,687,707 8,697,341 8,687,707 9,119,126

The Company’s NOLCO as of March 31, 2010 will expire as follows: Incurred in Year PHP INR Expiring in

2008 51,755,698 54,325,678 2011 2009 50,574,668 51,340,549 2012 2010 37,131,546 37,172,721 2013

139,461,912 142,838,947 NOLCO incurred in 2007 amounting to P=8,961,857 expired in 2010.

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

d. The reconciliation between the provision for income tax at statutory rates and the provision for

income tax as shown in the statement of income is as follows:

2010(Php) 2010(Inr) 2009(Php) 2009(Inr) Income tax at statutory rate -6,633,557 -6,734,013 -21,132,474 (21,336,625) Additions to (reduction in) income tax resulting from the tax effects of:

Net increase in unrecognized deferred income tax assets

6,640,148 6,740,703 21,140,111 21,344,336

Interest income subject to final tax -6,460 -6,558 -7,185 (7,254) Nondeductible portion of interest expense

3,246 3,295 4039 4,078 3,377 3,428 4,491 4,534


48

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

14. Lease Commitments The Company has various lease agreements for its office space and condominium units with terms

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

The Company has three-year lease agreements covering two of its office/facilities spaces that are

subject to annual escalation of 8% and 10%, with one month and three months rent-free period, respectively.

Future minimum rentals payable under these noncancelable operating lease arrangements are as

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

15. Equity

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

16. Other Matter

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

Aditya Birla Minacs Worldwide Inc.

49

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

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

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

April 23, 2010. Licensed Public Accountants


50

CONSOLIDATED BALANCE SHEET


51

CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT


52

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)


53

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIENCY)

AUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIENCY


54

CONSOLIDATED STATEMENT OF CASH FLOWS

See accompanying notes to the consolidated financial statements.


55

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2010 1 NATURE OF BUSINESS Aditya Birla Minacs Worldwide Inc. (the “Company” or “Minacs”) is incorporated under the Ontario Business Corporations Act. The Company is wholly-owned by AV Transworks Limited Canada, a wholly-owned subsidiary of Aditya Birla Minacs Worldwide Limited, India, which in turn is a subsidiary of Aditya Birla Nuvo Limited. The Company operates in one segment as a provider of business process outsourcing (“BPO”) solutions. These incorporate contact centre solutions, integrated marketing services and back office administration. Operating in multiple languages, the Company serves customers throughout North America, Europe, Latin America and the Pacific Rim from its operating locations in North America and Europe. 2 SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles ("GAAP") and include the accounts of the Company and its subsidiaries. All significant inter-company balances and transactions among these entities have been eliminated on consolidation.

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

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

Section 1000, Financial Statement Concepts. The objectives of this Section are to reinforce a principle-based approach to the recognition of costs as assets and to clarify the application of the concept of matching revenue and expenses in Section 1000. Collectively, this change brings the Canadian practice closer to International Financial Reporting Standards ("IFRS") and U.S. generally accepted accounting principles by eliminating the practice of recognizing as assets a variety of start-up, pre-production and similar costs that do not meet the definition and recognition criteria of an asset. Adoption of this guidance had no impact on the Company's consolidated financial statements. EIC 173, Credit Risk and the Fair Value of Financial Assets and Financial Liabilities. This guidance clarifies that an entity's own credit risk and the credit risk of the counterparty should be taken into account in determining the fair value of financial assets and financial liabilities including derivative instruments. Adoption of this guidance had no impact on the Company's consolidated financial statements.


56

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

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

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

Use of Estimates The preparation of these consolidated financial statements in conformity with Canadian GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates. Revenue Recognition The Company derives revenues by providing BPO solutions and consulting arrangements. Payment terms may vary by contract. The Company recognizes revenues at the time services are performed and when the price is fixed or determinable and collection is reasonably assured. The majority of revenues are recognized based on the billable hours or minutes rendered as defined in the client contract. The rate per billable hour or minute charged is based on a predetermined contractual rate as agreed in the underlying contract. This contractual rate fluctuates based on the Company’s performance against certain predetermined criteria related to quality and performance. Some clients are entitled to service credits when the Company is not in compliance with certain obligations as defined in the client contract. Such service credits are recorded as a reduction of revenues as incurred based on a measurement of the Company’s obligation under the terms of the client contract. For some contracts, the Company is paid by its customer based on achievement of client-determined criteria specified in the client contract such as full-time equivalents, units processed or completed contacts. The Company recognizes this performance-based revenue by measuring its actual results against the performance criteria specified in the contracts. Amounts collected from customers prior to the performance of services are recorded as deferred revenue. These advances are amortized to revenues in accordance with the Company’s policy on revenue recognition. The Company classifies reimbursements received from customers for out-of-pocket expenditures as revenues. The Company incurs out-of-pocket expenditures such as expenses related to travel, postage and telecommunications costs for which customers have agreed to reimburse Minacs. The corresponding cost


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associated with this revenue is recorded within direct expenses. Some customers agree to reimburse the Company for initial training and recruiting costs over a specified period of time. The revenue for these costs is recorded over the period of time stipulated within the contract with a corresponding cost recorded within direct expenses. Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated amortization. Amortization is provided on a straight-line basis over the estimated useful lives of the assets. Computer equipment is amortized over a four-year life. Communications equipment is amortized over five to seven-year lives. Furniture and fixtures are amortized over seven to ten-year lives. Leasehold improvements are amortized over the term of the lease. Leases Leases are classified as either capital or operating leases. Leases that substantially transfer all of the benefits and risks of ownership of property to the Company are accounted for as capital leases. At the time a capital lease is entered into, an asset is recorded together with its related long-term obligation to reflect the acquisition and financing. Equipment recorded under capital leases is amortized on the same basis as property, plant and equipment. Rental payments under operating leases are expensed as incurred. Business Combinations, Goodwill and Intangible Assets The Company follows the guidance in the CICA Handbook Section 1581, Business Combinations, which requires all business combinations to be accounted for using the purchase method. In addition, any goodwill and intangible assets acquired in a business combination are accounted for under CICA Handbook Section 3064, Goodwill and Intangible Assets. This section requires that goodwill not be amortized, while identified intangible assets with finite useful lives be amortized over their useful lives. Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired. Goodwill and indefinite life intangible assets are tested for impairment annually or more frequently if events or changes in circumstances indicate that those assets might be impaired. The impairment test is carried out in two steps. In the first step, the identification of a potential impairment is determined by comparing the fair value of the reporting unit to its carrying value. Fair value is based on estimates of discounted future cash flows. When the fair value of the reporting unit is less than its carrying value, the fair value is allocated to all its assets and liabilities based on their fair values. The amount that the fair value of the reporting unit exceeds the amounts assigned to its assets and liabilities is the fair value of the goodwill. In the second step, impairment is determined by comparing the fair value of goodwill to its carrying value. Any shortfall is charged to income. Intangible assets with finite useful lives acquired through business combinations are recorded at their fair value at the date of acquisition. An impairment loss on an intangible asset with a finite useful life is recognized when its carrying value exceeds the total undiscounted cash flows expected from its use and disposition. The amount of loss is determined by deducting its fair value based on undiscounted cash flows expected from its use and disposition from its carrying value. The Company reviews definite life intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Amortization of intangible assets, other than computer software, is provided on a straight-line basis over ten years. Computer software is amortized over four to five-year lives.


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

Income Taxes The Company follows the liability method of accounting for income taxes. Under this method, future tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities, and are measured using substantively enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce future tax assets to the estimated amount that is more likely than not to be realized. Government Assistance Government assistance towards current expenses is included in the determination of income for the year as a reduction of the expenses to which it relates. The Company has made a number of estimates and assumptions in determining the amount eligible for government assistance. It is possible that the allowed amount of assistance could be materially different from the recorded amount upon assessment by the respective government agency. Equity and Comprehensive Income Comprehensive income is the change in equity from transactions and other events from non-owner sources. Other comprehensive income refers to items recognized in comprehensive income that are excluded from net income calculated in accordance with Canadian GAAP. Financial Instruments All financial instruments, including derivatives, are measured on the consolidated balance sheet at fair value except for loans and receivables, held-to-maturity investments and other financial liabilities, which are measured at amortized cost. Subsequent measurement and changes in fair value will depend on their initial classification, as follows: held-for-trading financial assets are measured at fair value and changes in fair value are recognized in net income; available-for-sale financial instruments are measured at fair value with changes in fair value recorded in other comprehensive income until the investment is derecognized or impaired, at which time the amounts would be recorded in net income. The Company's financial assets and liabilities are generally classified and measured as follows:


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Asset/Liability Category Measurement

Cash Held-for-trading Fair value

Receivables Loans and receivables Amortized cost

Payables and accrued liabilities Other financial liabilities Amortized cost

Long-term debt Other financial liabilities Amortized cost

Obligations under capital leases Other financial liabilities Amortized cost

Deferred grant and government assistance Other financial liabilities Amortized cost

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

Financing costs and credit facility arrangement fees associated with the issuance of long-term debt are netted against the carrying value of the related debt and are amortized using the effective interest rate method to interest expense over the period to maturity of the related debt. Hedges The Company applies hedge accounting to forward rate contracts, options and cross-currency swap agreements. These contracts have been designated as cash flow hedges, and are measured at fair value at the end of each period. The resulting gain/loss on recognition of the forward rate contracts, options and cross-currency swap agreements is recognized in other comprehensive income.

Foreign Exchange Translation Foreign operations are considered to be self-sustaining and are translated into Canadian dollars using the current rate method. Assets and liabilities are translated using the exchange rate in effect at the consolidated balance sheet date and revenues and expenses are translated at the average rate for the month in which the transaction is recorded. Exchange gains or losses on translation of the Company’s investments in these subsidiaries are recorded in accumulated other comprehensive income. Research and Development Research costs are expensed as incurred. Development costs that meet specific criteria related to technical, market and financial feasibility are capitalized and amortized over the useful life of the technology when put into use.

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


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

4 OTHER RECEIVABLES Other receivables are comprised of:

As at March 31, 2009, a derivative liability of $11,300,000 (INR 49.90 Cr) was included in accounts payable and accrued liabilities. 5 PROPERTY, PLANT AND EQUIPMENT

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

The assets under capital leases are held as collateral for the capital lease obligations. For the year ended March 31, 2010, included within amortization expense is $1,732,000 (INR 7.65 Cr) (2009: $3,112,000) (INR 13.74 Cr) relating to assets under capital leases. Included in restructuring charges for 2010 is an impairment loss of $933,000 (INR 4.33 Cr) relating to the write-down in value of leasehold improvements and lease exit costs relating to the Saskatoon and Port Hawkesbury site closures (Note 14). Included in restructuring charges for 2009 is an impairment loss of $4,606,000 (INR 20.08 Cr) relating to the write-down in value of leasehold improvements and lease exit costs relating to the Saskatoon, Pickering and Chatham site closures (Note 14).


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6 DEFERRED DEVELOPMENT COSTS Deferred development costs are comprised of:

7 INTANGIBLE ASSETS Intangible assets consist of:

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

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

8 GOODWILL Goodwill consists of:

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


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(b) The Company also receives payroll rebates from Nova Scotia Business Inc. if certain incremental wage growth is achieved within the Province of Nova Scotia. As at March 31, 2010, the Company has recorded $230,000 (INR 1.02 Cr) (2009: $642,000) (INR 2.83 Cr) as a payroll rebate receivable which is included in other receivables. During the year ended March 31, 2010, the Company recorded $231,000 (INR 1.01 Cr) (2009: $257,000) (INR 1.12 Cr) as a reduction of direct expenses and selling, general and administrative expenses for this grant. (c) In fiscal 2008, Minacs finalized an agreement with the Province of New Brunswick to receive a forgivable loan in the amount of $2,260,000 (INR 9.98 Cr). The loan provides for forgiveness subject to terms being met in respect of employment to be created at a contact centre in that province. To date, Minacs has received $900,000 (INR 3.97 Cr); no amounts were received in fiscal 2010. As at March 31, 2010, the Company has recorded $858,000 (INR 3.79 Cr) (2009: $771,000) (INR 3.4 Cr) as deferred grant and government assistance. If the terms of the loan are not met by August 31, 2014, then the amount remaining as deferred grant and government assistance will need to be repaid.

10 LONG-TERM DEBT

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

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

Interest Rate

The weighted average interest rate on borrowings at March 31, 2010 was 1.05% (2009: 4.62%). Interest and financing expenses are comprised of the following amounts:


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11 RELATED PARTY TRANSACTIONS Transactions with the Aditya Birla Nuvo Limited group of companies are as follows:

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

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

The Company received $20,000,000 (INR 88.32 Cr) on February 24, 2010 and a further $10,000,000 (INR 44.16 Cr) on March 26, 2010 in cash from its parent company AV Transworks Limited Canada as subscription for Redeemable Series B Preference Shares that were issued during the year. The Series A Preference Shares are redeemable at face value at the option of the Company, at any time after December 31, 2012. The Series B Preference Shares are redeemable at face value at the option of the Company, at any time after December 31, 2014. However, there is no redemption obligation on the Company. The preference shareholders are entitled to a cumulative dividend of 4.50% for Series A and 5% for Series B on the outstanding preference shares. The payment of dividends is at the discretion of the


64

Company and subject to availability of profits of the Company. The undeclared dividend as of March 31, 2010 is $1,029,312 (INR 4,55 Cr) (2009 - $2,505) (INR 0.01 Cr). 13 COMMITMENTS AND CONTINGENCIES Capital Leases Interest on obligations under capital leases accrues at various rates ranging from 6.5% to 9.2%. The following is a schedule of future minimum annual lease payments for these capital leases:

Commitments

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

Contingent Liabilities On May 17, 2006, the former major shareholder and founder of the Company, Elaine Minacs, died. The major shareholder of the Company then became the Estate of Elaine Minacs (the “Estate”) together with certain entities controlled by it (the “EM Shareholders”) until August 18, 2006, when AV Transworks Limited Canada acquired the shares of the Estate and the EM Shareholders. The Company is the owner of a $350,000 (INR 1.55 Cr) whole life insurance policy and a $2,000,000 (INR 8.83 Cr) term life insurance policy insuring the life of Elaine Minacs. The term life policy is a key-man policy, originally required by the Company's previous lenders. The beneficiary of the policies when they were originally acquired was the Company. During 2005, the beneficiary of the whole life insurance policy was changed at the direction of Elaine Minacs. Also during 2005, the beneficiary of the term life insurance policy was changed to family members related to Elaine Minacs at the direction of Elaine Minacs. In fiscal 2007, management changed the beneficiary back to the Company. A legal proceeding has been commenced by the Estate against the Company claiming $5,000,000 (INR 22.08 Cr) in damages stating that the change in beneficiary was in breach of Elaine Minacs’ employment agreement. Proceeds of $350,000 (INR 1.55 Cr) were paid into escrow pursuant to an escrow agreement with the Estate. The proceeds of $2,000,000 (INR 8.83 Cr) were paid by the underwriter to the court to be held in trust. The


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Company has filed a defense and counterclaim to the initial Estate claim in August 2007 for the proceeds of the life insurance policies and damages of $500,000 (INR 1.55 Cr). A second claim for damages of $500,000 (INR 1.55 Cr) and for punitive damages of $100,000 (INR 0.44 Cr) was commenced by the Estate in December 2007 stating the Company was in breach of contract related to an employment agreement. Management has not accrued a contingent liability for the claims made by the Estate because they believe that the claims have no merit and the outcome of the proceeding is not determinable. During the ordinary course of business activities, in addition to the above, the Company may be a party to claims and may be contingently liable for litigation. Management believes that adequate provisions have been made in the accounts where required. Although it is not possible to estimate the extent of potential costs and losses, if any, management believes that the ultimate resolution of such contingencies will not have a material adverse effect on the consolidated financial position of the Company. Guarantees At March 31, 2010, the Company had $75,000 (INR 0.33 Cr) (2009: $75,000) (INR 0.33 Cr) of outstanding letters of credit to secure customer performance guarantees.

