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					Consolidated Financial Statements - U.S. GAAP




                    Consolidated Financial Statements
                               U.S. GAAP




                                      94
                                     INFOTECH Annual Report 2007 - 08


Review Report of Independent Accountants
To the Board of Directors and Shareholders of:                           generally accepted auditing standards in the United States of
Infotech Enterprises Limited                                             America, the objective of which is the expression of an opinion
                                                                         regarding the financial statements taken as a whole. Accordingly,
We have reviewed the accompanying consolidated balance sheets            we do not express such an opinion.
of Infotech Enterprises Limited as of March 31, 2007 and 2008,
and the related consolidated statements of income, of                    Based on our review, we are not aware of any material
shareholders' equity and comprehensive income and of cash flows          modifications that should be made to the accompanying
for the three years ended March 31, 2008 in accordance with              consolidated financial statements in order for them to be in
Statements on Standards for Accounting and Review Services               conformity with generally accepted accounting principles in the
issued by the American Institute of Certified Public Accountants.        United States of America.
All information included in these financial statements is the
representation of the management of Infotech Enterprises
Limited.
                                                                         Price Waterhouse
A review consists principally of inquiries of company personnel
and analytical procedures applied to financial data. It is               Place : Hyderabad, India
substantially less in scope than an audit in accordance with             Date : June 16, 2008




                                                                    95
Consolidated Financial Statements - U.S. GAAP


Consolidated Balance Sheets
(in rupees/US$, except amounts per common stock and as stated otherwise)
(Unaudited - see accompanying independent accountants review report)
                                                                                                                   As of March 31
                                                                                                    2007                  2008            2008
    ASSETS
    Current assets
    Cash and cash equivalents                                                               Rs 710,669,097     Rs. 658,340,195     $ 16,450,280
    Investments in bank deposits                                                                  1,036,146         509,609,058      12,733,860
    Accounts receivable, net of allowance for doubtful debts                                 1,382,952,240        1,844,521,251      46,089,986
    Unbilled revenue on contracts                                                              220,164,060          326,149,602       8,149,665
    Deferred taxes on income                                                                    60,644,155           53,147,990       1,328,036
    Prepaid expenses and other assets                                                          191,608,122          382,196,873       9,550,147
    Total current assets                                                                     2,567,073,820       3,773,964,969       94,301,974
    Premises and equipment, net                                                              1,153,899,183        2,212,431,442      55,283,144
    Goodwill, net                                                                              213,482,948          216,922,100       5,420,342
    Other intangible assets, net                                                                12,449,105                    –               –
    Investments                                                                                 13,704,810        1,986,429,814      49,635,927
    Investments in associated companies                                                        245,164,011          307,101,805       7,673,709
    Deferred taxes on income                                                                    33,707,376           45,813,433       1,144,764
    Other non-current assets                                                                    75,180,010           74,083,622       1,851,165
    Total assets                                                                        Rs. 4,314,661,263     Rs. 8,616,747,185   $ 215,311,025
    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities
    Short-term and curent portion of long-term debts                                           115,579,400         219,012,297       5,472,571
    Accounts payable                                                                           289,124,782         411,220,878      10,275,384
    Other liabilities                                                                          314,101,698         337,715,255       8,438,662
    Unearned revenue                                                                            87,712,995         150,792,307       3,767,924
    Total current liabilities                                                                  806,518,875       1,118,740,737      27,954,541
    Long-term debts, excluding current portion                                                 154,228,428         205,022,539       5,123,002
    Deferred taxes on income                                                                    94,439,166         206,667,481       5,164,105
    Other non-current liabilities                                                              206,627,473         279,072,308       6,973,321
    Total liabilities                                                                        1,261,813,942       1,809,503,065      45,214,969
    Contingencies and Commitments (Note 17)
    Minority Interest                                                                                     –          6,927,076         173,090
    Preferred Stock                                                                                       –        980,640,000      24,503,748
    (Nil and 2,724,000 Compulsorily Convertible Preference Shares of
    Rs. 360 each fully paid-up as of March 31, 2007 and 2008 respectively)
    Shareholders' equity
    Common stock - par value Rs. 5 ($ 0.12) per share                                          230,769,461         260,639,995       6,512,744
    (60,000,000 and 73,872,000 equity shares authorised and 46,153,892 and
    52,127,999 equity shares issued as of March 31, 2007 and 2008 respectively)
    Additional paid-in capital                                                                 851,577,785       2,962,950,372      74,036,741
    Retained earnings                                                                        1,968,309,829       2,603,592,366      65,057,281
    Other comprehensive income / (loss)                                                           4,245,046        (5,450,889)       (136,204)
                                                                                            3,054,902,121        5,821,731,844     145,470,562
    Shares held by the Infotech Trust under employee stock option plan
    (112,080 equity shares as of March 31, 2007 and 2008 respectively)                          (2,054,800)         (2,054,800)        (51,344)
    Total shareholders' equity                                                               3,052,847,321        5,819,677,044     145,419,218
    Total liabilities and shareholders' equity                                          Rs. 4,314,661,263     Rs. 8,616,747,185   $ 215,311,025
    The accompanying notes are an integral part of these consolidated financial statements.


                                                                          96
                                          INFOTECH Annual Report 2007 - 08


Consolidated Statements of Income
(in rupees/US$, except amounts per common stock and as stated otherwise)
(Unaudited - see accompanying independent accountants review report)
                                                                                                                        Year ended March 31
                                                                                          2006           2007            2008         2008
Revenues                                                      Rs.3,641,406,383                   5,425,382,903   6,741,262,473 $168,447,338
Cost of revenues
(Includes stock-based compensation of
Rs.50,565, Rs. 73,763,638 and Rs. 66,648,360 (US$ 1,665,376)
for the years ended March 31, 2006, 2007 and 2008 respectively) 2,734,271,049                    3,895,198,583   4,878,077,522   121,890,993
Gross Profit                                                                    907,135,334      1,530,184,320   1,863,184,951   46,556,345

Selling, general and administrative expenses
(Includes stock-based compensation of
Rs. 528,621, Rs. 3,882,297 and Rs. 3,507,809 (US$ 87,653)
for the years ended March 31, 2006, 2007 and 2008 respectively)                 439,107,253       702,728,564    1,104,229,959    27,591,953
Amortization of other intangible assets                                          22,005,825        20,173,029       12,449,105       311,072
Total operating expenses                                                        461,113,078       722,901,593    1,116,679,064   27,903,025
Operating income                                                                446,022,256       807,282,727      746,505,887    18,653,320
Interest income                                                                    6,345,318        12,131,614      51,464,485     1,285,969
Interest expense                                                                 (6,719,492)      (13,330,114)    (36,074,864)     (901,420)
Other income/(expense), net                                                      29,012,600         55,114,882     175,359,945     4,381,809
Income before income taxes and equity in earnings of
associated companies, net of taxes                                              474,660,682       861,199,109     937,255,453     23,419,678
Income taxes                                                                     83,337,581       167,473,823     297,687,557      7,438,470
Income before equity in earnings of
associated companies, net of taxes and Minority Interest                        391,323,101       693,725,286     639,567,896     15,981,208
Equity in earnings of associated companies, net of taxes                         75,883,916        71,764,422      54,253,425      1,355,658
Minority Interest                                                                         –                 –       2,208,679         55,189
Net income                                                                  Rs.467,207,017        765,489,708     696,030,000    $17,392,055
Earnings per share:
    Basic                                                                           Rs.10.34            16.73            13.84        $0.35
    Diluted                                                                         Rs.10.11            16.34            13.66        $0.34
Weighted average shares used in computing
earnings per share (on an adjusted basis):
    Basic                                                                         45,172,800       45,765,725      50,292,960    50,292,960
    Diluted                                                                       46,199,082       46,836,147      50,942,433    50,942,433
The accompanying notes are an integral part of these consolidated financial statements.