14 RESTRUCTURING AND OTHER CHARGES In fiscal 2010, the Company terminated a number of employees. Total severance payments and other charges of $1,343,000 (INR 5.85 Cr) (2009: $1,825,000) (INR 7.96 Cr) have been charged to restructur ing costs. In fiscal 2009, the Company closed its Saskatoon and Pickering sites and suspended operations at its Chatham site. In fiscal 2010, the Company approved a plan to close its Port Hawkesbury site and restart the operations at the Chatham site. The costs recorded in restructuring relating to lease exit costs and asset impairment in fiscal 2010 are $2,485,000 and include a recovery of $687,000 (INR 2.99 Cr) of the prior year provision (2009: $6,452,000) (INR 28.13 Cr). The details of severance expenses, impaired assets, lease exist costs for the balance of the remaining lease periods and the credits against lease exit liabilities are given below:

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


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

15 INCOME TAX

Future tax assets consist of the following temporary differences:

Future tax liabilities consist of the following temporary differences:

Expiry of Losses

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

16 SUPPLEMENTAL CASH FLOW INFORMATION

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


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

Cash interest and income taxes paid are as follows:

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

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

Risk Management


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

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

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

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

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

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


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

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

Interest Rate Risk

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

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

Credit Risk Credit risk arises from cash held with banks and financial institutions, as well as credit exposure to clients, including outstanding accounts receivable. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors.

The Company derived 50.2% or $148,000,000 (INR 645.18 Cr) of its revenues from multiple contracts with two groups of clients in the automotive and technology sectors for the year ended March 31, 2010 (2009: 51.9% or $180,590,000) (INR 787.26 Cr).

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

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


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

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

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

18 MANAGEMENT OF CAPITAL The Company defines capital that it manages as the aggregate of its shareholders' equity, cash on the balance sheet and interest-bearing debt. The Company's objective when managing capital is to ensure that it can provide services to its customers and returns to its shareholders.

As at March 31, 2010, managed capital comprised of shareholders' equity of $48,472,000 (INR 214.05 Cr) (2009: $3,805,000) (INR 16.8 Cr), cash of $4,230,000 (INR 18.68 Cr) (2009: $3,087,000) (INR 13.63 Cr) and interest-bearing debt of $35,557,000 (INR 157.02 Cr) (2009: $62,878,000) (INR 277.67 Cr).


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

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

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

Compass BPO FZE

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INDEPENDENT AUDITORS’ REPORT To The Manager of, Compass BPO FZE Ras Al Khaimah - U.A.E. Report on the financial statements We have audited the accompanying financial statements of Compass BPO FZE which comprise the statement of financial position as at 31 March 2010 and the statements of comprehensive income, changes in equity and cash flows for the year then ended, a summary of significant accounting policies and other explanatory related notes to financial statements set out on pages 3 to 14. Management's responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards (IFRS). This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error, selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor's responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the accompanying financial statements give a true and fair view of the financial position of Compass BPO FZE as at 31 March 2010, and of its financial performance and it’s cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS). Report on other legal and regulatory requirements The accompanying financial statements comply with the U.A.E. Commercial Companies Law No. 8 of 1984 (as amended by Law No. 13 of 1988). Name of the Auditor Ravi Kannampillil Registration Number (80) Dated: 12 April 2010

Compass BPO FZE

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2010 31-03-10

31-03-09

Note Dirhams

Dirhams ASSETS:

NON-CURRENT ASSET Property, Plant and Equipment 6 7,317 99,295

Total non-current assets 7,317 99,295

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

Total current assets 246,026 797,866

Total assets 253,343 897,161

EQUITY Share Capital 100,000 100,000

Head Office Current Account 670,135 171,689 Retained Earnings (loss) (763,419) 294,983

Total equity 6,716 566,672

LIABILITIES:

CURRENT LIABILITIES Trade and Other Payables, including Derivatives 10 126,631 206,612

Provisions 11 119,996 123,877

Total current liabilities 246,627 330,489

Total liabilities 246,627 330,489

Total equity and liabilities 253,343 897,161

For Compass BPO FZE Manager The notes on pages 7 to 14 are an integral part of these financial statements

Compass BPO FZE

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STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2010

31-03-10

31-03-09 Note

Dirhams

Dirhams

Revenue 2,553,233 4,660,751

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

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

Other Income 12 Nil 413,356

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

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

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

For Compass BPO FZE Manager The notes on pages 7 to 14 are an integral part of these financial statements

Compass BPO FZE

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

(Amount in Dirhams)

PREVIOUS YEAR

Head Office Share Current Retained

Capital Account Earnings Total

Equity

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

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

Total comprehensive income for the year Nil Nil 824,622 824,622

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

CURRENT YEAR

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

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

Total comprehensive loss for the year Nil Nil (1,058,402) (1,058,402)

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

Compass BPO FZE

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STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31 MARCH 2010

31-03-10

31-03-09

Dirhams

Dirhams

Cash flows from Operating Activities (Loss)/ Profit for the period

(1,058,402)

824,622

Adjustment for : Depreciation of property, plant and equipment 70,069

73,346

Interest expense 5,483

5,734 Loss on sale of Property, Plant & Equipments 13,447

Nil

Operating Profit Before Working Capital Changes

(969,403)

903,702

Decrease / (Increase) in trade and other receivables 530,297

(312,456)

Decrease / (Increase) in prepayments 40,928

(7,932) Increase / (Decrease) in trade and other payables (79,981)

(838,171)

(Decrease) / Increase in provisions (3,881)

72,247

Net Cash from / (used in) Operating Activities

(482,040)

(182,610)

Cash flows from Investing Activities

Purchase of property, plant & equipments (12,849)

(9,535)

Proceeds from Sale of Property, Plant & Equipment 21,311

Nil

Net cash from / (used in) Investing Activities

8,462

(9,535)

Cash flows from Financing Activities

Interest paid (5,483) (5,734) Net movement during the year 498,446 171,689

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

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

(26,190)

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

62,897

Cash and cash equivalents at the end of the period

56,092

36,707

Compass BPO FZE

77

NOTES TO FINANCIAL STATEMENTS AS AT 31 MARCH 2010

1. Reporting entity 'Compass BPO FZE', here-in-after called 'the Establishment' is incorporated in the RAK Free Trade Zone,

Ras Al Khaimah, as a Free Zone Establishment in accordance with the laws and regulations of the Free Zone Authority.

The shareholder of the establishment is M/s. Compass BPO Limited, United Kingdom, who is the registered

holder of One Share of AED 100,000/-. During the year the name of the holding company was changed from "Compass Connections Limited" to

"Compass BPO Limited". The establishment is engaged in the business of Management Consultancy. 2. Reporting Period These financial statements cover the year from 01 April 2009 to 31 March 2010. The previous year figures

are for the year 01 April 2008 to 31 March 2009. 3. Basis of Preparation a) Statement of Compliance The financial statements of the establishment have been prepared in accordance with International

Financial Reporting Standards (IFRS), which includes International Accounting Standards (IAS) and its Interpretations.

b) Basis of Measurement The financial statements have been prepared on the historical cost basis. c) Functional and Presentation Currency These financial statements are expressed in U.A.E. Dirhams, rounded to the nearest Dirham. 4. Changes in Accounting Policies The accounting policies adopted are consistent with those of the previous financial year, except that the

establishment has adopted the following new and amended IFRS and IFRIC interpretations as on 01 January 2009:

IAS 1 Presentation of Financial Statements (Revised) 5. Significant Accounting Policies a) Associated Companies Associated Companies are defined as those companies in which the establishment holds a long term

equity interest, has representation on the board of directors and is in a position to exercise significant influence in their management, but not control, over the financial & operating policies.

b) Financial Instruments

Compass BPO FZE

78

(i) Non-derivative financial assets The establishment initially recognizes loans and receivables and deposits on the date that

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

♦ Loans and Receivables Loans and receivables are financial assets with fixed or determinable payments

that are not quoted in an active market. They are recognized initially at fair value plus any directly attributable transaction costs. They are measured at amortised cost using the effective interest method, less any impairment losses.

Trade receivables are recognised initially at the transaction price. They are

subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the establishment will not be able to collect all amounts due according to the original terms of the receivables.

(ii) Non-derivative financial liabilities The establishment initially recognizes debt securities issued and subordinated liabilities on

the date they are originated. All other financial liabilities are recognized on the trade date. It includes loans and borrowings, bank overdrafts and trade and other payables. These financial liabilities (except trade and other payables) are recognized at fair value plus any directly attributable transaction costs. Subsequently they are measured at amortized cost using effective interest method.

Trade payables are recognised initially at the transaction price and subsequently measured at

amortised cost using the effective interest method. c) Property, Plant & Equipment (i) Measurement Basis Property, plant & equipment are measured at cost less accumulated depreciation and any

impairment in value. (ii) Subsequent costs The cost for replacing part of an item of property, plant & equipment is recognised in the

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

(iii) Depreciation Depreciation is calculated to write-off the cost of property, plant & equipment on the

straight line basis over their estimated useful lives as follows: Number of years Motor Vehicle 3 years Furniture & Fixtures 3 years Office Equipments 3 years d) Provisions Provisions are recognized when the establishment has a present legal or constructive obligation as a

Compass BPO FZE

79

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

e) Impairment of assets (i) Financial assets The establishment assesses at each balance sheet date whether there is any objective

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

(ii) Non financial assets Assets that have an indefinite useful life, for example goodwill, are not subject to

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

f) Foreign Currency Transactions Transactions in foreign currencies are translated to UAE Dirhams at the foreign exchange rate ruling

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

g) Revenue Recognition Revenue is recognized when it is probable that the economic benefits will flow to the establishment

and when the revenue can be measured reliably, on the following basis : (i) Service Income Service income is recognized in profit or loss in proportion to the stage of completion of the

transaction at the reporting date. The stage of completion is assessed by reference to surveys of work performed.

(ii) Management Fee Management fee is recognised on an accrual basis when service is rendered.

Compass BPO FZE

80

h) Cash and cash equivalents Cash and cash equivalents for the purpose of cash flow statement consist of cash in hand and cash at

bank.

6. Property, Plant & Equipments

CURRENT YEAR

(Amount in Dirhams)

Motor

Furniture Office

Vehicle &

Fixture Equipme

nt Total

Cost or Deemed Cost : As at 01 April 2009 154,740

36,874 31,564

223,178

Additions during the year Nil Nil 12,849

12,849

Deletion during the year (154,740)

(36,874

) (33,273)

(224,887

)

As at 31 March 2010 Nil Nil 11,140

11,140

Depreciation & Impairment Losses : As at 01 April 2009 90,265

21,510 12,108

123,883

Depreciation during the year 47,282

11,267 11,520

70,069

Deletion during the year (137,547)

(32,777

) (19,805)

(190,129

)

As at 31 March 2010 Nil Nil 3,823

3,823

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

7,317

As at 31 March 2009 64,475

15,364 19,456

99,295

Compass BPO FZE

81

PREVIOUS YEAR

(Amount in Dirhams)

Motor Furniture Office Vehicle & Fixture Equipment Total

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

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

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

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

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

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

31-03-10

31-03-09 Dirhams

Dirhams

7. Trade and Other Receivables

Trade Debtors 149,602 682,899 Deposits 18,000 15,000

167,602 697,899

8. Prepayments

Rent 21,576 61,493 Trade Licence fees 756 1,134 Others Nil 633

Compass BPO FZE

82

22,332 63,260

9. Cash and Cash Equivalents

Cash 15,523 24,109 HSBC Bank Middle East 40,569 12,598

56,092 36,707

10. Trade and Other Payables, including Derivatives

Loan from Directors 60,795 69,421 Advance from Customers 26,120 102,911

* Due to Associates 39,716 34,280

126,631 206,612

* Due to Associates

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

39,716 34,280

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

11. Provisions

Bonus payable Nil 104,440 Professional charges 10,000 10,000 Maintenance Charges 43,168 9,437 Additional License Fee 66,828 Nil

119,996 123,877

31-03-10

31-03-09 Dirhams

Dirhams

12. Other Income

Foreign exchange gain (net) Nil 413,356

Compass BPO FZE

83

13. Administrative Expenses

Travelling expense 201,470 247,364 Rent 172,418 276,335 Communication Expenses 111,735 42,183 Office costs 84,221 17,030 Marketing expenses 39,173 77,355 Foreign exchange difference 17,735 Nil Loss on sale of asset 13,447 Nil Audit Fee 17,500 Nil Repairs and Maintenance 11,088 49,565 Electricity and Water 10,065 14,633 Legal & professional charges 6,000 10,000 Licence fee 6,378 10,048 Interest and Bank charges 5,483 5,734

696,713 750,247

14. Financial Risk Management Objectives & Policies

a) Credit Risk

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

b) Interest Rate Risk

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

c) Exchange Rate Risk

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

Compass BPO FZE

84

d) Liquidity Risk

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

Financial liabilities as at 31-03-2010 < 3 mths 3 - 12 mths 1 - 5 yrs Total Due to Associates Nil 39,716 Nil 39,716 Loan from Directors Nil 60,795 Nil 60,795 Advance from Customers 26,120 Nil Nil 26,120 Provisions 119,996 Nil Nil 119,996

Total 146,116 100,511 Nil 246,627

15. Fair Values of Financial Instruments

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


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

Salary paid to Directors Dhs. 975,514/-

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

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

For Compass BPO FZE Manager

Compass BPO Inc.

85

Profit & Loss Account for the period ended 31 March 2010

Particulars Amt($) Amt($) Particulars

Amt($) Amt($)

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

Salary 468,850

527,428 Revenue

1,135,919 1,416,001

Consultant Charges 320,832

474,056

Travel 107,389

104,610

Office Costs 89,062

92,008

Marketing 35,990

28,511

Audit Fees 9,270

-

Legal & Professional Fees 2,020

7,205

Insurance 9,432

10,060

Bad Debts -

34,664

Taxes & Fees 3,786

5,017

Depreciation 8,338

7,150

Bank Charges 710

1,609

Tax for the Year 24,200

43,536

Profit transferred to Balance Sheet 56,040

80,149

1,135,919

1,416,001

1,135,919 1,416,001

Compass BPO Inc.

86

Balance Sheet as at 31 March 2010

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

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

Capital Stock

100 100

Computer Equipment

Less: Depreciation 4,659

6,624

Amount owed to holding company

249,696

419,185

Accounts Payable 36,085

40,530 Office Equipments

Other Liabilities 10,629

54,998 Less: Depreciation

1,287 1,174

Provision for taxation 24,200

48,408

Furnitures & Fixtures

Retained Earning 165,302

109,261 Less: Depreciation

4,252 6,066

Bank 10,648

147,629

Debtors 448,010

465,088

Prepaid 17,156

45,901

486,012

672,482

486,012 672,482

Compass BPO Inc.

87

Schedule for Profit & Loss Account

Account Code Account Name Amount

$ 1 Salaries : Gross Salary (DM) 328,166 Gross Salary (JP) 164,111 Bonus (JP) 5,000 Bonus provn - 28,427 468,850

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

3 Audit Fees :

410-020 Audit Fees 9,270

4 Legal & Professional

Fees : 410-160 Legal & Professional Fees 2,020

Compass BPO Inc.

88

5 Travel Etc. : 400-090 Flights Charges 25,735 400-110 Conveyance Local 13,056 400-130 Hotel Accomodation 15,721 400-190 Trl & Liv Travel 49,131 600-090 Flights Charges - Direct 654 600-110 Conveyance Local - Direct 181 600-130 Hotel Accom - Direct 1,459 600-190 Trl & Liv Travel 1,452 107,389

6 Marketing : 400-140 Marketing Cost 27,764 410-040 Business Prom/Ent 7,834 410-420 Entertain - B'ness Dev 347 610-040 Business Prom/Ent 45 35,990 7 Revenue 300-010 Staff Charges 1,745,770 320-010 Consulting - IND 581,341 320-025 Consulting Fixed Price 123,066 320-040 Software Revenue 10,450 2,460,628 320-020 Consulting-US Consulting (DM) 52,035 Consulting (MEL) 79,624 Consulting (TERRI) 76,210 Consulting (VICKY) 119,910 Consulting (JOEL) 46,230 Consulting (CHERYL) 35,760 409,769 310-010 Other Income 213,180 310-020 P/L on FA - 3,288 310-030 Interest rec 1,340 211,233 3,081,629 Less: 400-020 CDIPL Charges-UK/US 1,871,861 Recharge 73,849 1,945,710 1,135,919

Compass BPO Inc.

89

8 Schedule for David's & Joel's Gross Salary

Gross Salary (DM)

Gross Salary (JP)

Month

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

478,127

Schedule for Balance Sheet

Account Code Account Name Amount $ 1 Debtors : 120-010 Debtors 448,010 250-015 Prov for Bad Debts - 448,010 2 Prepaid : 150-070 Prepaid Expenses 17,156 17,156 3 Other Liabilities : 150-040 Advance Account 7,320 150-105 Melinda Phillips Loan A/c (400) 240-060 Out.Liabilities for Exps 3,709 10,629

Compass Business Process Outsourcing Private Limited

90

DIRECTORS’ REPORT TO THE MEMBERS

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

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

Profit/(Loss) before Depreciation 231.09 191.48

Depreciation (88.64) (74.59)

Profit/(Loss) before Taxation 142.45 116.89

Provision for Taxation (8.85) (2.06)

Profit/(Loss) after Taxation 133.60 114.83

Loss Brought Forward (146.85) (261.68)

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

DIVIDEND

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

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

(i) That in the preparation of the annual accounts for the financial year ended 31.03.2010 the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of the affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period;

(iii) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(iv) That the Directors have prepared the accounts for the financial year ended 31.03.2010 on a ‘on going concern’ basis.


91

PARTICULARS OF CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION:

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

FOREIGN EXCHANGE Your company remains to be net foreign exchange earner for India (Rupees in Lacs) 31.03.2010 31.03.2009

Export Earnings for Service 2406.34 2551.54 Less: Expenses - Capital 8.54 23.49 - Others 24.74 29.07 Net Foreign Exchange Earning 2373.06 2498.98 PARTICULARS OF EMPLOYEES

There were no employees covered by the provisions of Section 217 (2A) of the Companies Act, 1956 read with companies (Particulars of Employees) Rules, 1975, whose particulars are required to be given. AUDITORS The Auditors of the Company M/s. KDS & Co., Chartered Accountants, Mumbai retire at the conclusion of ensuing Annual General Meeting and S. V. Ghatalia & Associate be appointed as Auditor for FY 2010-11. DEPOSITS The Company has not accepted any deposit during the financial year. ACKNOWLEDGEMENTS Your Directors thank Compass BPO Ltd., UK for their continuous support and guidance given to the Company. Your Directors are also thankful to the various Governments Agencies and Banks for their valuable support. The Directors also express their appreciation to all Employees, Staff and Shareholders of the Company. For and on behalf of the Board of

Compass Business Process Outsourcing Pvt. Ltd.

(Mr. Deepak Patel) DATE : 22/04/2010 Chairman PLACE: Mumbai


92

Aud itors' Report

To The Members o f Compass Bus iness Process Outsour cing Pr iv ate Limi ted 1 . We hav e audited the at tached Balance Sheet o f Compass Bus iness Proces s Outsourc ing

Pr ivate Limi ted (Th e Company) , as at 3 1 s t March 2010 and a lso the Profit and Loss Account for the year end ed on tha t da te annexed thereto . These Finan cial Statements ar e the re sponsib il i t y o f th e Co mpan y’ s Manag ement . Our respons ib il it y i s to expres s an op in ion on th ese Financ ia l Statements based on o ur audi t.

2 . We have conducted our aud it in accordance wi th Auditing Stand ards Gener al ly Accep ted in Ind ia . Those Standards r eq uire that we p lan and p er form th e aud it to ob tain reasonable assurance about whe ther the financial s tatemen ts are free of ma ter ial miss ta tement(s) . An audi t in cludes examining , on a tes t check b asi s, ev iden ce supporting the amoun ts and disc losures in th e Fin ancial Statements. An audit also includ es as sessing the account ing pr incip les used and s ign i fican t es t ima tes made b y management , as we ll as evaluat ing th e overal l financial s ta tement presen tat ion . We bel ieve tha t our audi t p rovides a reasonable basis for our op inion .

3 . We r ep or t that :

i. We hav e obtained a ll the in formation and explanat ions, which to the b es t o f our knowledge and b el ie f wer e necessar y for our audit;

ii . In our op in ion , p rop er books of account have b een k ept as required b y law so far as

i t ap pears fro m our examina tion of the b ooks; ii i . The Balance shee t and Profit & Loss Account deal t with b y th i s rep or t are in

agreement with the books of accounts ; iv. In our op in ion and to the b es t o f our in for mat ion, the Balance S hee t and the Profit

and Loss Account compl y wi th the Accoun ting Stand ards re fer red to in sect ion 211(3C) of th e Companies Act, 1 956 ;

v. On the bas is o f wr i tten represen ta tion rece ived from the d irectors of the co mpan y

for the year ended March 31 s t , 2010 and tak en on record b y the Board o f D ir ec tors , we r ep ort tha t no director is d isquali fi ed from being appoin ted as d ir ec tor of th e comp an y under clause (g) o f sub -sec tion (1 ) o f Section 2 74 of the Comp anies Act, 1956;

vi. In our op in ion and to the b es t o f our in formation and accord ing to the explana tions

given to us , the sa id accounts give the in formation requir ed b y the Comp anies Act, 1956 , in the manner so requir ed and g ive a true and fa ir view in conformit y with th e Accounting P rincip les g enera ll y accep ted in Ind ia:

(a) In the case of Balance S heet, o f the s tate of a ffai rs o f the Comp any as at 3 1 s t Mar ch,

2010;and (b) In the case o f the P rofi t & Loss Account , o f the Profit for the year ended on that

date .


93

4 . As requir ed b y th e Companies (Audi tor 's Report) Order , 2003 , as amend ed b y th e

Companies ( Audi tor ’s Rep ort) (Amendment) Order, 2004 , issued b y th e Central Governmen t of Ind ia in ter ms o f sub -sec tion (4 A) of s ect ion 227 of the Co mpanies Ac t, 1 956 we report hereunder on the ma tters speci fied in paragraphs 4 and 5 of the sa id O rder to the ex ten t app licab le to the co mpany.

i a) The Company has main tained p roper records to show fu l l part iculars , inc lud ing

quanti tative de ta ils and s i tuat ion o f i ts fix ed assets .

b ) All the fixed asset s o f the Comp an y have been ph ysica ll y ver i fi ed dur ing the

year b y the Man agement and no mater ial d iscrepancies have been no ticed on the ph ysica l ver i fi ca tion as con firmed b y the management .

c) Fix ed Assets di sp osed off dur ing the year were no t substan tial and therefore, do

not ef fect the going concern assu mption .

i i . The compan y is a s erv ice comp an y pr imar ily render ing back o ffice d ata process ing services . Accord ingl y it does no t hold an y physica l inven tor ies. Thus clau se 4( i i) o f th e comp anies ( Auditor s Rep or t) Order, 2 003 ( ‘the Order’ ) is not app licab le.

i i i . The Compan y has not t aken an y loan except inter es t free unsecured loan taken from

its share ho lder, which is out s tanding at the Ba lance S hee t date . The compan y has no t gran ted an y loans, s ecured or un secur ed to or fr om comp anies , firms or other part ies covered in the regi ster ma in tained und er S ection 301 o f th e Comp anies Act, 1956 .

iv. In our op inion and according to in formation and exp lanat ion g iven to us , ther e are adequate in terna l contro l p rocedures commen surate wi th the size o f the Company and the na ture of i ts b usiness for p urchase of fix ed asse ts and render ing of s erv ices . The ac tiv iti es o f th e compan y do not involve purchase of inventor y and the sa le o f goods. We have no t observed an y cont inuing fa ilure to correc t major weakness in the in ternal contro ls dur ing the cour se o f th e aud it .

v. In our op in ion and accord ing to in for mation and explanat ion g iven to us , the transac tions tha t need to b e enter ed in the r eg is ter in pursuance of S ect ion 301 of th e Companies Ac t 1956 have been en tered.

In our op in ion and accord ing to th e exp lanat ion given to us , th e transac tions made in pursuance of con tract or ar r ang emen t en tered in the reg is ter main tained und er Sect ion 301 of the Comp anies Act , 1956 and exceed ing value of Rupees Five Lakhs in resp ect o f an y part ies dur ing the yea r have been mad e at p r ices which are reasonab le , hav ing regard to the prevail ing mark et p r ice at relevant t ime. The comp an y is p rovid ing serv ices to i ts ho lding co mpan y, as explained to us , the tr ansac tion are made at th e contracted pr ice. Th e preva il ing mark et p rice is not freel y ascer tain able, consider ing the terms of contract and special ized nature of activ i ti es ; however in our op in ion


94

contracted ra te s are r easonab le having regard to the terms o f con tr ac t and nature o f the serv ices provided .

v i. The Compan y has not accepted an y dep osits from the p ublic and consequent ly, the direct ives i ssued b y the Reserv e Bank o f Ind ia, the provis ion o f the Sec tions 58A and 58 AA o f the Comp anies Act, 1956 and the ru les framed ther e under are no t applicab le.

v ii . In our op in ion, The Company has an In ternal Audi t sys tem however the s ame needs to be s tr ength en ed and coverage needs to be ex tended to make i t commensur ate w ith the s ize & nature of i ts b usiness .

v ii i . Accord ing to in format ion and exp lanat ion g iven to us , the Central Gov ernmen t has no t p rescr ibed the main tenance o f cost records under sect ion 2 09(1) (d) o f th e Companies Act , 1956 .

ix. Accord ing to the in for mat ion & explana tions g iven to us , and on the basi s o f our examinat ion of the books of accounts and o ther documents , The Comp an y i s gener ally regular in dep osi ting with ap propr iate au thor it ies und isputed s tatu tor y dues inc luding Provident Fund dues, In come Tax, Sales Tax , Cus toms Duty, Inv es tor Educa tion and Protect ion Fund , Weal th Tax and an y o ther mater ial st atutor y dues applicab le to i t .

Accord ing to the in for mat ion & exp lanat ion g iven to us , no undisp uted dues payable in r espec t o f Provident Fund , Income tax, Sales t ax , Weal th Tax, Serv ice Tax, Customs Duty, Excise Dut y and Cess wer e in arrear s, a s at 3 1 s t March 2010 for a per iod of mor e than s ix months from the da te they b ecame payab le .

Accord ing to the in formation & explan at ions given to us, there are no dues in respect o f Income Tax , Sales Tax, Wea lth Tax , S erv ice Tax , Cus toms Duty and Excis e D uty & Cess that h ave not been deposi ted wi th the approp riated au thor it ies on account o f an y d ispute wi th the Co mpan y.

x. In our op inion, in the curren t fin an cial year , the accumula ted los ses are no t more than fi fty p ercen t o f i ts n et wor th. The compan y has nei th er incurred an y cash losses in the curren t financial year nor in the immediatel y proceeding fin ancia l year .

xi. In our op inion and explan ation g iven to us the Compan y has not de faul ted in repayment of dues to a bank.

xii . The Comp an y has no t an y granted loans & advances on th e bas is o f secur i ty b y wa y of p ledge of shar es , debentures & other secur it i es . Accord ingly, clause 4(xi i) o f th e order is no t app licab le.

xii i . The Company is no t a Chi t Fund, Nidhi Mutual Benefi t Fund or a Soc iet y. Accordingl y, c lause 4(x ii i) o f the order is no t applicab le .

xiv . Accord ing to the in formation & explanat ions g iven to us , th e Compan y i s not dea ling or tr ad ing in sh ares , secur it ies , deb entur es & other inv es tments . Accord ingl y, clause 4(xiv) of the order is not app licab le.


95

xv. Accord ing to th e in for mat ion & explanat ions given to us , the Compan y has no t given an y guarantee for loans t ak en b y o thers from b anks or finan cial in st i tu tions. Accord ingly, clau se 4(xv) of the order is no t applicab le .

xvi. There i s no ter m loan outs tanding dur ing the curr en t financial year .

xviii . Accord ing to the in formation & explanat ions g iv en to u s and the overall examinat ion o f th e Balance Sheet o f the Company, we repor t that no funds raised on the shor t- t erm basis have been used for long- te rm inv es tments . No long -term fund s have been used to fin ance shor t- term assets except the permanent work ing cap i ta l .

xviii . Th e Company has no t made an y p re feren tial a llotment of the shar es to p ar ti es & companies cov ered in the reg is ter main tained under sect ion 301 of the Companies Ac t 1956 . Accord ingly, clause 4 (xv iii) o f the order is no t app licab le .

xix . Th e Compan y has no t issued an y deb entures . Accord ingl y, c lause 4 (x ix) of the order is not app licab le.

xx. The Compan y has no t rai sed an y mon ey b y public i ssu e dur ing the fin ancia l year. According , clause 4(xx) o f th e order i s no t ap plicab le.

xxi. Accord ing to the in formation & exp lanat ions to us , no fr aud on or b y the Co mpan y has b een not iced or rep orted dur ing the yea r.

xxii . The o th er clauses of the Companies (Auditor ’s Repor t) Order , 2003 are not ap plicab le to the Compan y fo r the financial year under audit .

For and on behalf o f KDS & Co.