                                                                             97
     Consolidated Statements of Shareholders' Equity and Comprehensive Income
     (in rupees/US$ except amounts per common stock and as stated otherwise)
     (Unaudited - see accompanying independent accountants review report)
                                                                                           Common                      Additional             Deferred      Retained          Other Shares held by            Total
                                                                                             Stock                 Paid-in capital         stock-based      earnings comprehensive Infotech Trust     Shareholders'
                                                                                            Shares     Par Value                         compensation                 Income/(loss)                          equity
     Balance as at March 31, 2005                                                       44,181,114   147,270,380      647,366,619            (933,619)    876,741,950    (4,170,573)   (2,054,800)    1,664,219,957
     Net income                                                                                  -             -                     -              -     467,207,017               -             -    467,207,017
     Other comprehensive income
          Gain (loss) on foreign currency translation                                            -             -                -                   -                -    (6,827,566)             -     (6,827,566)
          Unrealized gains (losses) on securities, net of taxes                                  -             -                -                   -                -         27,141             -          27,141
          Total comprehensive income                                                             -             -                -                   -                -              -             -     (6,800,425)
     Issuance of common stock on exercise of stock options                                 726,492     2,421,640       27,835,133                   -                -              -             -     30,256,773
     Shares issued on Tele Atlas acquisition (Refer note 5C)                               750,000     2,500,000       67,000,000                   -                -              -             -     69,500,000
     Deferred stock-based compensation                                                           -             -                -             579,186                -              -             -         579,186
     Amortization of Deferred Stock Compensation                                                 -             -                -                   -                -              -             -               -
     Shares transferred by the Infotech Employee
          Trust to employees on vesting                                                          -             -                     -              -                -              -             -               -
     Cash dividends paid at the rate of Rs. 1.25 per share                                       -             -                     -              -     (25,620,997)              -             -    (25,620,997)
     Balance as at March 31, 2006                                                      45,657,606    152,192,020      742,201,752           (354,433)    1,318,327,970   (10,970,998)   (2,054,800)   2,199,341,511
     Net income                                                                  -                             -                -                   -     765,489,708              -              -    765,489,708
     Other comprehensive income                                                  -                             -                -                   -                -             -              -               -
          Gain (loss) on foreign currency translation                            -                             -                -                   -                -    15,641,331              -      15,641,331
          Unrealized gains (losses) on securities, net of taxes                  -                             -                -                   -                -             -              -               -
          Adjustments to initially adopt SFAS 158, net of taxes                  -                             -                -                   -                -     (425,287)              -       (425,287)
          Realised losses on securities, net of taxes                            -                             -                -                   -                -             -              -               -




98
          Total comprehensive income                                             -                             -                -                   -                -             -              -      15,216,044
     Issuance of common stock on exercise of stock options                 496,286                     2,115,405       32,084,530                   -                -             -              -      34,199,935
     Shares issued on Tele Atlas acquisition (Refer note 5C)                     -                             -                -                   -                -             -              -               -
                                                                                                                                                                                                                       Consolidated Financial Statements - U.S. GAAP




     Deferred stock-based compensation                                           -                             -                -                   -                -             -              -               -
     Amortization of Deferred Stock Compensation                                 -                             -                -                   -                -             -              -               -
     Shares transferred by the Infotech Employee Trust to employees on vesting   -                             -                -                   -                -             -              -               -
     Reversal of Defered Stock based compensation on adoption of SFAS 123R       -                             -        (354,433)             354,433                -             -              -               -
     Stock split (effected in the form of stock dividend)                        -                    76,462,035                -                   -     (76,462,035)             -              -               -
     Stock based compensation expense                                            -                             -       77,645,934                   -                -             -              -      77,645,934
     Cash dividends paid at the rate of Rs. 1.25 per share                       -                             -                -                   -     (39,045,814)             -              -    (39,045,814)
     Balance as at March 31, 2007                                                      46,153,892    230,769,460      851,577,783                   -    1,968,309,829     4,245,046    (2,054,800)   3,052,847,318
     Net income                                                                                  -             -                     -              -     696,030,000               -             -    696,030,000
     Other comprehensive income
          Gain (loss) on foreign currency translation                                            -             -                -                   -                -    (9,695,934)             -      (9,695,934)
          Adjustments to initially adopt SFAS 158, net of taxes                                  -             -                -                   -                -              -             -                -
          Total comprehensive income                                                             -             -                -                   -                -              -             -      (9,695,934)
     Issuance of common stock on exercise of stock options                                       -             -                -                   -                -              -             -                -
     Preferential allotment of shares                                                    5,974,107    29,870,535    2,014,251,485                   -                -              -             -   2,044,122,020
     Reversal of Defered Stock based compensation
          on adoption of SFAS 123R                                                               -             -                -                   -                -              -             -               -
     Stock split (effected in the form of stock dividend)                                        -             -                -                   -                -              -             -               -
     Stock based compensation expense                                                            -             -       97,121,104                   -                -              -             -      97,121,104
     Cash dividends paid at the rate of Rs. 1.25 per share                                       -             -                -                   -     (60,747,464)              -             -    (60,747,464)
     Balance as at March 31, 2008                                                      52,127,999    260,639,995    2,962,950,372                   -    2,603,592,365   (5,450,888)    (2,054,800)   5,819,677,044
     Balance as at March 31, 2008                                                      52,127,999     $6,512,744      $74,036,741                   -     $65,057,280     ($136,204)     ($51,344)    $145,419,218
     The accompanying notes are an integral part of these consolidated financial statements.
                                              INFOTECH Annual Report 2007 - 08