Char tered Accoun tan ts K eta n D. Sa iya Par tner Membership No. 49176 Fir m Regn. No. – 117073 W Place : -Mumbai Dated : - 22nd April , 2010


96

BALANCE SHEET AS AT MARCH 31, 2010

Schedule 31.03.2010

31.03.2009

(Rs.)

(Rs.)

SOURCES OF FUNDS

Shareholders' Funds

Share Capital

1 17,431,000

17,431,000

Loan Funds

Secured Loans

2 637,140

75,324

Unsecured Loans

3 1,852,283

1,852,283

Total

19,920,423

19,358,607

APPLICATION OF FUNDS

Fixed Assets

4

Gross Block

56,331,620

63,732,756

Less : Depreciation

36,675,776

53,065,478

Net Block

19,655,844

10,667,278

Deffered Tax Asset

1,478,000

1,251,983

Current Assets, Loans and Advances

Sundry Debtors

5 1,334,632

3,908,736

Cash and Bank Balance

6 3,508,934

3,208,695

Loans and Advances

7 25,869,293

25,770,555

30,712,859

32,887,987

Less : Current Liabilities and Provisions

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

Provisions

9 4,309,510

3,211,900

33,250,751

40,133,569

Net Current Assets

(2,537,892)

(7,245,582)

Profit and Loss Account

1,324,471

14,684,928

Total 19,920,423

19,358,607

0


97

Significant Accounting Policies

13

- 0.25

and Notes on Accounts

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

This is the Balance Sheet referred to in our report of even date

Mr Deepak Patel Director

Ketan D. Saiya

Mr Manoj Kedia Director Partner

Membership No: 49176 For and on behalf of KDS

& Co Chartered Accountants

Firm Registration : 117073W Place: Mumbai

Place: Mumbai

Date : 22nd April 2010



98

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

2009-10 2008-2009

Schedule (Rs.) (Rs.)

INCOME

Income from Services

240,634,675 255,153,974

Other Income

10 288,847 703,269

Total Income

240,923,522 255,857,243

EXPENDITURE

Personnel Costs

11 140,669,881 154,343,417 Operating, Administration and other expenses 12 77,104,319 82,233,511 Interest

39,334 132,320

Depreciation

8,864,548 7,458,717

226,678,082 244,167,965

Profit /(Loss) before Taxation

14,245,440 11,689,278

Taxation Current

1,111,000 -

Deffered

(226,017) (474,054)

Fringe Benefit Tax

- 679,800

Profit /(Loss) After Taxation

13,360,457 11,483,532

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

Balance carried forward to the Balance Sheet

(1,324,471) (14,684,928)

Earnings Per Share ( Basic and Diluted)

17.83

15.12

Significant Accounting Policies

13

and Notes on Accounts

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


99

This is the Profit and Loss Account referred

to in our report of even date

Mr Deepak Patel Director

Ketan D. Saiya

Mr Manoj Kedia Director Partner

Membership No: 49176

For and on behalf of

KDS & Co


Firm Registration : 117073W

Place: Mumbai

Place: Mumbai




100

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

SCHEDULE 1

SHARE CAPITAL

31.03.2010 31.03.2009

Authorised

(Rs.) (Rs.)

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

7,000,000 7,000,000

1,05,000 Preference Shares of Rs 100/- each

10,500,000 10,500,000

TOTAL 17,500,000 17,500,000

Issued,Subscribed and Paid-up

31.03.2010

31.03.2009

(Rs.) (Rs.)

6,93,100 Equity Shares of Rs. 10/- each fully paid

6,931,000 6,931,000

1,05,000 Preference Shares of Rs 100/- each fully paid

10,500,000 10,500,000

TOTAL 17,431,000 17,431,000

Notes:

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

Compass BPO Limited, UK

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

consideration other than cash.

3. Preference Shares carry dividend of 10% and are redeemable at par in one installment at any

time before 10 years from 27th March 2000, the date of allotment.

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

BPO Limited, UK.

SCHEDULE 2

SECURED LOANS

31.03.2010 31.03.2009

(a) Loans from Bank

(Rs.) (Rs.)

Cash Credit from IDBI Bank Limited (Note 1 & 2)

637,140 75,324

Total Secured Loans

637,140 75,324


101

Notes:

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

other receivables.

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

BPO Limited, UK.

SCHEDULE 3

UNSECURED LOANS

31.03.2010 31.03.2009

(Rs.) (Rs.)

Interest free loan from Shareholder

1,852,283 1,852,283

SCHEDULE 4

FIXED ASSETS

Particulars

Gross Block Depreciation Net Block

As on Additions / Adj. Disposals As on As on Disposals For the As on As on As on

1-Apr-09 during the

during the 31-Mar-10 1-Apr-09

during the Year

31-Mar-10

31-Mar-10

31-Mar-09

Year Year Year

Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees

Computers

47,403,947

553,898

15,477,416

32,480,429

39,505,268

15,046,734

4,666,133

29,124,667

3,355,762

7,898,679

Office Equipment

6,597,690

8,637,418

4,200,312

11,034,796

5,886,726

4,167,262

1,571,430

3,290,894

7,743,902

710,964

Vehicles

3,046,005

-

493,584

2,552,421

1,886,487

493,586

604,967

1,997,868

554,553

1,159,518

Furniture and Fixtures

6,685,114

6,847,922

5,893,052

7,639,984

5,786,997

5,546,669

1,803,353

2,043,681

5,596,303

898,117

Electrical Fittings

-

2,623,990

-

2,623,990

-

-

218,666

218,666

2,405,324

-

TOTAL

63,732,756

18,663,228

26,064,364

56,331,620

53,065,478

25,254,252

8,864,548

36,675,776

19,655,844

10,667,278

Previous Year

59,417,895

4,636,958

322,097

63,732,756

45,928,858

322,097

7,458,717

53,065,478

10,667,278

- SCHEDULE 5

31.03.2010 31.03.2009

SUNDRY DEBTORS

(Rs.) (Rs.)

Debts outstanding for less than six months

TOTAL 1,334,632 3,908,736

(Unsecured Considered Good)

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

company Compass BPO Limited, UK


102

SCHEDULE 6

CASH AND BANK BALANCES

31.03.2010 31.03.2009

(Rs.) (Rs.)

Cash on hand (including Foreign currency on hand)

154,152 132,186

Balance with Scheduled Banks

On Current Account

21,574 37,884

Fixed Deposits

2,849,000 2,609,000

Interest Accrued on Fixed Deposits

49,413 74,243

Balance with Non-Scheduled Bank

HSBC Bank - on Current Account

332,557 240,112

- on Fixed Deposit

100,000 100,000

- Interest Accrued on Fixed Deposit

2,238 15,271

3,508,934 3,208,695

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

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

of customs authorities.

SCHEDULE 7

LOANS AND ADVANCES

31.03.2010 31.03.2009

(Unsecured, considered good)

(Rs.) (Rs.)

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

Deposits

9,794,648 9,944,650

Due from fellow subsidiary Compass BPO FZE, UAE.

487,047 487,047

TOTAL 25,869,293 25,770,555

SCHEDULE 8

CURRENT LIABILITIES

31.03.2010 31.03.2009

(Rs.) (Rs.)

Creditors for Expenses

6,167,244 10,256,258

Creditors for Capital Goods*

9,418,710 9,408,537

Due To Holding Company, Compass BPO Ltd, UK

1,687,594 5,219,749

Other Liabilities 11,667,693 12,037,125

TOTAL 28,941,241 36,921,669

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


103

SCHEDULE 9 PROVISIONS

31.03.2010 31.03.2009

(Rs.) (Rs.)

Provision for Taxation

2,590,800 1,479,800

Provision for Provident Fund Contribution

442,409 480,490

Provision for Gratuity

1,276,301 1,251,610

TOTAL 4,309,510 3,211,900

SCHEDULE 10

31.03.2010 31.03.2009

OTHER INCOME

(Rs.) (Rs.)

Interest Received on Fixed Deposit with Bank

202,583 44,090

(Tax deducted 34640/- (Last Year 6074)

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

Profit on sale of assets (Net)

29,502 40,420

Interest on Income Tax refund

- 439

Miscelleaneous Income

5,111 -

Foreign Exchange Gain (Loss) - Net

- 549,840

TOTAL 288,847 703,269

SCHEDULE 11

31.03.2010 31.03.2009

PERSONNEL COSTS

(Rs.) (Rs.)

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

Contribution to Provident and Other Funds 5,576,148 5,960,440

Staff Welfare 2,489,446 3,613,409

Staff Training Expenses 972,625 1,734,774

Administration Charges for Provident Fund 699,850 680,763

Gratuity 1,276,301 1,251,610

TOTAL 140,669,881 154,343,417

SCHEDULE 12

31.03.2010 31.03.2009

OPERATING, ADMINISTRATION AND OTHER EXPENSES

(Rs.) (Rs.)

Rent

22,147,603 23,931,133

Rates & Taxes

46,012 58,524

Office Expenses

217,694 113,986

Electricity & Water Charges

10,971,011 11,317,575


104

Travelling Expenses

3,369,738 5,248,163

Conveyance Expenses

4,474,930 5,204,182

Printing and Stationery

924,696 1,104,005

Telephone Charges

1,175,959 1,596,930

Communication Cost

7,002,939 7,278,518

Payment to Auditors

Statutory Audit Fees

275,000 225,000

Management Audit Fees

150,000 -

Tax Audit Fees

50,000 25,000

Taxation Matters

25,000 69,738

Other Services

219,323 73,033

Computer & Software Expenses

9,862,351 7,992,269

Legal and Professional Charges

3,640,396 7,650,527

Car Expenses

523,636 507,014

Business Promotion/Entertainment

112,107 258,779

Repairs & Maintenance

7,725,519 8,416,857

ROC and Stamp Duty Charges

2,500 9,920

Insurance Expenses

821,854 727,746

STPI Annual Charges

585,000 200,000

Bank Charges

235,974 224,613

Foreign Exchange Gain (Loss) - Net

2,545,077 -

TOTAL 77,104,319 82,233,511

Minacs Kft.

105

Unaudited Balance Sheet As at 31st March, 2010

March 31 2010

March 31 2009

HUF INR/Cr

HUF INR/Cr

Sources of Funds I Shareholders' funds

Share capital 3,000,000 0.07

3,000,000

0.07

Retained earnings 69,544,015 1.63

54,892,850

1.27

Exchange fluctuation on FX translation - (0.05)

-

(0.05)

72,544,015 1.65

57,892,850

1.29

II Loan Funds - -

- -

Total 72,544,015 1.65

57,892,850

1.29

Application of Funds

I Fixed Assets

Property, plant and equipment, net 166,354 0.00

- -

Deferred development costs 134,936 0.00

- -

301,290 0.01

- -

II Current assets

Cash and cash equivalents 84,120,524 1.92

18,446,838

0.41

Accounts receivable 97,421,621 2.22

101,797,475

2.27

Prepaid expenses 1,425,968 0.03

1,143,245

0.03

Other Receivables 13,759,783 0.31

16,683,599

0.37

196,727,895 4.48

138,071,157

3.07

Less Liabilities

Accounts payable and accrued liabilities 10,742,265 0.24

11,949,196

0.27

Due to Inter-Companies 113,742,906 2.59

68,229,111

1.52

Total 124,485,170 2.84

80,178,307

1.78

72,242,725 1.65

57,892,850

1.29

Total 72,544,015 1.65

57,892,850

1.29

Notes

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

0.2226

Minacs Kft.

106

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

April 1 2009

March 31 2010

April 1 2009

March 31 2010

April 1 2008 March 31

2009

April 1 2008 to

March 31 2009

HUF INR/Cr

HUF INR/Cr

Revenues

401,959,291

9.91

402,552,405

10.27

Expenditure

Labour & Employee Related Remuneration

173,385,630

4.28

193,368,826

4.93

Payroll Related

61,359,280

1.51

71,893,567

1.83

Group Insurance

780,006

0.02

943,500

0.02

Telecommunications

500,990

0.01

668,133

0.02

Training and seminars

2,568,498

0.06

3,488,418

0.09

Other dierct costs

32,373,811

0.80

15,937,937

0.41

Total

270,968,215

6.68

286,300,381

7.30

Gross profit

130,991,076

3.23

116,252,024

2.97

Selling, general and administrative expenses

Professional Services

7,300,170

0.18

12,615,539

0.32

Recruiting

225,294

0.01

931,408

0.02

Office Cost

537,987

0.01

480,841

0.01

Other General and Admin

6,331,476

0.16

4,212,918

0.11

Total

14,394,927

0.35

18,240,706

0.47

Earnings before interest expense, income

taxes, depreciation and amortization 116,596,149

2.88

98,011,318

2.50

Depreciation and amortization

-

-

7,746

0.00

Interest and financing expenses

1,781,984

0.04

14,518,411

0.37

Management fee

90,072,000

2.22

63,550,000

1.62

Income (loss) before income taxes

24,742,165

0.61

19,935,161

0.51

Minacs Kft.

107

Provision for (recovery of) income taxes

Current

10,091,000

0.25

9,398,000

0.24

Future

-

-

- -

10,091,000

0.25

9,398,000

0.23

Net income (loss) for the period 14,651,165

0.36

10,537,161

0.28

Earnings/('Deficit), beginning of period

54,892,850

1.27

44,355,689

0.99

Retained earnings, end of period

69,544,015

1.63

54,892,850

1.27

Notes Average FE Conversion Rate for HUF to INR

for the Financial Year

0.2466

0.2552

Minacs Kft.

108

Notes to Financial Statements as of March 31, 2010 I. General information

1. Business name: The name of the Company In Hungarian: MINACS Telefoninformációs Szolgáltatások Kft In English: MINACS Call Center Services Limited Tax registration number: 1311764974-2-41 The abbreviated name of the Company in Hungarian: MINACS Kft. The abbreviated name of the Company in English: MINACS Ltd. Seat: Hungary 1114 Budapest, Ulaszlo Street 27. The registered headquarter of the company: Hungary 1138 Budapest, Váci út 169.

2. The FORM OF THE COMPANY: Limited Liability Company

The company was established in 2003 by the following owners: MINACS Worldwide GmbH 96,66 % Julius Minacs 3,33 %

The Company’s share capital is THUF 3.000, which exclusively consists cash deposits. The amount of it hasn’t changed compared to the last year.

The managing director of the Company: Paul Lonford Niewoehner

US-6115 Waterford, Grace K. DR. MI 48329-1328 The Company’s representation, registration:

The executives are entitled to register and represent the Company independently; the managers appointed by the General meeting are jointly entitled.

The Company’s present owners: Member Nominal Value THUF

MINACS Worldwide GmbH 2.900.000 HUF Julius Minacs 100.000 HUF The MINACS Ltd. is going to consolidate by the Minacs Worldwide GmbH. The consolidated report can be seen at the seat of the Company.

Minacs Kft.