Consolidated Statements of Cash Flows
(in rupees/US$, except amounts per common stock and as stated otherwise)
(Unaudited - see accompanying independent accountants review report)
                                                                       2006                                         2007               2008           2008
Cash flows from Operating Activities
Net income                                                              Rs. 467,207,017                   Rs. 765,489,708    Rs. 696,030,000    $17,392,054
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation                                                                165,743,523                      230,869,172         347,338,164       8,679,115
     Amortization of other intangible assets                                  22,005,825                       20,173,029          12,449,105        311,072
     Deferred stock-based compensation                                           579,186                       77,645,934          97,121,103      2,426,814
     Deferred taxes on income                                                  5,979,146                     (17,106,777)          93,478,188      2,335,787
     (Profit)/Loss on sale of investments                                              -                                -       (13,835,104)       (345,705)
     (Profit)/Loss on sale of premises and equipment                           1,187,412                      (1,210,760)         (3,688,133)       (92,157)
     Equity in earnings of associated company and ventures, net of taxes (75,883,916)                        (71,764,422)       (54,253,425)     (1,355,658)
Changes in assets and liabilities:
     Accounts receivable, net                                             (325,691,838)                     (354,550,192)      (461,569,011)    (11,533,459)
     Unbilled revenue on contracts                                            14,051,850                     (25,703,600)      (105,985,542)     (2,648,314)
     Prepaid expenses and other assets                                    (209,172,629)                        87,247,754      (190,588,751)     (4,762,338)
     Inventories                                                               1,484,756                           964,908                 –               –
     Other non-current assets                                                 11,856,100                     (40,490,830)          1,096,389          27,396
     Accounts payable                                                       (49,196,760)                      187,930,544        122,096,096       3,050,877
     Other liabilities                                                        69,140,971                       (1,973,125)        23,613,558         590,044
     Unearned revenue                                                         15,889,482                       41,646,243         63,079,314       1,576,195
     Other non-current liabilities                                          185,377,676                      (22,128,398)         72,444,836       1,810,216
Net cash provided by operating activities                                                  300,557,801       877,039,188        698,826,787       17,461,939
Cash flows from investing activities
Proceeds from maturity of bank deposits                                                      11,355,461        52,618,066          1,036,146          25,890
Investments in bank deposits                                                               (52,618,066)       (1,036,146)      (509,609,058)    (12,733,860)
Purchase of premises and equipment                                                        (402,960,496)     (707,388,162)    (1,413,287,426)    (35,314,528)
Proceeds from sale of premises and equipment                                                    962,711         1,210,760          9,693,079         242,206
Purchase consideration for acquisitions                                                    (69,917,506)                 -                  -               -
Proceeds from investments in associated ventures                                                      -        12,073,362                  -               -
Purchase of investments                                                                   (213,638,947)                 -    (2,140,340,951)    (53,481,783)
Proceeds from sale of investments                                                           233,931,104                 -        181,451,051       4,534,009
Net cash used in investing activities                                                     (492,885,739)     (642,522,120)    (3,871,057,159)    (96,728,067)
Cash flows from financing activities
Issuance of common stock                                                                     99,756,809        34,199,935      3,027,662,020     75,653,723
Proceeds from short-term debts                                                                        -      108,700,000                   -               -
Repayment of short-term debts                                                                         -      (71,650,930)                  -               -
Proceeds from long-term debts                                                                73,491,873      150,000,000         154,227,008      3,853,748
Repayment of long-term debts                                                                          -       (6,622,385)                  -               -
Cash dividends paid                                                                        (25,620,997)      (39,045,814)       (71,683,493)     (1,791,192)
Net cash provided by/(used in) financing activities                                        147,627,685       175,580,804       3,110,205,535     77,716,279
Effect of foreign exchange rate changes on cash and cash equivalents       4,605,466                           15,641,333          9,695,934         242,277
Net change in cash and cash equivalents                                 (40,094,787)                          425,739,206       (52,328,901)    $(1,307,572)
Cash and cash equivalents at beginning of the year                   Rs 325,024,678                       Rs. 284,929,891    Rs. 710,669,097     $17,757,848
Cash and cash equivalents at end of the year                        Rs. 284,929,891                       Rs. 710,669,097    Rs. 658,340,195     $16,450,280
Supplementary information:
Cash paid during the year for:
     Income taxes                                                   Rs. 189,763,893                       Rs. 182,757,855    Rs. 251,743,933     $6,290,453
     Interest                                                         Rs. 3,767,686                         Rs. 9,207,945     Rs. 37,171,668       $928,827
Non-cash items:
      Equity shares issued for acquisition                           Rs. 69,500,000                                      -                  -              -
The accompanying notes are an integral part of these consolidated financial statements.

                                                                                     99
Consolidated Financial Statements - U.S. GAAP


Notes to the Consolidated Financial Statements
(Unaudited - see accompanying independent accountants review report)

1.   Description of Business                                                     Infotech Aerospace Services Inc., Puerto Rico, USA
                                                                                 (hereinafter referred to as "IASI"), a former wholly owned
     Infotech Enterprises Limited, its wholly and majority owned                 subsidiary and now an associate of Infotech is engaged in
     consolidated subsidiaries and associated companies                          providing information technology and engineering services
     (hereinafter referred to as "Infotech Group") are engaged                   to its North American clients.
     in providing global technology services and solutions
     specializing in geospatial, engineering design and IT                  2.   Summary of Significant Accounting Policies
     solutions.                                                                  a)   Principles of Consolidation and Basis of
     Infotech Enterprises Limited (hereinafter referred to as                         Presentation. The consolidated financial statements of
     "Infotech") was incorporated on August 28, 1991 in                               Infotech and its majority-owned domestic and foreign
     Hyderabad, Andhra Pradesh as a private limited company                           subsidiaries are prepared in accordance with Generally
     and subsequently converted into a public limited company                         Accepted Accounting Principles in the United States
     on April 21, 1995. Infotech has its headquarters and                             ("U.S. GAAP") in Indian Rupees (Rs.), the national
     development facilities in India and serves a global customer                     currency of India. All significant inter-company balances
     base through its subsidiaries in United States of America                        and transactions have been eliminated.
     (USA), United Kingdom (UK) and Germany, and branches                             Minority Interest in subsidiaries represents the minority
     in India, Australia, Singapore, Canada, Norway, New                              shareholders' proportionate share of net assets and
     Zealand, and Dubai. Infotech's range of services include                         the results of operations of Infotech's majority owned
     digitization of drawings and maps, photogrammetry,                               subsidiaries.
     computer aided design/engineering (CAD/CAE), design                              Solely for the convenience of the reader, the financial
     and modelling, repair development engineering, reverse                           statements as of and for the year ended March 31,
     engineering application software development, software                           2008 have been translated into United States dollars at
     products development, consulting and implementation.                             the noon buying rate in New York City on March 31,
     Infotech specializes in software services and solutions for                      2008 for cable transfers in Indian rupees, as certified
     the manufacturing, utilities, telecommunications,                                for customs purposes by the Federal Reserve Bank of
     transportation & logistics, local government and financial                       New York of US$1 = Rs. 40.02. No representation is
     services markets.                                                                made that the Indian rupee amounts have been, could
     Infotech Enterprises Europe Limited, (formerly Dataview                          have been or could be converted into United States
     Solutions Limited, UK), (hereinafter referred to as "Infotech                    dollars at such a rate or at any other certain rate on
     Europe"), a wholly owned subsidiary of Infotech based at                         March 31, 2008 or at any other date.
     London, UK, provides geospatial services to clients in the                  b)   Investments in Associated Companies. Investments
     communications, utility and government sectors.                                  in business entities in which Infotech Group does not
     Infotech Enterprises America, Inc. (formerly known as                            have control, but has the ability to exercise significant
                                                                                      influence over operating and financial policies
     Infotech Software Solutions Inc) (hereinafter referred to as
                                                                                      (generally 20-50 percent ownership), are accounted for
     "Infotech America"), a wholly owned subsidiary of Infotech
                                                                                      by the equity method.
     based at East Hartford, CT, USA, focuses mainly on
     engineering design services and IT solutions.                               c)   Use of Estimates. The preparation of the
                                                                                      consolidated financial statements in conformity with
     Infotech Enterprises GmbH (formerly known as Advanced
                                                                                      U.S. GAAP requires that the management make
     Graphics Software GmbH) (hereinafter referred to as
                                                                                      estimates and assumptions that affect the reported
     "IEG"), a wholly owned subsidiary of Infotech based at                           amounts of assets and liabilities and disclosure of
     Leonberg, Germany, focuses mainly on engineering design                          contingent liabilities as of the date of the financial
     services for the transportation market segment. It is also                       statements, and the reported amount of revenues and
     engaged in the business of purchasing software licenses                          expenses during the reported period. Examples of such
     (mainly three software - Cadkey, 3D-View and I-DEAS)                             estimates include: estimates of expected contract costs
     and then reselling these licenses.                                               to be incurred to complete software development,
     Infotech Geospatial (India) Limited, Hyderabad, India                            allowance for doubtful debts, future obligations under
     (formerly Geospatial Integrated Solutions Pvt. Ltd.)                             employee benefit plans, valuation allowances for
     (hereinafter referred to as "IGIL"), a partly owned subsidiary                   deferred taxes, useful lives of premises and equipment
     of Infotech, is enagaged in extending services in the areas                      (fixed assets) and goodwill impairment. Actual results
     of GIS and IT.                                                                   could differ materially from those estimates.

                                                                      100
                                  INFOTECH Annual Report 2007 - 08




d)   Foreign Currency Translation. The accompanying                           customers with one to three months' warranty as post-
     consolidated financial statements are reported in Indian                 sale support for its fixed price engagements. Infotech
     Rupees, the reporting as well as functional currency                     Group has not provided for any warranty costs for
     of Infotech. However, the US dollar, Pound sterling                      the year ended March 31, 2006, 2007 and 2008 as
     and Euro are the functional currencies for its foreign                   historically it has not incurred any expenditure on
     subsidiaries located in U.S., U.K. and Germany                           account of warranties and since the customer is
     respectively. The translation of functional currencies                   required to formally sign off on the work performed,
     into Indian Rupees (reporting currency) is performed                     any subsequent work is usually covered by an additional
     for assets and liabilities using the current exchange rates              contract.
     in effect at the balance sheet date and for revenues,
                                                                              In accordance with Emerging Issues Task Force (EITF)
     costs and expenses using the average exchange rates
                                                                              01-14 (formerly Topic D-103), "Income Statement
     prevailing during the reporting periods. Adjustments
                                                                              Characterization of Reimbursements Received for
     resulting from the translation of functional currency
                                                                              "Out-of-Pocket" Expenses Incurred", Infotech Group
     financial statements to reporting currency are
                                                                              has accounted for reimbursements received for out-
     accumulated and reported as other comprehensive
                                                                              of-pocket expenses incurred as revenues in the
     income/(loss), a separate component of shareholders'
                                                                              statement of income.
     equity.
                                                                         f)   Costs of Revenue and Selling, General and
     Transactions in foreign currency are recorded at the
                                                                              Administrative Expenses. Costs of revenues
     exchange rate prevailing on the date of transaction.
                                                                              primarily include the compensation cost of technical
     Monetary assets and liabilities denominated in foreign
                                                                              staff, depreciation on dedicated assets and system
     currencies are expressed in the functional currency at
                                                                              software, application software costs, travel costs, data
     the exchange rates in effect at the balance sheet date.
                                                                              communication expenses, research and development
     Gains or losses resulting from foreign currency
                                                                              expenses and other expenses incurred that are related
     transactions are included in the statement of income.
                                                                              to the generation of revenue. Selling, general and
e)   Revenue Recognition. Revenue from software                               administrative expenses generally include the
     services, which include engineering design services,                     compensation costs of sales, management and
     mapping and geospatial services, software development                    administrative personnel, travel costs, advertising,
     and system maintenance consist of revenues earned                        business promotion, depreciation on assets, rent,
     from services performed either on a time-and-material                    repairs, electricity, and other general expenses not
     basis or time bound fixed price engagements. Revenues                    attributable to costs of revenues.
     earned from software services performed on a "time
                                                                         g)   Research and development costs. Research and
     and material" basis are recognized as and when services
                                                                              development costs are expensed as incurred and
     are performed. Software services performed on time
                                                                              amounted to Rs. 149,551,691, Rs. 205,168,270 and Rs.
     bound fixed-price engagements, require accurate
                                                                              196,710,370 (US$ 4,915,302), for the years ended
     estimation of the costs which include salaries and
                                                                              March 31, 2006, 2007 and 2008 respectively.
     related expenses of technical associates, related
     communication expenses, travel costs, scope and                     h)   Advertisement Cost. Infotech Group expenses all
     duration of each engagement. Revenue and related                         advertising costs as incurred. Advertising expenses
     costs for these projects are recognised on percentage                    charged to income amounted to Rs. 2,428,062, Rs.
     of completion basis, with revisions to estimates                         6,675,637 and Rs. 4,235,813 (US$ 105,842) for the years
     reflected in the period in which changes become                          ended March 31, 2006, 2007 and 2008 respectively.
     known. Provisions for estimated losses on such                      i)   Cash and Cash Equivalents. Infotech Group
     engagements are made during the period in which a                        considers all highly liquid investments with an original
     loss becomes probable and can be reasonably                              maturity of three months or less to be cash equivalents.
     estimated.                                                               Cash equivalents are stated at cost, which approximates
     Amounts included in the financial statements, which                      their fair value due to the short maturity of the
     relate to recoverable costs and accrued profits not yet                  investments. Cash and claims to cash that are restricted
     billed on contracts, are classified in current assets as                 as to withdrawal or use in the ordinary course of
     "Unbilled revenue on contracts". Billings on                             business are classified as other receivables under
     uncompleted contracts in excess of the accrued cost                      current assets unless they are to be utilized for other
     and accrued profit are classified in current liabilities as              than current operations in which case they are classified
     "Unearned revenue". Infotech group provides its                          as other non current assets .