109

THE COMPANY’S ACTIVITIES INCLUDE: 82.20 Call center activities – main activity 62.02 Computer consultancy activities 63.11 Data processing hosting and related activities 58.12 Publishing of directories and mailing lists 62.09 Other information tec and service activities 73.20 Market research and public opinion polling 70.22 Business and management consulting 82.99 Other business support services The Company is only pursuing authorised activities owning the administrative license. Other: The financial year of the Company differs from the calendar year. The statement date is March 31, 2010. The date of the preparation of the annual report is April 10, 2010. Under the principle of completeness, the annual report includes those business activities which happened between the year end and the date of report preparation, and could affect the financial figures in the balance sheet and the profit & loss. The form of the financial statement The Company prepares a simplified annual report, accordingly it keeps double entry. The Company prepares an ‘A’ type annual financial statement, with the so called balance-like arrangement. The company prepares its profit and loss statement by the ‘A’ method, the cost summary method. It has formed its inner registrations, sub ledger and chart of accounts, and their joining points in accordance with it. The data of the annual report are expressed in thousand HUF, if not indicated otherwise. II. MAJOR ELEMENTS OF THE ACCOUNTING POLICY The Company performs its activity in compliance with the regulations of the accounting law. The Company has established its policy for cash treatment, inventory taking, and asset and liability valuation in accordance with the accounting law. The Company’s Accounting Policy has set out that under the principle of going concern the enforcement of (the principle of integrity, authenticity, transparency, comparison, continuity, consistence, prudence, gross accounting, individual valuation, accrual and deferral, priority of content over form, materiality and comparison of cost and profit) should be ensured. It is considered to be a significant error if in the year of revealing the error during different checks considering a given business year (separately each year), the value of the revealed errors and margins of error (independent of indication), increasing – decreasing profit and equity, the joint amount is above the 1% of the gross sum. It is considered an error influencing true and fair picture to a great extent if the contracted value of the errors and margins significantly alters the equity. It is considered to be such an error in all cases when following the settling out there is more than 20% change in the equity reported in the balance sheet of the previous financial year. In the case of the year-end assets and liabilities incurred in foreign currency or exchange are going to be revaluated irrespective of the amount according to published exchange rates of the HNB.

Minacs Kft.

110

Evaluation of the assets in the financial statement 1/ Intangible assets Intangible assets are disclosed at purchase or production value, reduced by accumulated depreciation, and at a value not exceeding their known market value. The calculation of depreciation is to be performed on a straight-line basis, by the application of the depreciation rates required for writing-off the intangible assets over a period equal to the expected useful life of the assets. The expected useful life of the intangible assets by categories: Rights representing value 7 years Software 3 years 2/ Tangible assets Tangible assets are disclosed in the balance sheet at purchase or production value, reduced by accumulated deprecation. The calculation of deprecation is performed on a straight line basis, by the application of the deprecation rates required for the writing off of the tangible assets over a period equal to the expected useful life of the assets: Land and buildings 20 years Technical equipment, machinery 3-7 years Other equipment 5-7 years 3/ Financial investments Investments representing ownership share in economic associations are disclosed at purchased price in the case of acquisition, while in the case of establishment at the value set out in the Articles of Association, until their market value does not permanently decrease below book value. In this case they are valued at the market value known as the date of preparation of the balance sheet. 4/ Recognition of transactions in foreign currency Transactions in foreign currency are accounted at the exchange rate of MNB as the date of the transaction. The exchange gain or loss arising from the difference between the exchange rate as at the date of the financial fulfilment and the transaction are disclosed in the profit and loss statement. 5/ Sales revenue Net sales revenues are accounted as at the date of fulfillment, and are exclusively of VAT. 6/ Corporate tax The corporate tax liability of the Company is accounted in the profit and loss statement on the basis of the regulations in the reported year. 7/ Changes in the Company’s accounting policy The Company’s accounting policy did not change during the year.

Minacs Kft.

111

III. FINANCIAL POSITION AND LIQUIDITY There has been no such event since the date of the balance sheet, which would have a material impact on the Company’s financial statement as at 31 March, 2010. The liquidity of the Company was during the financial year insured. IV. Notes to Balance Sheet as at March 31st, 2010


2010

April 1 2009

March 31 2010

April 1 2008 March 31 2009

April 1 2008 to

March 31 2009

HUF INR/Cr

HUF INR/Cr

1 Equity Share capital 3,000,000 0.07

3,000,000 0.07

2 Accumulated profit reserve

Balance at beginning of the year 54,892,850

1.27

44,355,689 0.99

Profits during the year from P&L 14,651,165

0.36

10,537,161 0.28

Balance at the end of the year 69,544,015 1.63 54,892,850 1.27

3 Liquid assets

Commerzbank Hungary

83,147,371

1.89

18,377,616 0.41

Petty cash 973,153

0.02

69,222 0.00

Total: 84,120,524 1.92 18,446,838 0.41

4 Receivables

Trade Receivables 97,421,621

2.22

101,752,475 2.27

Employee Advances Receivables - - 45,000 0.00

Total: 97,421,621 2.22 101,797,475 2.27

5 Other Receivable

Value added tax 12,267,783

0.28

16,003,513 0.36

Income & Other Taxes Payable 1,492,000

0.03

680,086 0.02

Total: 13,759,783 0.31 16,683,599 0.37

6 Liabilities

Current Liabilities

Trade Creditors

371,861

0.01

(696,215)

(0.02)

Accruals - General

1,000,370

0.02

2,551,950

0.06

Accruals - Payroll

9,370,034

0.21

10,093,461

0.22

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

Minacs Kft.

112

7 Due to Inter Company

Due to GmbH Germany

32,345

0.00

26,646,254

0.59

Due to MXW Canada

112,123,337

2.56

15,732,057

0.35

Due to Minacs UK

1,587,223

0.04

25,850,800

0.58

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

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


2010

April 1 2009

March 31 2010

April 1 2008 March 31 2009

April 1 2008 to

March 31 2009

HUF INR/Cr

HUF INR/Cr

1 Labour & Employee Related Remuneration

Regular Wages Paid 169,865,267

4.19

188,885,390

4.82

Sick Pay 3,520,363

0.09

4,483,436

0.11

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

2 Payroll Related

Payroll Taxes Direct 13,149,007

0.32

15,677,128

0.40

Medicare (US) 48,210,273

1.19

56,216,439

1.43

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

3 Other Costs

Travel - Direct Cost 8,053,014

0.20

11,444,930

0.29

Project Disbursements 24,320,797

0.60

4,493,007

0.11

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

4 Professional Services

Accounting Fees 6,922,255

0.17 11,009,953

0.28

Corporate Legal Fees 377,915

0.01

1,605,586

0.04

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

5 Office Cost

Office Supplies & Minor Equipment 319,801

0.01

409,224

0.01

Minacs Kft.

113

Other Supplies 202,476

0.00

44,680

0.00

Postage 15,710

0.00

26,937

0.00

537,987 0.01 480,841 0.01

6 Other General and Admin Cost

Non-Cash Incentives - Indirect - -

8,130

0.00

Other SG&A 6,319,280

0.16

4,186,785

0.10

Penalty and Fine Charges 12,196

0.00

18,003

0.00

6,331,476 0.16 4,212,918 0.10

7 Interest and financing expenses

Bank Service Charges 785,504

0.02

1,737,862

0.04

Foreign Currency Unrealised Gain 2,867

0.00

12,771,715

0.33

Foreign Currency realised Gain 1,229,518

0.03

153,096

0.00

Other Interest Expenses

(235,905)

(0.01)

(144,262)

(0.00)

1,781,984 0.04 14,518,411 0.37

8 Provision for (recovery of) income taxes

Current Income Tax 2,056,000

0.05

1,057,000

0.03

State Tax 8,035,000

0.20

8,341,000

0.21

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

Minacs Limited

114


Notes As At 31st March 2010

As At 31st March 2009

£ INR/Cr

£ INR/Cr

I Sources of Funds

Shareholders' funds Called up share capital 4 1,000 0.01

1,000 0.01

Profit and loss account

267,698 2.04

183,796 1.45

Exchange fluctuation on Translation

(0.23)

(0.09)

268,698 1.82 # 184,796 1.37

Loan Funds

- -

- -

Total

268,698 1.82

184,796 1.37

II Application of Funds

Fixed assets

- -

- -

Investments 5 15,277 0.10

15,277 0.11

Current assets

Debtors 6 707,809 4.80

942,614 6.99

Cash at bank and in hand 146,936 1.00 141,644 1.05

854,745 5.80

1,084,258 8.04

Less Current liabilities 7 (601,324) (4.08)

(914,739) (6.78)

Net Current Assets

253,421 1.72

169,519 1.26

Total

268,698 1.82

184,796 1.37

Notes:

See accompanying notes to the financial statements

FE Conversion Rate for GBP to INR as at year end

67.87

74.16

Place: Toronto

Deepak Patel

Date: April 23, 2010

CEO

Minacs Limited

115

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

Year ended 31/03/2010

Year ended 31/03/2009

£ INR/Cr

£ INR/Cr

Sales 2,392,193 18.23

2,355,259 18.64 Total 2,392,193 18.23

2,355,259 18.64

Direct costs Wages and salaries 1,574,508 12.00

1,584,086 12.54

Employer's NI contributions 152,017 1.16

162,570 1.29 Staff pension scheme costs 10,127 0.08

10,998 0.09

Placement & interview expenses 3,800 0.03 8,839 0.07 Staff training 1,168 0.01

5,622 0.04

Travel expenses 27,035 0.21

55,924 0.44 Health & safety costs 1,676 0.01

1,938 0.02

Total 1,770,332 13.49

1,829,976 14.48 Gross profit 621,862 4.74

525,283 4.16

Administration Wages and salaries 244,300 1.86

270,268 2.14

Rent payable 29,100 0.22

10,150 0.08 Printing, postage and stationery 4,539 0.03 2,586 0.02 Telephone 3,602 0.03

7,193 0.06

Motor vehicle leasing - -

1,774 0.01 Entertaining 2,443 0.02

1,144 0.01

Legal and professional 5,430 0.04

9,475 0.07 Accountancy 38,210 0.29

44,390 0.35

Audit 6,000 0.05

6,000 0.05 Bank charges 9 0.00 262 0.00 Exchange rate (gain)/loss 639 0.00

(59,276) (0.47)

Payroll services 6,000 0.05

6,500 0.05 General expenses (240,918) (1.84)

(238,219) (1.89)

Recruitment costs - -

603 0.00 Subscriptions 4,681 0.04

1,044 0.01

Management Charges 401,500 3.06

375,000 2.97

505,534 3.85

438,894 3.47

Financial Other operating income (142) (0.00)

(6,514) (0.05)

(142) (0.00)

(6,514) (0.05)

Total expenses 505,392 3.85

432,380 3.42 Net profit/(loss) before taxation 116,470 0.89

92,903 0.74

Less :Corporation tax based on profits for the period (32,567) (0.25)

(26,106) (0.21)

Net Profits/(Loss) for the year 83,902 0.64

66,798 0.53 Balance brought forward 183,796 1.40

116,998 0.93

Minacs Limited

116

Balance carried forward 267,698 2.04

183,796 1.45

Notes Please see accompanying notes to the financials

FE Conversion Rate for GBP to INR for the Financial Year

76.1983

79.1328

Place: Toronto

Deepak Patel


CEO

Minacs Limited

117

1. Accounting policies

1.1. Accounting convention The financial statements are prepared under the historical cost convention and in accordance with applicable accounting standards, and in accordance with the Financial Reporting Standard for Smaller Entities (effective April 2008).

1.2. Turnover Turnover represents the total invoice value of sales made during the year stated net of value added tax.

1.3. Leasing Rentals payable under operating leases are charged against income on a straight line basis over the lease term.

1.4. Investments Fixed asset investments are stated at cost less provision for permanent diminution in value. 1.5. Pensions The pension costs charged in the financial statements represent the contribution payable by the company

during the period. The regular cost of providing retirement pensions and related benefits is charged to the profit and loss

account over the employees' service lives on the basis of a constant percentage of earnings. 1.6. Foreign currencies

Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange prevailing at the accounting date. Transactions in foreign currencies are recorded at the date of the transactions. All differences are taken to the Profit and Loss account

1.7. Group accounts The company is entitled to the exemption under Section 398 of the Companies Act 2006 from the obligation

to prepare group accounts. 2. Turnover

The total turnover of the company for the year has been derived from its principal activity wholly undertaken in the UK and Ireland.

3. Pension costs The company operates a defined contribution pension scheme in respect of the employees. The Scheme and its assets are held by independent managers. The pension charge represents contributions due from the company and amounted to £10,127; INR 0.8 mn (Previous Year £10,998 ; INR 0.9 Mn )

Minacs Limited

118

4 Share capital As At 31st March 2010

As At 31st March 2009

£ INR/Cr

£ INR/Cr

Authorised

1000 Ordinary shares of £1 each

1,000

0.01

1,000

0.01

Allotted, called up and fully paid


1,000

0.01

1,000

0.01

Equity Shares


1,000

0.01

1,000

0.01

5 Investments in Subsidiary undertakings

Cost of Shares

Opening balance

15,277

0.10

15,277

0.11

Additions/(deletions during the year)

-

-

-

-

Closing Balance

15,277

0.10

15,277

0.11

Net book Values

Opening balance

15,277

0.10

15,277

0.11

Additions/(deletions during the year)

-

-

-

-

Closing Balance

15,277

0.10

15,277

0.11

Holdings of 20% or more

The company holds 20% or more of the share capital of the following companies:

Subsidiary undertaking

Minacs Worldwide GmbH


Country of Registration Germany

Germany

Nature of Business Provider of Outsourced solutions Provider of Outsouced solutions

Class of Shares held Euro Share

Euro Share

Proportion of shares held 100%

100%

Minacs Limited

119

6 Debtors Trade Debtors 700,210 4.75

697,316 5.17

Amounts owed by group undertakings 5,104 0.03

148,182 1.10

Other debtors 1,126 0.01

82,355 0.61

Prepayments and accrued income 1,369 0.01

14,761 0.11

707,809 4.80

942,614 6.99

7 Current lilabilites

Amount falling due within one year

Trade Creditors 5,923 0.04

12,188 0.09

Amounts owed by group undertakings 359,437 2.44

705,009 5.23

Corporation Tax 32,651 0.22

26,080 0.19

Other taxes and social security costs 153,452 1.04

151,022 1.12

Accruals and deferred income 49,861 0.34

20,440 0.15

601,324 4.08

914,739 6.78

Year ended 31st March 2010

Year ended 31st March 2009

£ INR/Cr

£ INR/Cr

8 Operating profit / (loss)

Operating profit/(loss) is stated after charging: Auditors' remuneration 6,000 0.05

6,000 0.05

Pension Costs 10,127 0.08

10,998 0.09

9 Tax on profit/ (loss) on ordinary activities

Analysis of charge in period

Current Tax UK corporation tax 32,567 0.25

26,106 0.21

10 Related Party Transactions

Sales to

Minacs Kft, Hungary 61,887 0.47

50,662 0.40

Minacs GmbH, Germany 3,155 0.02 46,993 0.37

Reimbursement of Expenses/Fees

Minacs GmbH, Germany 70,031 0.53

51,906 0.41

Miancs Worldwide Inc, Canada 160,582 1.22

245,888 1.95

Receivables from

Minacs Kft, Hungary 5,104 0.03

76,659 0.57

Minacs GmbH, Germany (8,846) (0.06)

71,523 0.53

(3,742) (0.03)

148,182 1.10

Payable to

Minacs Limited

120

Minacs Worldwide Inc, Canada 359,437 2.44

705,009 5.23

11 Ultimate Parent Undertaking

The Company is wholly owned subsidiary of Minacs Worldwide Inc, a company incorporated in Canada. The ultimate parent Company is Aditya Birla Nuvo Limited, a Company incorporated in India.

Minacs Worldwide S A De C V

121

Balance Sheet

As at March 31 2010

As at March 31 2009

Pesos INR/ Cr

Pesos INR/Cr

I Sources of Funds

Shareholders' funds

Share capital

Shares issued 50,000 0.02

50,000 0.02

Cumulative translation adjustment -

-

Deficit (50,000) (0.02)

(50,000) (0.02)

- -

- -

Debt - -

- -

Total - -

- -

II Application of Funds

Fixed Assets - -

- -

Current assets

Cash and cash equivalents - -

- -

Accounts receivable - -

- -

Prepaid expenses - -

- -

- -

- -

Less Current liabilities - -

- -

Bank Indebtedness - -

- -

Other liabilities - -

- -

Net current Assets - -

- -

Total - -

- -

See accompanying notes to the financial statements.

Note

Conversion rate for Pesos to INR

3.62

3.62


122

Statements of Operations and Deficit

Year ended March 31 2010

Year ended March 31 2009

Pesos INR/ Cr

Pesos INR/Cr

Revenues

- -

- -

Direct expenses

- -

- -

Selling, general and administrative expenses

- - - -

Earnings before interest expense, income taxes, depreciation and amortization

- -

- -

Depreciation and amortization

- -

- -

Interest and financing expenses

- -

- -

Provision for (recovery of) income taxes

- -

- -

Net income (loss) for the period

- -

- -

Deficit, beginning of period

(50,000)

(0.02)

(50,000)

(0.02)

Deficit, end of period

(50,000)

(0.02)

(50,000)

(0.02)

Note

Conversion rate for Pesos to INR at 31 March, 2010

3.619

3.620


123

Notes to Financial Statements MARCH 31, 2010

1 NATURE OF BUSINESS Minacs Worldwide SA de CV (the “Company” or “Minacs Mexico”) is a provider of business process outsourcing (“BPO”) solutions. The Company is a subsidiary of Minacs Worldwide Inc. (“Minacs”). Minacs Mexico is an inactive subsidiary. 2 SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of these financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates. Revenue Recognition The Company derives revenues through the provision of direct resources to its customers and consulting arrangements. Payment terms may vary by contract. The Company recognizes revenues at the time services are performed and when the price is fixed or determinable and collection is reasonably assured. The majority of revenues are recognized based on the billable hours or minutes rendered as defined in the client contract. The rate per billable hour or minute charged is based on a predetermined contractual rate as agreed in the underlying contract. This contractual rate fluctuates based on the Company’s performance against certain predetermined criteria related to quality and performance. Some clients are entitled to penalties when the Company is not in compliance with certain obligations as defined in the client contract. Such penalties are recorded as a reduction of revenues as incurred based on a measurement of the Company’s obligation under the terms of the client contract. For some contracts the Company is paid by its customer based on achievement of certain level of revenues or other client-determined criteria specified in the client contract such as full time equivalents, units processed or completed contacts. The Company recognizes this performance-based revenue by measuring its actual results against the performance criteria specified in the contracts. The Company classifies reimbursements received from customers for out-of-pocket expenditures as revenues. The Company incurs out-of-pocket expenditures such as expenses related to travel, postage and telecommunications costs for which customers have agreed to reimburse Minacs. The corresponding cost associated with this revenue is recorded within direct expenses. Some customers agree to reimburse the Company for initial training and recruiting costs over a specified period of time. The revenue for these costs are recorded over the period of time stipulated within the contract with a corresponding cost recorded within direct expenses. Income Taxes The Company follows the liability method of accounting for income taxes. Under this method, future tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities, and are measured using substantively enacted tax rates and laws that are expected to be


124

in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce future income tax assets to the estimated amount that is more likely than not to be realized. Foreign Exchange Translation Assets and liabilities are translated using the exchange rate in effect at the balance sheet date and revenues and expenses are translated at the average rate of the month the transaction is recorded. Cash and Cash Equivalents Cash and cash equivalents consist of unrestricted cash and short-term deposits having an initial maturity of three months or less. 3 SHARE CAPITAL

2010 2009 Pesos INR/Cr Pesos INR/Cr Common shares 50,000 0.02 50,000 0.02 50,000 0.02 50,000 0.02

Authorized Share Capital The Company is authorized to issue an unlimited number of common shares.


125

Unaudited Balance Sheet As at 31st March, 2010

31.03.2010 31.03.2010

31.03.2009 31.03.2009

€ INR/Cr

€ INR/Cr

Sources of Funds I Shareholders’ funds

1. Share capital authorized and fully paid in 25,000 0.15

25,000 0.17

2. Profit carried forward 1,783,414 11.85

1,445,595 9.66

3. Profit current year 310,833 2.04

337,819 2.19

4. Exchange fluctuations on conversion - (0.96)

- 0.07

Total equity 2,119,247 13.08

1,808,414 12.08

II Loan Funds - -

- -

2,119,247 13.08

1,808,414 12.08

Application of Funds I Fixed assets

1. EDP software 998 0.01

569 0.00

2. Leasehold improvements 12,553 0.08

12,553 0.08

3. Furniture and equipment 27,422 0.17

20,297 0.14

4. Office equipment 37,980 0.23

36,181 0.24

5. Deferred Development Costs 2,442 0.02

- -

Gross block 81,395 0.50

69,600 0.46

6. Accumulated depreciation (61,114) (0.38)

(53,738) (0.36)

Total Net Block 20,281 0.13

15,863 0.11

II Investments

1. Investments in Subsidiary Company - Hungary 11,050 0.07

11,050 0.07

III Current assets

1. Cash at bank and on hand 166,461 1.03

102,409 0.68

2. Accounts receivable 1,752,586 10.82

1,997,877 13.35

3. Intercompany receivables 499,957 3.09

143,340 0.96

4. Prepaid expenses 42,249 0.26

45,519 0.30

5. Other assets 2,500 0.02

400 0.00

Total current assets 2,463,753 15.21 2,289,546 15.29

Less Liabilities

1. Accounts payable 3,219 0.02

10,494 0.07

2. Intercompany payables - -

77,243 0.52

3. Accrued expenses 368,169 2.27

458,080 3.06

4. Other liabilities 4,449 0.03

(37,772) (0.25)

Total liabilities 375,837 2.32

508,045 3.39

Net Current Assets 2,087,916 12.89

1,781,501 11.90

Total 2,119,247 13.08

1,808,414 12.08

The accompanying notes to the Financial Statements are an intergral part of this balance sheet

Conversion Rate for Euro to INR as at year end rates 61.74

66.80


126

Unaudited Profit and Loss Account for the period from April 01 2009 to March 31, 2010

April 1 2009

March 31 2010

April 1 2009

March 31 2010

April 1 2008

March 31 2009

April 1 2008 to March 31 2009

€ INR/Cr

€ INR/Cr

Income 1. Revenues 7,363,240 48.31

8,441,642 54.72

2. Interest income 59 0.00

1,701 0.01

7,363,299 48.31

8,443,343 54.73

Expenditure 3. Staff cost 5,213,485 34.20

6,169,127 39.99

4. Selling, general and administrative expenses 444,458 2.92

513,931 3.33

5. Management fees 1,267,897 8.32

1,298,049 8.41 Total 6,925,840 45.44

7,981,107 51.74

6. Earnings before interest, income taxes and 437,459 2.87

462,236 3.00

depreciation 7. Depreciation on fixed assets 7,377 0.05

6,576 0.04

9. Interest expenses - -

- - 10. Earnings before income taxes 430,082 2.82

455,660 2.95

11. Income taxes 119,249 0.78

117,841 0.76 12. Net income 310,833 2.04

337,819 2.19

The accompanying notes to the Financial Statements are an integral part of this statement of income

The average conversion rates for Euro to INR for the financial year

65.60 64.83


127

Unaudited Cash Flow for the year ended March 31, 2010

April 1 2009

March 31 2010

April 1 2009

March 31 2010



€ INR/Cr

€ INR/Cr

Net earnings (Incl FE Rate difference) 310,833 2.04

337,819 2.26

Depreciation of fixed assets 7,377 0.05

6,576 0.04

Changes in operating assets and liabilities - Accounts receivables and intercompany

receivables (111,326) (0.69)

(436,879) (2.92)

- Prepaid expenses and other assets 1,170 0.01

61,274 0.41

- Accounts payables and intercompany payables (84,519) (0.52)

(781,662) (5.22)

- Accrued expenses and other liabilities (47,689) (0.29)

13,122 0.09

Cash flow used in operating activities 75,847 0.59

(799,750) (5.34)

Purchase of fixed assets / deferred expenses (11,795) (0.07)

(6,339) (0.04)

Correction profit carried forward - -

- -

Decrease/increase in cash during the year 64,052 0.52

(806,089) (5.38)

Cash at the beginning of the year 102,409 0.69

908,498 6.07

Cash at the end of the year 166,461 1.03

102,409 0.69


128

Notes to Financial Statements as of March 31, 2010

I. General information

The company was set up on May 17, 2000 through notarized contract under the former firm Insartor Holding SECHZEHNTE GmbH and was registered on July 04, 2000 with the commercial register at the district court in Munich (HRB 131937).

The firm Insartor Holding SECHZEHNTE GmbH was changed in Minacs Worldwide GmbH with the shareholders resolution dated August 04, 2000. AT the same time it was concluded to transfer the company’s residence from Munich to Russelsheim. The change of the former firm Insartor Holding SECHZEHNTE GmbH in Minacs Worldwide GmbH as well as the residence transfer were registered on March 07, 2001 under HRB 3872 with the commercial register at the district court in Russelsheim.

Within the course of concentration of keeping the commercial-, cooperative association- and partnership register and the step by step establishment of an electronic register Minacs Worldwide GmbH is registered from January 01, 2002 with the commercial register at the district court in Darmstadt under HRB 83872.

The subscribed capital of the company amounts to EUR 25.000,00 and is paid in totally.

The solely shareholder is Minacs Ltd., London.

The purpose of the company is to act as a provider of outsourced solutions incorporating customer contact center management and other professional services. The company designs and delivers solutions that enable the customer relationship management of its clients.

During the period 01.04.2009 to 31.03.2010 most of the company’s revenue has been generated by one major customer.

II. Financial information

1. General accounting policy

The financial statements had been prepared in accordance with German Generally Accepted Accounting Principles which are laid down in the Commercial Code.

Fixed assets were carried at historical acquisition costs less accumulated depreciation according to the straight-line method

The accrued expenses consider all recognized risks and uncertain commitments, based on reasonable commercial judgment.

Liabilities were valued with their anticipated future settlement amounts

The provision for income taxes was calculated on the basis of the German taxable income.


129

2. Other information

a) Contingent liabilities

There were no contingent liabilities on the balance-sheet date.

b) Subsequent events

There have been no events occurred since March 31, 2010 which require adjustments to the figures submitted in this report.

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

April 1 2009

March 31 2010

April 1 2009

March 31 2010



€ INR/Cr

€ INR/Cr Assets

I Fixed Assets (WDV) 20,281 0.13

15,863 0.11

II Investment 11,050 0.07

11,050 0.07 III Current Assets

1.Cash at Bank and on hand

a) Cash at Bank

Commerz bank AG EUR-Account 00 47,783 0.29

95,298 0.64

Deutschebank 114,968 0.71

- -

UniCredit Banca Italy 3,512 0.02

1,534 0.01

Rent Deposit - -

5,448 0.04

b) Cash on Hand

Petty Cash in Germany 198 0.00

130 0.00

166,461 1.03

102,409 0.68

2. Accounts Receivables 1,752,586 10.82

1,997,877 13.35

3. Intercompany Receivables

a) Minacs Worldwide Inc., Ontario, Canada 489,813 3.02

56,714 0.38

b) Minacs Ltd., London, England 10,023 0.06

(77,243) (0.52)

b) Minacs Hungary 122 0.00

86,626 0.58

499,957 3.09

66,097 0.44

4. Prepaid Expenses 42,249 0.26

45,519 0.30


130

5. Other Assets

Accounts receivables against employees 2,500 0.02

400 0.00

2,500 0.02

400 0.00

April 1 2009

March 31 2010

April 1 2009

March 31 2010

April 1 2008 to

March 31 2009


€ INR/Cr

€ INR/Cr IV Liabilities

6. Accounts Payable 3,219 0.02

10,494 0.07

7. Accrued Expenses

Audit and Legal Expenses 36,650 0.23

66,000 0.44

Disability 4,500 0.03

5,200 0.03

Personnel Expenses 6,000 0.04

144,000 0.96

Workmen's compensation 25,000 0.15

25,000 0.17

Outstanding holiday pay 190,000 1.17

145,000 0.97

Other Personnel Liabilities 46,060 0.28

51,280 0.34

Other Accruals 59,959 0.37

21,600 0.14

Total 368,169 2.27

458,080 3.06

8. Other Liability

Sales Tax Payable (2,652) (0.02)

(4,545) (0.03)

Income and Other Taxes Payable 7,101 0.04

(33,228) (0.22)

4,449 0.03

(37,772) (0.25)

Total 375,837 2.32

430,801 2.88

9. Staff Cost

Wages and salaries (4,245,153) (27.85)

(4,994,769) (32.38)

Social security, pensions and other

personnel expenses (941,884) (6.18) (1,089,929) (7.07)

Subcontractors staff and minor services (26,448) (0.17)

(84,429) (0.55)

(5,213,485) (34.20)

(6,169,127) (39.99)

Wages and Salaries (4,245,153) (27.85)

(4,994,769) (32.38)

Social Security, pensions and other personnel expenses (941,884) (6.18)

(1,089,929) (7.07)

Subcontractor staff and minor services (26,448) (0.17)

(84,429) (0.55)

Total (5,213,485) (34.20)

(6,169,127) (39.99)


131

10. Selling, General & Administration Expenses

Rent (34,384) (0.23)

(36,734) (0.24)

Gas, Electricity & Water (2,939) (0.02)

(2,553) (0.02)

Cleaning (3,315) (0.02)

(2,692) (0.02)

Insurances (583) (0.00)

(583) (0.00)

Other Personnel Expenses (229,574) (1.51) (274,825) (1.78)

Representation & Entertainment Expenses (5,505) (0.04)

(1,675) (0.01)

Travel Expenses (8,652) (0.06)

(2,979) (0.02)

Freight - out (905) (0.01)

(873) (0.01)

Other Repair & Maintenance Costs (1,013) (0.01)

(273) (0.00)

Mailing Expenses (710) (0.00)

(539) (0.00)

Telephone, Internet (10,384) (0.07)

(10,798) (0.07)

Office Supplies (3,313) (0.02)

(5,193) (0.03)

Magazines, Books, Contributions (3,132) (0.02)

(2,111) (0.01)

Training Expenses (18,861) (0.12)

(6,443) (0.04)

Legal, Consulting & Accounting Expenses (90,481) (0.59)

(140,707) (0.91)

Rent of Equipment (4,424) (0.03)

(4,390) (0.03)

Bank Charges (13,658) (0.09)

(13,113) (0.09)

Exchange Losses (2,076) (0.01)

(2,816) (0.02)

Other Supplies (10,549) (0.07)

(4,633) (0.03)

Total (444,458) (2.92)

(513,931) (3.33)

The Minacs Group (USA) Inc.