                                                                   101
Consolidated Financial Statements - U.S. GAAP




  j)   Inventories. Inventories consist of software products/                   recorded value. If impairment is indicated, the asset is
       packages bought-in for resale and are generally stated at                written down to its fair value. Assets to be disposed
       the lower of cost as determined using the first-in-first-                are reported at the lower of the carrying value or the
       out method (FIFO), or net realizable value.                              fair value less cost to sell.
  k)   Premises, Equipment and Depreciation. Premises                      n)   Investments. Infotech Group has evaluated its
       and equipment are stated at actual cost less accumulated                 investment policies consistent with the provisions of
       depreciation. Depreciation is computed using the                         SFAS 115, "Accounting for Certain Investments in
       straight-line method over the estimated useful lives.                    Debt and Equity Securities", and determined that all
       Assets under capital leases and leasehold improvements                   of its investment securities are to be classified as
       are amortized using straight line method over shorter                    available-for-sale. Accordingly, such securities are
       of the lease-term or their estimated useful lives. Costs                 carried at fair value with unrealized gains and losses,
       of software purchased for use in the projects are                        net of taxes reported as other comprehensive income,
       depreciated over the useful life or over the period of                   a separate component of shareholders' equity. Realized
       the project whichever is lower.                                          gains and losses and declines in value judged to be
                                                                                other-than-temporary are included in other income.
       The cost and the accumulated depreciation for
                                                                                The cost of securities sold is based on the first-in-
       premises and equipment sold, retired or otherwise
                                                                                first-out (FIFO) method. Interest and dividends on
       disposed off are removed from the stated values and
                                                                                securities classified as available-for-sale are included
       the resulting gains and losses are included in the
                                                                                in other income. Other investments that are not
       statement of income. Advances paid towards the
                                                                                marketable are carried at cost, subject to tests of other
       acquisition of premises and equipment outstanding at
                                                                                than temporary impairment.
       each balance sheet date and the cost of premises and
       equipment not put to use before such date are disclosed             o)   Income Taxes. In accordance with the provisions of
       as Assets under Construction.                                            SFAS 109, "Accounting for Income Taxes", income
                                                                                taxesare accounted for under the asset and liability
  l)   Goodwill and Other Intangible Assets. Goodwill
                                                                                method. Deferred tax assets and liabilities are
       represents the excess of the cost of an acquired entity
                                                                                recognized for the future tax consequences attributable
       over the net of the amounts assigned to assets acquired
                                                                                to differences between the financial statements carrying
       and liabilities assumed. In accordance with SFAS No.
                                                                                amounts of existing assets and liabilities and their
       142, "Goodwill and Other Intangible Assets", goodwill
                                                                                respective tax bases and operating loss carry forwards.
       is tested for impairment using a fair-value approach at
                                                                                Deferred tax assets and liabilities are measured using
       the reporting unit level, annually or sooner when
                                                                                enacted tax rates expected to apply to taxable income
       circumstances indicate impairment. Infotech Group
                                                                                in the years in which those temporary differences are
       follows the two-step impairment recognition and
                                                                                expected to be recovered or settled. The effect on
       measurement guidance in accordance with SFAS 142.
                                                                                deferred tax assets and liabilities of a change in tax
       Infotech Group amortizes other intangible assets over                    rates is recognized in the statement of income in the
       their estimated useful life on a straight-line basis unless              period of change. Based on management's judgment,
       such life is deemed indefinite. Amortizable intangible                   the measurement of deferred tax assets is reduced, if
       assets are tested for impairment based on undiscounted                   necessary, by a valuation allowance for any tax benefits
       cash flows, and, if impaired, written down to fair value                 for which it is more likely than not that some portion
       based on either discounted cash flows or appraised                       or all of such benefits will not be realized.
       values.                                                                  Effective April 1, 2007, Infotech Group adopted the
  m) Impairment of Long-Lived Assets. Infotech Group                            provisions of FASB Interpretation No. 48, Accounting
     accounts for impairment of long-lived assets in                            for Uncertainty in Income Taxes-an interpretation of
     accordance with the provisions of SFAS 144                                 FASB Statement No. 109 ("FIN 48"). FIN 48 clarifies
     "Accounting for the Impairment or Disposal of Long-                        the accounting for uncertainty in income taxes by
     Lived Assets". Infotech Group reviews long-lived                           prescribing a minimum recognition threshold for a tax
     assets, for impairment whenever events or changes in                       position taken or expected to be taken in a tax return
     business circumstances indicate the carrying amount                        that is required to be met before being recognized in
     of assets may not be fully recoverable. Each                               the financial statements. Infotech Group classifies
     impairment test is based on a comparison of the                            potential interest and penalties related to unrecognized
     undiscounted cash flows expected to be generated from                      tax benefits as interest expense and other expense
     the use of the asset and its eventual disposition to its                   respectively.

                                                                     102
                                   INFOTECH Annual Report 2007 - 08




p)   Earnings Per Share. In accordance with the provisions of SFAS 128, "Earnings Per Share", basic earnings per share are
     computed on the basis of the weighted average number of shares outstanding during the period. Diluted earnings per share are
     computed on the basis of the weighted average number of common and dilutive common equivalent shares outstanding during
     the period, using the "treasury stock" method for options and warrants, except where the results will be anti-dilutive.
q)   Employee Stock Option Plan. Effective April 1, 2006, Infotech adopted Statement of Financial Accounting Standard ("SFAS")
     No. 123R, "Share-Based Payment," utilizing the modified prospective method. SFAS 123R requires the recognition of stockbased
     compensation expense in the consolidated financial statements for awards of equity instruments to employees based on the
     grant-date fair value of those awards, estimated in accordance with the provisions of SFAS 123R. Infotech recognizes these
     compensation costs on a graded vesting basis over the requisite service period of the award. Prior to the adoption of SFAS
     123R, Infotech followed the intrinsic value method to account for its employee stock option plans in accordance with the
     recognition and measurement principles of Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock
     Issued to Employees" and Related Interpretations ("APB 25"), as allowed by SFAS 123 and as amended by SFAS No. 148,
     "Accounting for Stock- Based Compensation - Transition and Disclosure". Infotech historically reported pro forma results
     under the disclosure-only provisions of SFAS 123.
     Under the modified prospective method, the provisions of SFAS 123R apply to all awards granted or modified after the date of
     adoption. In addition, the unrecognized expense of awards not yet vested at the date of adoption, determined under the original
     provisions of SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), are recognized in net income in the
     periods after the date of adoption. In accordance with the modified prospective transition method, Infotech's Consolidated
     Financial Statements for the prior periods have not been restated to reflect, and do not include, the impact of SFAS 123R.
     Proforma Disclosure
     Had stock based compensation cost been recognized based on the fair value at the date of grant in accordance with SFAS 123,
     the pro-forma amounts of Infotech Group's net income and earnings per share would have been as follows for the year ended
     March 31, 2006 respectively:

                                                                                                                                                 2006
     Net income
          As reported                                                                                                                Rs. 467,207,017
          Add: charge as per APB 25                                                                                                          579,186
          Less: charge under FAS 123                                                                                                      12,053,089
          Pro forma                                                                                                                      455,733,114
     Earnings per share:
     Basic        As reported                                                                                                                   10.34
                  Pro forma                                                                                                                     10.09
     Diluted      As reported                                                                                                                   10.11
                  Pro forma                                                                                                                      9.87

     Note: The pro forma disclosures shown above are not representative of the effects on net income and earnings per share in future years.
     The fair value of Infotech stock options used to compute pro-forma net income and earnings per share disclosures is the
     estimated present value at grant date using the Black-Scholes option-pricing model. The following assumptions were used:
                                                                                                                                                 2006
     Dividend yield                                                                                                                             0.65%
     Expected volatility                                                                                                                       85.00%
     Risk-free interest rate                                                                                                                    7.50%
     Expected term (in years)                                                                                                                      3.5




                                                                      103
Consolidated Financial Statements - U.S. GAAP




  r)   Derivative Financial Instruments. Infotech Group has                     Effective March 31, 2007, Infotech adopted the
       adopted the provisions of SFAS 133, "Accounting for                      provisions of SFAS No. 158, "Employer's
       Derivative Instruments and Hedging Activities" as                        Accounting for Defined Benefit Pension and
       amended. Infotech Group enters into forward foreign                      Other Post retirement Plans - an amendment of
       exchange contracts where the counter party is generally                  FASB Statements No. 87, 88, 106, and 132(R)".
       a bank. Infotech purchases forward foreign exchange                      The provisions of SFAS No. 158 were adopted
       contracts to mitigate the risk of changes in foreign                     pursuant to the transition provisions therein.
       exchange rates on cash flows denominated in certain                      Accordingly, Infotech has recognized the
       foreign currencies. These contracts do not qualify for                   unrecognized transitional obligation and actuarial
       hedge accounting under SFAS 133, as amended. Any                         losses as a liability with corresponding adjustment
       derivative that is either not a designated hedge, or is so               to accumulated other comprehensive income (net
       designated but is ineffective per SFAS 133, as amended                   of tax), a separate component of shareholders'
       is marked to market and recognized in earnings                           equity.
       immediately.
                                                                                The funded status of the company's retirement -
  s)   Employment Benefits.                                                     related benefit plans is recognized in the
                                                                                Consolidated Balance Sheet. The funded status
       i)     Provident Fund. In accordance with Indian law, all                is measured as the difference between the fair
              employees in India are entitled to receive benefits               value of plan assets and the projected benefit
              under the Provident Fund, which is a defined                      obligation at March 31, the measurement date.
              contribution plan. Both the employee and the                      The current portion of the benefit obligation
              employer make monthly contributions to the plan                   represents the actuarial present value of benefits
              at a predetermined rate (presently 12.0%) of the                  payable in the next 12 months exceeding the fair
              employees' basic salary. Infotech has no further                  value of plan assets. This liability is recorded in
              obligations under the plan beyond its monthly                     Current Liabilities - Other Liabilities - Others in
              contributions. These contributions are made to                    the Consolidated Balance Sheet
              fund administered and managed by the
              Government of India. Infotech's monthly                           (Gains)/losses not recognized as a component
              contributions are charged to income in the period                 of net periodic gratuity cost/(income) in the
              it is incurred.                                                   Consolidated Statement of Income as they arise
                                                                                are recognized as a component of other
       ii)    Employee State Insurance Fund. In addition to the                 comprehensive income in the Consolidated
              above benefit, all employees in India who are                     Statement of Stockholders' Equity, net of tax.
              drawing gross salary of less than Rs. 10,000 (US$                 Those (gains)/losses are subsequently recognized
              250) per month are entitled to receive benefit                    as a component of net periodic gratuity period
              under employee state insurance fund scheme. The                   cost/(income) pursuant to the recognition and
              employer makes contribution to the scheme at a                    amortization provisions of applicable accounting
              predetermined rate (presently 4.75%) of                           standards. (Gains)/losses arise as a result of
              employee's gross salary. Infotech has no further                  differences between actual experience and
              obligations under the scheme beyond its monthly                   assumptions or as a result of changes in actuarial
              contributions. These contributions are made to                    assumptions. Net periodic gratuity cost/(income)
              fund administered and managed by the                              is recorded in the Consolidated Statement of
              Government of India. Infotech's monthly                           Income and includes service cost, interest cost,
              contributions are charged to income in the year                   expected return on plan assets, amortization of
              it is incurred.                                                   prior service cost and (gains)/losses previously
                                                                                recognized as a component of Other
       iii)   Gratuity Plan. In addition to the above benefits,
                                                                                Comprehensive Income.
              Infotech provides for a gratuity obligation, a
              defined benefit retirement plan (the "Gratuity              iv)   Superannuation Plan. In addition to the above
              Plan") covering all its employees in India. The                   benefits, the senior management employees of
              Gratuity Plan provides a lump sum payment to                      Infotech in India are entitled to superannuation,
              vested employees at retirement or termination of                  a defined contribution plan (the "superannuation
              employment based on the respective employee's                     plan"). Infotech makes yearly contributions under
              salary, and the years of employment with Infotech                 the superannuation plan administered and
              Group. Infotech provides for the Gratuity Plan                    managed by the Life Insurance Corporation of
              on the basis of actuarial valuation.                              India ('LIC'), based on a specific percentage

                                                                    104
                                 INFOTECH Annual Report 2007 - 08




          (presently 15.0%) of each employee's basic salary.                 combination, the recognition and measurement of
          Infotech Group has no further obligations under                    assets acquired and liabilities assumed in a business
          the plan beyond its contributions.                                 combination, the accounting for goodwill, and financial
                                                                             statement disclosure. This Statement applies to Infotech
     v)   Contribution Pension Scheme. In addition to the                    prospectively to business combinations for which the
          above, Infotech Europe, operates a defined                         acquisition date is on or after April 1, 2009. Early
          contribution pension scheme. The assets of the                     adoption of SFAS 141R is prohibited. Infotech will
          scheme are held separately from those of Infotech                  adopt this statement in fiscal year 2009 and its effect on
          Europe in an independent administered fund.                        future periods will depend on the nature and significance
          Infotech Europe has no further obligations under                   of any acquisitions that are subject to this statement.
          the scheme beyond its monthly contributions.
                                                                             In December 2007, the FASB issued SFAS No. 160,
     vi) Compensated Absences. The employees of the                          “Non-controlling Interests in Consolidated Financial
         Company are entitled to compensated absences                        Statements” - An Amendment of ARB No. 51. SFAS
         based on the unavailed leave balance and the last                   160 establishes new accounting and reporting standards
         drawn salary of the respective employees. The                       for the non-controlling interest in a subsidiary and for
         Company has provided for the liability on account                   the deconsolidation of a subsidiary. Specifically, this
         of compensated absences in compliance with                          statement requires the recognition of a non-controlling
         SFAS No. 43. The Company has recognized                             interest (minority interest) as equity in the consolidated
         Rs. 32,129,148, Rs. 51,705,164 and Rs. 71,622,546                   financial statements and separate from the parent's
         (US$ 1,789,669)towards compensated absence                          equity. The amount of net income attributable to the
         liability for the years ended March 31, 2006, 2007                  non-controlling interest will be included in consolidated
         and 2008 respectively.                                              net income on the face of the income statement. SFAS
t)   Recently issued Accounting Pronouncements.                              160 clarifies that changes in a parent's ownership
                                                                             interest in a subsidiary that do not result in
     In September 2006, the FASB issued SFAS 157, Fair                       deconsolidation are equity transactions if the parent
     Value Measurements, which establishes a framework                       retains its controlling financial interest. In addition, this
     for measuring fair value in generally accepted                          statement requires that a parent recognize a gain or
     accounting principles, and expands disclosures about                    loss in net income when a subsidiary is deconsolidated.
     fair value measurements. This Statement applies under                   Such gain or loss will be measured using the fair value
     other accounting pronouncements that require or                         of the non-controlling equity investment on the
     permit fair value measurements. SFAS 157 is effective                   deconsolidation date. SFAS 160 also includes expanded
     for fiscal years beginning after November 15, 2007,                     disclosure requirements regarding the interests of the
     which is fiscal year commencing April 1, 2008 for us.                   parent and its non-controlling interest. SFAS 160 is
     We are in the process of evaluating the impact SFAS                     effective from fiscal year beginning on April 1, 2009
     157 will have on our financial position, results of                     to Infotech. Infotech does not expect the adoption of
     operations, liquidity and its related disclosures.                      this statement to have a material effect on the
                                                                             consolidated financials statements.
     In February 2007, the FASB issued FASB Statement
     159, The Fair Value Option for Financial Assets and                     In March 2008, the FASB issued SFAS No. 161,
     Financial Liabilities ("SFAS 159"). SFAS 159 allows                     Disclosures about Derivative Instruments and Hedging
     the company to choose to measure many financial                         Activities ("SFAS 161"). SFAS 161 requires disclosure
     assets and financial liabilities at fair value. Unrealized              of the fair values of derivative instruments and their
     gains and losses on items for which the fair value option               gains and losses in a tabular format. It also requires
     has been elected are reported in earnings. SFAS 159 is                  more information about an entity's liquidity by
     effective for fiscal years beginning after November 15,                 requiring disclosure of derivative features that are credit
     2007, which is fiscal year commencing April 1, 2008                     risk-related. Finally, it requires cross-referencing within
     for us. We are in the process of evaluating the impact                  footnotes to enable location of important information
     SFAS 159 will have on our financial position, results                   about derivative instruments. SFAS 161 is effective
     of operations, liquidity and its related disclosures.                   from year ending March 31, 2009 to Infotech . Infotech
                                                                             is in the process of evaluating the impact SFAS 161
     In December 2007, the FASB issued SFAS No. 141                          will have on the disclosures.
     (revised 2007), Business Combinations ("SFAS 141R"),
     which replaced SFAS 141. SFAS 141R retains the                     u)   Reclassification. Certain items previously reported
     fundamental requirements of SFAS 141, but revises                       in specific financial statement captions have been
     certain principles, including the definition of a business              reclassified to conform to the 2008 presentation.