132

Consolidated Balance Sheet (Unaudited in US$)

As At March 31 2010

As At March 31 2009

US$

INR/Cr

US$

INR/Cr

Sources of Funds I Shareholders' fund 1. Share capital $302,040 1.36 $302,040 1.58

2. Retained earnings $8,102,244

37.61

$6,711,455

31.19 3. Exchange Fluctuation on Transaltion - (1.13) - 3.83

$8,404,284

37.84

$7,013,495

36.59

II Debt 1. Long-term debt from

holding company $20,768,591

93.52

$20,768,591

108.36

$29,172,875

131.36

$27,782,086

144.95 Application of funds

I Fixed Assets

1. Property, plant and equipment, net $5,410,781

24.36

$6,245,114

32.58

2. Deferred Development costs $1,480,070

6.66

-

- 3. Intangibles $101,961

0.46

$166,357

0.87

4. Goodwill $1,900,000

8.56

$1,900,000

9.91

$8,892,812

40.04

$8,311,471

43.36

II Investments -

-

-

-

III Current assets 1. Cash and cash equivalents $1,038,954

4.68

$1,203,632

6.28

2. Accounts receivable $12,759,501

57.46

$15,377,669

80.23 3. Due from parent company $14,550,822 65.52 $10,368,103 54.09 4. Prepaid expenses $867,898

3.91

$580,327

3.03

5. Future income taxes - Long term $361,234

1.63

$456,493

2.38

6. Future income taxes - Short term $256,472

1.15

$1,434

0.01

$29,834,881 134.35 $27,987,659 146.02 Less liabilities

I Short term 1. Accounts payable and

accrued liabilities $7,625,908

34.34

$6,277,087

32.75 2. Income and other taxes payable (29,082)

(0.13)

(246,779)

(1.29)

3. Obligations under capital leases $321,213

1.45

$693,037

3.62


133

$7,918,039

35.66

$6,723,345

35.08

II Long term 1. Accounts payable and

accrued liabilities $527,081

2.37

$704,779

3.68 2. Obligations under capital leases -

-

$321,213

1.68

3. Future income taxes $1,109,698

5.00

$767,707

4.01 Total liabilities $9,554,818

43.03

$8,517,044

44.44

Net Assets $20,280,063

91.32

$19,470,615

101.59 Total $29,172,875

131.37

$27,782,086

144.95

Notes : See accompanying notes to the financial

statements. FE Conversion Rate for US$ to INR as at end of

year

45.03

52.17

Place: Toronto

Deepak J. Patel


Chief Executive Officer


134

Statement of Operations and Deficit Unaudited in US $

31/3/2010 31/3/2010

31/3/2009 31/3/2009

US$ INR/Cr

US$ INR/Cr

Revenues $97,017,763 448.13

$118,834,456 552.20

Expenditures Direct expenses $72,406,782 334.45

$92,167,048 428.28

Selling, general and administrative expenses $12,268,172 56.67

$12,188,117 56.64

$84,674,953 391.12

$104,355,165 484.92

Earnings before interest, income taxes, depreciation,

amortization and restructuring and other charges $12,342,810 57.01

$14,479,290 67.28

Management fee $6,857,000 31.67

$7,792,900 36.21 Restructuring and other charges $113,188 0.52

273,179 1.27

Interest and financing expenses $944,475 4.36

$987,779 4.59 Depreciation and amortization $2,177,429 10.06

$2,291,937 10.65

Provision for (recovery of) income taxes Current $677,717 3.13

$1,239,612 5.76

Future $182,212 0.84

387,021 1.80 Net income (loss) for the period $1,390,789 6.42

$1,506,863 7.00

Earnings/('Deficit), beginning of period $6,711,455 31.19

$5,204,593 24.18

Retained earnings, end of period $8,102,244 37.61

$6,711,455 31.19

Notes:

See accompanying notes to the financial statements.

Average FE Conversion Rate for US$ to INR for the Financial year

46.19

46.47

Place: Toronto

Deepak J. Patel


Chief Executive Officer


135

Notes To Financial Statements March 31, 2010

1 NATURE OF BUSINESS Minacs Group (USA) Inc. (the “Company” or “Minacs USA”) is a provider of business process outsourcing (“BPO”) solutions. These incorporate contact centre solutions, integrated marketing services and back office administration. Minacs USA is a subsidiary of Minacs Worldwide Inc. (“Minacs”). 2 SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of these financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates. Revenue Recognition The Company derives revenues through the provision of direct resources to its customers and consulting arrangements. Payment terms may vary by contract. The Company recognizes revenues at the time services are performed and when the price is fixed or determinable and collection is reasonably assured. The majority of revenues are recognized based on the billable hours or minutes rendered as defined in the client contract. The rate per billable hour or minute charged is based on a predetermined contractual rate as agreed in the underlying contract. This contractual rate fluctuates based on the Company’s performance against certain predetermined criteria related to quality and performance. Some clients are entitled to penalties when the Company is not in compliance with certain obligations as defined in the client contract. Such penalties are recorded as a reduction of revenues as incurred based on a measurement of the Company’s obligation under the terms of the client contract. For some contracts the Company is paid by its customer based on achievement of certain level of revenues or other client-determined criteria specified in the client contract such as full time equivalents, units processed or completed contacts. The Company recognizes this performance-based revenue by measuring its actual results against the performance criteria specified in the contracts. Amounts collected from customers prior to the performance of services are recorded as deferred revenue. These advances are amortized to revenues in accordance with the Company’s policy on revenue recognition. The Company classifies reimbursements received from customers for out-of-pocket expenditures as revenues. The Company incurs out-of-pocket expenditures such as expenses related to travel, postage and telecommunications costs for which customers have agreed to reimburse Minacs USA. The corresponding cost associated with this revenue is recorded within direct expenses. Some customers agree to reimburse the Company for initial training and recruiting costs over a specified period of time. The revenue for these costs is recorded over the period of time stipulated within the contract with a corresponding cost recorded within direct expenses. Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is provided from the first day of the month following the date the assets are placed into service, on a straight-line basis.


136

Computer software is depreciated over four to five-year lives. Computer equipment is depreciated over a four-year life. Communications equipment is depreciated over five to seven-year lives. Furniture and fixtures are depreciated over seven to ten-year lives. Leasehold improvements are depreciated over the term of the lease. Goodwill Goodwill is not amortized and is tested for impairment on an annual basis. Such evaluation determines any impairment in value, taking into account the ability to recover the carrying amount of goodwill from discounted cash flows. The Company also considers projected future operating results, trends, and other circumstances in making such evaluations. In addition to the annual impairment test, the Company will perform an impairment test if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Intangibles The Company allocates value to intangible assets acquired relating to customer and supplier contracts, proprietary processes, and certain business relationships. Amortization of intangibles is provided on a straight-line basis over 10 years. Impairment of Long-lived Assets The Company reviews its long-lived assets such as property, plant and equipment and intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. When indicators of impairment of the carrying value of the asset exist, and the carrying value is greater than the net recoverable value (as determined on an undiscounted basis), an impairment loss is recognized to the extent that the fair value (measured as the discounted cash flows over the remaining life of the asset when quoted market values are not readily available) is below the carrying value.

Income Taxes The Company follows the liability method of accounting for income taxes. Under this method, future tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities, and are measured using substantively enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce future income tax assets to the estimated amount that is more likely than not to be realized. Foreign Exchange Translation Assets and liabilities are translated using the exchange rate in effect at the balance sheet date and revenues and expenses are translated at the average rate of the month the transaction is recorded. Cash and Cash Equivalents Cash and cash equivalents consist of unrestricted cash and short-term deposits having an initial maturity of three months or less.


137

As At March 31 2010 As At March 31 2009

US$ INR (Cr)

US$ INR (Cr)

3 Share Capital

Common shares 100 0.00

$100 0.00

Contributed surplus 301,940 1.36

$301,940 1.58

302,040 1.36

$302,040 1.58

The Company is authorized to issue an unlimited number of common shares.

4 Long-Term Debt

Loan from Parent Company 20,768,591 93.52

20,768,591 108.36

The loan from parent company bears interest at specified margins over bank prime and is payable to the Parent Company over a 25 year period.

5 PROPERTY, PLANT AND EQUIPMENT As At 31st March, 2010 As At 31st March, 2009

Gross Cost Accumulated Depreciation

Gross Cost

Accumulated Depreciation

Gross Cost Accumulated Depreciation

Gross Cost

Accumulated Depreciation

In US$ In US$

In INR/Cr In INR/Cr In US$ In US$

In INR/Cr In INR/Cr

Computer software 6,367,256 (4,581,077.4) 28.67 (20.63) 5,664,187 (3,752,908) 29.55 (19.58)

Computer equipment 7,601,383 (6,107,934.4) 34.23 (27.50) 7,179,106 (5,282,777) 37.46 (27.56)

Communications equipment 934,194 (905,702.3) 4.21 (4.08) 934,194 (891,613) 4.87 (4.65)

Furniture and fixtures 2,388,900 (1,458,331.9) 10.76 (6.57) 2,269,690 (1,291,276) 11.84 (6.74)

Leasehold improvements 2,494,614 (1,322,518.9) 11.23 (5.96) 2,460,469 (1,043,958) 12.84 (5.45)

19,786,346 (14,375,564.9) 89.10 (64.73) 18,507,646 (12,262,531.8) 96.56 (63.98) Less: accumulated depreciation (14,375,565) (64.73) (12,262,532) (63.98)

5,410,781 24.36 6,245,114 32.58

Included in these figures are assets under capital leases as follows

In US$

INR (Cr) In US$

INR (Cr)

Cost 5,034,046 22.67 5,216,260 27.22 Less: accumulated depreciation (4,289,108) (19.31) (3,880,866) (20.25)

Net book value $744,938 3.35 $1,335,394 6.97

Conversion rates for US$ to INR 45.03 52.17


138

The assets under capital leases are held as security for the capital lease obligations. Included within depreciation and amortization is $513,877 relating to assets under capital leases.


US$ INR (Cr)

US$ INR (Cr)

6 INTANGIBLES

Cost 643,962 2.90

$643,962 3.36

Less: accumulated depreciation (542,001) (2.44) (477,605) (2.49)

Net book value 101,961 0.46

$166,357 0.87

7 GOODWILL

Balance, beginning of period 1,900,000 8.56 $1,900,000 9.91

Foreign currency translation adjustment - -

- -

Balance, end of period 1,900,000 8.56

$1,900,000 9.91

8 Future Income Taxes

Accounts payable and accrued liabilities 512,340 2.31

$352,347 1.84

Other 105,366 0.47

$105,580 0.55

617,706 2.78

$457,927 2.39

Valuation allowance - -

- -

Less: current portion (256,472) (1.15)

($1,434) (0.01)

361,234 1.63

$456,493 2.38

Future tax liabilities consist of the following temporary differences

Property, plant and equipment (299,690) (1.35)

$699,913 3.65

Other assets (810,008) (3.65)

$67,795 0.35

(1,109,698) (5.00)

$767,708 4.01

9 COMMITMENTS AND CONTINGENCIES Capital Leases

Interest on obligations under capital leases accrues at various rates ranging from 8.3% to 9.1%.

The following is a schedule of future minimum lease payments for these capital leases:


139


Capital Leases US$ INR (Cr) US$ INR (Cr) 2008 - -

- -

2009 - -

- - 2010 - -

$753,410 3.93

2011 329,278 1.48

$329,278 1.72 Total minimum lease payments 329,278 1.48

$1,082,688 5.65

Less: amount representing interest (8,066) (0.04)

($68,439) (0.36) Present value of net minimum lease payments 321,212 1.45

$1,014,249 5.29

Less: current portion 321,212 1.45

$693,037 3.62 Total capital lease obligations - -

$321,212 1.68

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


US$ INR (Cr) US$ INR (Cr) 2010 - -

$1,632,250 8.52

2011 1,457,358 6.56

$1,451,958 7.58 2012 1,402,668 6.32

$1,402,668 7.32

2013 1,402,668 6.32

$1,402,668 7.32 2014 1,402,668 6.32

$1,402,668 6.32

2015 467,556 2.11

- - Thereafter - -

$467,554 2.11

Total commitments 6,132,918 27.62

$7,759,766 39.15 Contingent Liabilities During the ordinary course of business activities, the Company may be a party to claims and may be contingently liable for litigation. Management believes that adequate provisions have been made in the accounts where required. Although it is not possible to estimate the extent of potential costs and losses, if any, management believes that the ultimate resolution of such contingencies will not have a material adverse effect on the financial position of the Company.

10 RELATED PARTY TRANSACTIONS Transactions with Related Parties are as follows:


140


US$ INR (Cr) US$ INR (Cr)

Management fees charged by Minacs Worldwide Inc 6,857,000 31.67

$7,792,900 36.21

Interest charged by Minacs Worldwide Inc 712,666 3.29

$952,921 4.43 Interest charged to IT Services (794,836) (3.67)

- -

Reimbursable expenses - Aditya Birla Minacs Worldwide Ltd 149,428 0.69

$215,615 1.00

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

11 EMPLOYEE BENEFIT PLANS The Company has defined contribution pension plans. The Company’s pension plan expenditures were $4,160 (Previous Year $430,563) (INR .02 Cr) (Previous Year INR 1.94 Cr) during 2010.

12 INTEREST AND FINANCING EXPENSES Interest and financing expenses are comprised of the following amounts:


US$ INR (Cr) US$ INR (Cr)

Interest expense on long-term debt 712,666 3.29

$952,921 4.43 Interest expense on obligations under capital leases 60,373 0.28

$127,287 0.59

Other interest expense (income) 21,850 0.10

$15,882 0.07 Interest expense 794,888 3.67

$1,096,090 5.09

Amortization of deferred finance charges - - - - Bank charges 42,868 0.20

$53,578 0.25

Foreign exchange loss (gain) 106,718 0.49

(161,889) (0.75) Total 944,475 4.36

$987,779 4.59

Transworks Inc (USA)

141

AUDITORS’ REPORT The Board of Directors of Aditya Birla Minacs Worldwide Limited (Formerly known as Transworks Information Services Limited) 1. In terms of your letter dated March 1, 2010 requesting us to audit the accounts of Transworks Inc. (“the

Company”), a wholly owned subsidiary of Aditya Birla Minacs Worldwide Limited (“the Parent”), incorporated in the United States of America, based on records including photocopies of some records, received from the said Company in Mumbai and in accordance with the accounting policies described in Note 1 of Schedule 14 to the attached financial statements (“the accounting policies”). We have not performed a statutory audit, the objective of which would be the expression of an opinion on the financial statements in conformity with generally accepted accounting practices and accordingly, we do not express such an opinion.