                                                                  105
Consolidated Financial Statements - U.S. GAAP




3.   Investments in Bank Deposits
     Infotech invested Rs. 1,036,146 and Rs. 509,609,058 (US $ 12,733,860) in fixed rate bank deposits as of March 31, 2007 and 2008
     respectively. The deposits are for a term of six months to one year and they carry an average interest rate of 7.35% and 7.80% as of
     March 31, 2007 and 2008 respectively. Interest on investment in bank deposits is recognized on accrual basis.
4.   Premises and Equipment, net
     Premises and equipment at cost less accumulated depreciation consist of:
                                                                                                                       As of March 31
                                                                                       2007                 2008                 2008
     Land
     - Freehold                                                              Rs. 17,992,138       Rs. 17,202,605             $ 429,850
     - Leasehold                                                                  7,771,720            7,771,720               194,196
     Building                                                                  208,936,510           873,099,456            21,816,578
     Leasehold improvements                                                       1,368,618              666,262                16,648
     Computers including software                                            1,413,030,604         1,759,907,195            43,975,692
     Furniture and fittings                                                    164,369,583           219,754,871             5,491,126
     Office equipment                                                          216,026,775           408,298,076            10,202,351
     Electrical installation                                                     42,971,971          168,254,008             4,204,248
     Vehicles                                                                    15,932,707           14,044,676               350,941
     Assets under construction                                                 288,480,426           311,275,154             7,777,990
     Total                                                                    2,376,881,052        3,780,274,022             94,459,620
     Less: Accumulated depreciation                                         (1,222,981,869)      (1,567,842,580)           (39,176,476)
     Premises and equipment, net                                          Rs. 1,153,899,183    Rs. 2,212,431,442           $ 55,283,144

     Depreciation expense amounted to Rs. 165,743,523, Rs. 230,869,172 and Rs. 347,338,164 (US$ 8,679,115) for the years ended March
     31, 2006, 2007 and 2008 respectively.
     Land includes Rs. 17,783,965 (US$ 444,377) in respect of which deed of conveyance is pending.
     Infotech has estimated the useful lives of assets for depreciation purposes as follows:
                                                                    Estimated Useful Lives
               Building                                                             28 years
               Computers and Software                                                3 years
               Plant and Machinery                                                  10 years
               Office Equipment                                                     10 years
               Furniture and Fixtures                                               10 years
               Electrical Installation                                              10 years
               Vehicles                                                              5 years
               Leasehold Improvements                             Shorter of lease period or
                                                                      estimated useful lives

     Capital Leases
     Assets under capital leases are stated at the present value of minimum lease payments. The gross amount and related accumulated
     depreciation recorded under capital leases, included with premises and equipment, were as follows:
                                                                                                                        As of March 31
                                                                                        2007                 2008                   2008
     Computers                                                                Rs. 21,677,386                     –                     –
     Less: Accumulated depreciation                                              (11,726,167)                    –                     –
     Assets under capital leases                                                Rs. 9,951,219                    –                     –
     Depreciation on assets held under capital leases included in total depreciation expense amounted to Rs. 4,173,341, Rs. 7,119,929 and
     Rs. 1,871,145 (US$ 46,755) for the years ended March 31, 2006, 2007 and 2008 respectively.

                                                                  106
                                     INFOTECH Annual Report 2007 - 08




5.   Business Combinations
     a)   Vargis LLC ("Vargis")
          On January 21, 2004, Infotech America acquired 100% holding in Vargis for an initial purchase consideration of Rs. 134,520,908
          (US$ 2,951,962) in cash and Rs. 19,629,000 (US$ 450,000) earn-out that was payable at the end of the December 2004 based on
          pre-agreed performance criteria. The acquisition was accounted for as a purchase and accordingly, the purchase price was
          allocated to the assets acquired and liabilities assumed based on their respective fair values. Vargis' results of operations are
          included in the Infotech Group's consolidated statement of operations from the date of acquisition. The allocation of the
          purchase price resulted in non-deductible goodwill of Rs. 105,387,416 (US$ 2,416,034) and other intangible assets (customer
          contracts) of Rs. 28,670,160 (US$ 657,271) with a weighted average life of 3 years. Effective June 1, 2006, Vargis has been
          merged with Infotech America.
     b)   Tele Atlas India Private Limited
          On March 23, 2005, Infotech entered a Securities Purchase Agreement with Tele Atlas Data Gent N.V, Belgium and Tele Atlas
          Data's Hetrogenbosch B.V., Netherlands (hereinafter referred to as Tele Atlas) to acquire their 100% equity in Tele Atlas India
          Private Limited ("Tele Atlas India"). Tele Atlas N.V. (holding company of Tele Atlas) and Infotech also entered into a Master
          Services Agreement. Tele Atlas offers digital maps and dynamic location content for a variety of automotive, personal navigation,
          location-based services, geospatial products and database solutions. Tele Atlas India is a provider of database and software
          services to Tele Atlas.
          The acquisition of shares was subject to fulfillment of certain terms and conditions specified in the agreement and obtaining
          necessary regulatory approvals. On April 11, 2005, Infotech paid the full amount of consideration to Tele Atlas and equity
          shares of Tele Atlas India have been transferred in favour of Infotech. The results of Tele Atlas India have been consolidated
          by Infotech from the consummation date April 11, 2005.
          As part of the acquisition, Infotech was required to pay cash and Tele Atlas was required to invest the amount received in the
          equity shares of Infotech. Infotech was also required to discharge capital gains tax liability of Tele Atlas arising on account of
          the acquisition. Tele Atlas also paid additional cash for its investment in equity shares of Infotech. Effectively the acquisition is
          partially through exchange of shares and partially through cash.
          The consideration for this acquisition amounted to Rs. 84,144,699 comprising of fair value of equity shares issued Rs. 68,124,526
          (net of cash received Rs. 1,375,474), cash paid by Infotech for capital gains tax liabilty of Tele Atlas Rs. 14,751,173 and direct
          acquisition costs of Rs. 1,269,000.
          The purchase consideration has been allocated to the assets acquired and liabilities assumed as of the date of acquisition based
          on management's estimates in accordance with Statement of Financial Accounting Standards No. 141, Business Combinations.
          The allocation of purchase price resulted in recognition of an intangible asset -customer contract with a weighted average useful
          life of 3 years and negative goodwill which was allocated as a pro rata reduction to assets.
          The final purchase price allocation is as follows:
                                                                                                                              Assigned value
          Fair value of eligible noncurrent assets (including intangibles)                                                    Rs.111,334,169
          Less:Negative goodwill net of addition to eligible noncurrent assets                             59,660,681
               Deferred Tax Liability                                                                    (19,628,969)            (40,031,712)
          Net value assigned to noncurrent assets                                                                                 71,302,457
          Fair value of net assets acquired, excluding eligible noncurrent assets and deferred taxes                              32,471,211
          Deferred tax liability                                                                                                (19,628,969)
          Purchase consideration                                                                                              Rs. 84,144,699
          Subsequent to the acquisition, Infotech has merged Tele Atlas India with Infotech pursuant to a scheme approved by Hon'ble
          High Court of Judicature, Andhra Pradesh on January 27, 2006
     c)   Infotech Enterprises Benelux BV ("Infotech BV")
          Infotech Europe acquired 100% holding in Infotech Enterprises Benelux BV (formerly "Map Analyst BV"), a company based
          in Netherlands, on December 27, 2005, for an intial consideration of Rs. 1,382,022 (US$ 31,071). Infotech BV is primarily engaged
          in providing GIS services and data products. The financial statements of Infotech group have consolidated the accounts of
          Infotech BV with effect from December 27, 2005. Infotech group recognized goodwill of Rs. 297,000 (US$ 6,678) equal to the
          excess of the consideration paid of Rs. 1,382,022 (US$ 31,071) over the fair value of assets acquired of Rs. 1,085,022 (US$ 24,393).