2. We have audited, in accordance with the accounting policies, the attached Balance Sheet of the Company as at

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

3. We conducted our audit in accordance with generally accepted auditing standards in India. These Standards

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

4. In our opinion, based on our audit, and to the best of our information and according to the explanations given to

us, the accompanying financial statements give a true and fair view in conformity with the accounting policies: a. in the case of the Balance Sheet, of the state of affairs of Company as at 31st March, 2010; b. in the case of the Profit and Loss Account, of the profit for the year ended on that date; and c. in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

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

For S. R. Batliboi & Co. Firm Registration No. 301003E Chartered Accountants per Vijay Maniar Partner Membership No.: 36738 Mumbai, April 23, 2010


142


As At 31st Mar'10

As At 31st

Mar'10

As At 31st

Mar'09

As At 31st

Mar'09

Schedule (US$) (INR) (US$) (INR)

I. SOURCES OF FUNDS

1 Shareholders' Funds Share Capital 1 - - 200,000 9,680,000

2 Reserves and Surplus Profit and Loss Account

47,416 2,140,350 200,673 10,646,132

3 Deferred Tax Liability

- - 65,000 3,297,450

TOTAL

47,416 2,140,350 465,673 23,623,582

II. APPLICATION OF FUNDS

1 Current Assets, Loans and Advances :

Sundry Debtors 2 - - 98,560 4,999,950 Cash and Bank Balances 3 53,762 2,426,810 368,200 18,678,805

53,762 2,426,810 466,760 23,678,755 Less: Current Liabilities and Provisions :

Current Liabilities 4 6,346 286,460 1,087 55,173

Net Current Assets

47,416 2,140,350 465,673 23,623,582

TOTAL

47,416 2,140,350 465,673 23,623,582

Notes to Accounts 10

The Schedules referred to above and the notes to accounts form an integral part of the Balance Sheet.

As per our Report of even date FOR S.R. BATLIBOI & CO.

For Transworks Inc.

Firm Registration No. 301003E


Deepak J. Patel

per Vijay Maniar Partner Membership No. 36738

Place: Mumbai

Ramesh Kamath Date: April 23, 2010



143

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2010

For the year ended Mar, 31

2010


2010


2009


2009 Schedule (US$) (INR) (US$) (INR)

INCOME : Mark up Fees

- - (57) (2,629) Reimbursement of Expenses

Business Development & Marketing 5 - - (807) (37,563)

Utilization of Fixed Assets

- - 131,268 6,107,449 Financing Charges 6 - - 1,856 86,374

- - 132,260 6,153,631

Bank Interest

- - 11 520 Exchange Rate Fluctuations on

coversion

- (1,235,015) - 6,552,522

TOTAL - (1,235,015) 132,271 12,706,673

EXPENDITURE : Travelling & other Expenses 7 - - 2,087 97,109

Rent 8 - - 7,589 353,073 Other Expenses 9 - - 86,046 4,003,454 Depreciation / Amortization

- - 34,738 1,630,724

Total

- - 130,460 6,084,360

Profit / (Loss) before tax for the year

- (1,235,015) 1,811 6,622,313

Less : Provision for the Deferred Tax

3,257 154,517 24,894 1,158,235

Less : Withholding Tax Written Off

- - 13,405 623,702

3,257 154,517 38,299 1,781,936 Profit / (Loss) after tax provision for the year

(3,257) (1,389,532) (36,488) 4,840,376

Dividend paid during the year

150,000 7,116,250 - - Profit / (Loss) for the year

(153,257) (8,505,782) (36,488) 4,840,376

Profit / (Loss) brought forward from previous year

200,673 10,646,132 237,161 5,805,756

Accumulated balance carried forward to the Balance Sheet

47,416 2,140,350 200,673 10,646,132

Notes to Accounts 10

.

.


144

The Schedules referred to above and the notes to accounts form an integral part of the Profit & Loss account

As per our Report of even date FOR S.R. BATLIBOI & CO.

For Transworks Inc. Firm Registration No. 301003E


Deepak J. Patel per Vijay Maniar

Partner Membership No. 36738 Place: Mumbai




145

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2010 Year

ended 31.3.2010

Year ended 31.3.2010

Year ended

31.3.2009

Year ended 31.3.2009

(US$) (INR) (US$) (INR) A.

Cash flows from Operating Activities Net Profit before taxation, and extraordinary items - (1,235,015) 1,811 6,622,313

Adjustments for : Depreciation / Amortization - - 34,738 1,630,724

Loss/(Profit) on Sale of Fixed Assets - - 96,529 4,491,200 Financing charges - - (1,856) (86,374) Reimbursement of utilisation of fixed assets - - (131,268) (6,107,449) Interest Income - - (11) (520) Difference on account of exchange rate difference in Deffered Tax (68,257) (3,451,967) - 536,179 Operating Profit before working capital changes (68,257) (4,686,982) (57) 7,086,073

Movements in working capital : (Increase)/Decrease in Sundry Debtors 98,560 4,999,950 685,711 26,347,329

(Increase)/Decrease in Loans & Advances - - 52,323 2,091,324 Increase/(Decrease) Current Liabilities & Provisions 5,259 231,288 (104,180) (4,152,382)

Cash generated from operations 35,562 544,256 633,797 31,372,345

Add/(Less): Direct Taxes (including TDS) paid)/Tax Refunds - - (13,405) (623,702)

Net Cash flow from Operating Activities 35,562 544,256 620,392 30,748,643 B.

Cash Flows from Investing Activities Proceeds from sale of Fixed Assets - - 110,000 5,165,513 Reimbursement of usage of fixed assets - - 131,268 6,107,449 Interest/investment income received - - 1,867 86,894

Net Cash from/(for) Investing Activities - - 243,135 11,359,855 C.

Cash flow from Financing Activities Repayment of share capital (200,000) (9,680,000) (500,000) (23,616,485)

Payment of Dividend (150,000) (7,116,250) - - Net Cash used in Financing Activities (350,000) (16,796,250) (500,000) (23,616,485)

Net Increase in cash and Cash equivalants during the year (314,438) (16,251,994) 363,527 18,492,013

Cash and cash equivalants at the beginning of the year 368,200 18,678,805 4,673 186,792 Cash and cash equivalants at the end of the year 53,762 2,426,810 368,200 18,678,805

Notes: Components of Cash and Cash Equivalents as at i) Balance with Banks : - in Current Account 53,762 2,426,810 368,200 18,678,805

Total 53,762 2,426,810 368,200 18,678,805


146

As per our Report of even date

FOR S.R. BATLIBOI & CO.

For Transworks Inc. Firm Registration No. 301003E


Deepak J. Patel

per Vijay Maniar Partner Membership No. 36738

Place: Mumbai




147

SCHEDULES FOR THE YEAR ENDED 31ST MARCH 2010

As At 31st

Mar'10

As At 31st

Mar'10

As At 31st

Mar'09

As At 31st

Mar'09

(US$) (INR) (US$) (INR)

SCHEDULE - 1 SHARE CAPITAL

Authorised Capital 1,000,000 Equity Shares of US$ 1/-

each

1,000,000 45,140,000 1,000,000 50,730,000

Issued, Subscribed & Paid up Capital

NIL (P Y 200,000) Equity Shares of US$ 1/- each fully paid up - - 200,000 9,680,000 (All the above equity shares are held by the holding

company Aditya Birla Minacs Worldwide Limited)

TOTAL - - 200,000 9,680,000

SCHEDULE - 2 SUNDRY DEBTORS

1 Other Debts

Unsecured, Considered good

- - 98,560 4,999,950

TOTAL - - 98,560 4,999,950

SCHEDULE - 3 CASH AND BANK BALANCES

1 Balance with bank

- On Current Account

53,762 2,426,810 368,200 18,678,805

TOTAL 53,762 2,426,810 368,200 18,678,805

SCHEDULE - 4 CURRENT LIABILITIES

1 Sundry Creditors

2,258 101,947 - - 2 Outstanding Liabilities

1,088 49,093 1,087 55,173

3 Provision for Tax

3,000 135,420 - -

TOTAL 6,346 286,460 1,087 55,173

SCHEDULE - 5 REIMBURSEMENT OF BUSINESS

DEVELOPMENT AND MARKETING EXPENSES

1 Reimbursement of Expenses

- - 28,761 1,338,182


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2 Write-back of Sales Commission

- - (27,954) (1,300,619)

TOTAL - - 807 37,563

SCHEDULE - 6 FINANCING CHARGES 1 Interest recoverable on Fixed Assets & LDC - - 1,856 86,374

- - 1,856 86,374

SCHEDULE - 7 TRAVELLING & OTHER EXPENSES

1 Travelling Expenses

- - 2,087 97,109

TOTAL - - 2,087 97,109

SCHEDULE – 8 RENT

1 Office Rent

- - 4,058 188,804 2 Flat Rent

- - 3,531 164,269

TOTAL - - 7,589 353,073

SCHEDULE - 9 OTHER EXPENSES 1 Bank Charges - - 116 5,400

2 Miscellaneous expenses - - 46 2,139 3 Sales Commission (Net of write-back) - - (27,954) (1,300,619) 4 Legal & Professional Fees - - 3,961 184,317 5 Insurance Charges - - 2,740 127,483 6 Maintenance Charges (Net of write-back) - - (18,078) (841,113) 7 Loss on Sale of Fixed Assets - - 96,529 4,491,200 8 US Payroll Taxes (Net of write-back) - - (650) (30,249) 9 Repairs & Maint. - Others - - 326 15,157

10 Write-back of deposits for Long Distance Charges - - 29,010 1,349,739

TOTAL - - 86,046 4,003,454 SCHEDULE – 10: Notes to Accounts 1. Accounting Policies

The Company is in the process of winding up its operations. Adjustments relating to the recoverability and the classification of recorded asset amount or to amounts that may be necessary on winding up of the Company have been made based on management’s assessment of the same. All assets and liabilities have


149

been stated at net realizable value. Accordingly, the financial statements have not been prepared on the going concern assumption.

a. Basis of preparation The accounts have been prepared under the historical cost convention on accrual basis in accordance with the generally accepted accounting principles applicable in India. The accounting policies applied by the company are consistent with those used in the previous year. As stated above, the financial statements have not been prepared on the going concern assumption.

b. Revenue recognition Incomes from services rendered are accounted on accrual basis based on agreements / arrangements with the concerned parties.

c. Fixed assets Fixed assets are stated at cost less accumulated depreciation and impairment losses if any. Cost comprises the purchase price and wherever applicable freight, duties and taxes and expenses incidental to acquisition and installation.

d. Leased assets

Finance lease, which effectively transfers to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at lower of fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability based on implicit rate of return. Finance charges are charged directly against income. Lease management fees, lease charges and other initial direct costs are capitalized.

Leases where lessor effectively retains substantially all the risks and benefits of ownership of the lease term are classified as operating leases. Operating lease payments are recognized as an expense in the profit & loss account in accordance with the lease agreement.

e. Depreciation

Depreciation on assets is provided on straight-line basis, based on the useful lives as estimated by the management. The management estimates seven years as the useful lives of these fixed assets.

f. Income Tax The Company utilizes the asset and liability method of accounting for Income taxes. Under this method, deferred income taxes are recorded to reflect the tax consequences of future years differences between the tax basis of assets and liabilities and there financial reporting amounts at each year end are based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to effect taxable income. A valuation allowance is provided against the future benefit of deferred tax asset if it is determined that it is more likely than not that the future tax benefits associated with the deferred tax assets will not be realized.

g. Conversion of Financial Statements

For the purpose of consolidation of the financial statements with that of the Parent, the amounts in USD) are converted into INR as follows: Equity capital and retained earnings at historical cost, all other balance sheet items at closing rate of exchange, profit and loss items at average rate and resultant translation gain/loss is adjusted in the profit and loss account


150

2. Provision for Taxation:

Provision for tax comprises current and deferred taxes. This includes provision for current tax US$ 3,000 (Rs. 1,35,420).

a) There is no Deferred Tax Liability / Deferred Tax Assets as at Mar 31 2010. (US$)

Particular As at 31/3/2009

Movement During the

year

As at 31/3/2010

Timing difference resulting in deferred Tax Liability Depreciation & deferment of income arising out of cash basis of accounting for tax purposes

(205,803) 205,803 Nil

Timing difference resulting in deferred Tax Asset Net temporary difference (205,803) 205,803 Nil

Deferred Tax liability (65,000) 65,000 Nil

(INR)

Particular As at 31/3/2009

Movement During the

year

As at 31/3/2010

Timing difference resulting in deferred Tax Liability

Depreciation & deferment of income arising out of cash basis of accounting for tax purposes (10,550,687)

10,550,687

Nil Timing difference resulting in deferred Tax Asset Net temporary difference (10,550,687)

10,550,687

Nil Deferred Tax liability( net of deferred tax asset) (3,297,450) 3,297,450 Nil


The Company had transactions with the following related parties: Ultimate Holding Company Aditya Birla Nuvo Limited Holding Company Aditya Birla Minacs Worldwide Limited

Summary of transactions with above related parties is as follows: US$

Particulars Year ended March 31,

2010 Year ended

March 31, 2009 Holding Company

Reimbursement of cost, financing charges & markup fee NIL 132,260 Repayment of Share Capital 200,000 500,000

Payment of dividend 150,000 NIL Related Party Balances

Receivable from Holding Company NIL 98,560 Payable to Holding Company 2,258 NIL


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INR

Particulars Year ended Mar 31,

2010

Year ended March 31, 2009

Holding Company

Reimbursement of cost, financing charges & markup fee NIL 6,153,631 Repayment of Share Capital 9,680,000 23,616,485 Payment of dividend 7,116,250 NIL

Related Party Balances Receivable from Holding Company NIL 4,999,950 Payable to Holding Company 101,947 NIL

4. Segment Information for the period ended 31st March , 2010

(1) Primary business segment

The Company is exclusively in the marketing of Business Process Outsourcing (BPO) services provided by its Holding Company Aditya Birla Minacs Worldwide Limited and hence its business activities primarily fall within a single business segment. Therefore, there are no additional disclosures to be provided in respect of primary segment under Accounting Standard 17 ‘Segment Reporting’, other than those already provided in the financial statements.

(2) Secondary business segment:

a. Geographical turnover is segregated based on the location of the customer who is invoiced. b. Assets are segregated based on their location.

c. Information about secondary business segments

US$ Year ended 31st March 2010 India Outside India Total a Revenue by geographical market - - - b Carrying amount of segment assets - 53,762 53,762

US$

Year ended 31st March 2009 India Outside India Total a Revenue by geographical market 132,260 - 132,260 b Carrying amount of segment assets 98,560 368,200 466,760

INR Year ended 31st March 2010 India Outside India Total

a Revenue by geographical market - - - b Carrying amount of segment assets - 2,426,810 2,426,810

INR


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Year ended 31st March 2009 India Outside India Total a Revenue by geographical market 6,153,631 - 6,153,631 b Carrying amount of segment assets 4,999,950 18,678,805 23,678,755

6. Previous year figures have been regrouped wherever necessary to correspond with current period figures. For S. R. BATLIBOI & CO. For Transworks Inc. Firm Registration No. 301003E Chartered Accountants Deepak J. Patel

per Vijay Maniar Partner Membership No. 36738 Place: Mumbai Ramesh Kamath Date: April , 2010 Chief Financial Officer

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