                                                                    107
Consolidated Financial Statements - U.S. GAAP




     d)      Infotech Geospatial (India) Limited ("IGIL")
             Infotech acquired 74% holding in Infotech Geospatial (India) Limited (formerly Geospatial Integrated Solutions Pvt Ltd), a
             company based in Hyderabad, India, on July 6, 2007 for a consideration of Rs. 29,600,000 (US$ 739,630). IGIL is primarily
             engaged in providing GIS and IT services. The financial statements on Infotech Group have consolidated the accounts of IGIL
             with effect from July 6, 2007. Infotech group recognized goodwill of Rs. 3,439,152 (US$ 85,936) equal to the excess of the
             consideration paid of Rs. 29,600,000 (US$ 739,630) over the fair value of the assets acquired of Rs. 26,160,849 (US$ 653,694).
6.   Goodwill, net
     Goodwill consists of:
                                                                                                                         As of March 31
                                                                                         2007                    2008              2008
     Goodwill
           Acquisition of Dataview                                            Rs. 120,168,302       Rs. 120,168,302           $ 3,002,706
           Acquisition of Cartographic                                             43,625,813            43,625,813             1,090,100
           Acquisition of IEG                                                      38,971,766            38,971,766               973,807
           Acquisition of Map Centric                                              12,114,618             12,114,618              302,714
           Acquisition of Vargis                                                  105,387,416           105,387,416             2,633,369
           Acquisition of Infotech BV                                                 297,000                297,000                7,421
           Acquisition of IGIL                                                              –              3,439,152               85,936
     Total                                                                        320,564,915          324,004,067              8,096,053
     Less: accumulated amortization                                                85,368,339            85,368,339             2,133,142
     Less: impairment                                                              21,713,628            21,713,628               542,569
     Goodwill, net                                                            Rs. 213,482,948       Rs. 216,922,100           $ 5,420,342
     Goodwill represents the excess of amount paid towards purchase price over the fair value of assets acquired. Goodwill is tested for
     impairment annually and when circumstances indicate that the carrying amount may not be recoverable as provided under FAS 142.
7.   Other Intangible Assets, net
     Other intangible assets are all amortizable and have original estimated useful lives as follows:
     Customer contracts                                                           3 to 5 years
     License fees                                                                     5 Years
     The following tables’ present details of Infotech Group’s total other intangible assets:
                                                                                       Gross             Accumulated                  Net
                                                                                                         amortization
     As of March 31, 2007
          Customer contracts                                                   Rs. 66,017,475           Rs. 53,568,370     Rs. 12,449,105
          License fees                                                                827,521                  827,521                  -
     Total                                                                     Rs. 66,844,996           Rs. 54,395,891     Rs. 12,449,105

     As of March 31, 2008
     Customer contracts                                                       Rs. 66,017,475            Rs. 66,017,475                   -
         License fees                                                                827,521                   827,521                   -
     Total                                                                    Rs. 66,844,996            Rs. 66,844,996                   -
     Total                                                                        $ 1,670,290              $ 1,670,290                   -

     Amortization of intangible assets amounted to Rs 22,005,825, Rs. 20,173,029 and Rs. 12,449,105(US$ 311,072) for the years ended
     March 31, 2006, 2007 and 2008 respectively.




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                                      INFOTECH Annual Report 2007 - 08




8.   Investments
     Investments of Infotech Group consist of available-for-sale securities and other non-marketable securities:
                                                                                                                         As of March 31
                                                                                       2007                  2008                 2008
     Available-for-sale securities
     Cost                                                                     Rs. 6,659,000     Rs. 1,994,052,004           $ 49,826,387
     Gross unrealized holding gains                                                 129,800                129,800                 3,243
     Permanent diminution in value                                              (6,551,990)            (7,751,990)             (193,703)
     AFS - Fair Value                                                               236,810         1,986,429,814             49,635,927
     Other investments, at cost                                                  13,468,000                      –                     –
     Investments - Non current                                               Rs. 13,704,810     Rs. 1,986,429,814           $ 49,635,927
     Infotech Group records an investment impairment charge on investments, when management believes an investment has experienced
     a decline in value that is judged to be other than temporary. Infotech monitors its investments for impairment by considering current
     factors including economic environment, market conditions and the operational performance and other specific factors relating to
     the business underlying the investment. Based on its assessment of its carrying values of investments, Infotech Group impaired the
     carrying value of its investment in Yeomen group, and recorded permanent diminution in value in investment amounting to Rs.
     31,763, Rs. NIL and Rs. NIL (US$ NIL ) in statement of income for the years ended March 31, 2006, 2007 and 2008 respectively.
     Other investments include, ordinary shares acquired by Infotech Europe in Multimedia Mapping Limited ("MML"), an unlisted
     company on July 31, 2001 at a cost of Rs. 13,944,000 (£ 200,000). This represents approximately 2% of the issued share capital of
     MML. In December 2007, Infotech Europe sold the investment for £ 452,211 and the profit on sale of investment has been
     recognized as Other Income.
     Investments in Associated Companies

     The summarized financial information as to assets, liabilities and results of operations of IASI is presented below:
                                                                                                                        As of March 31
                                                                                        2007                  2008                 2008
     Balance sheet
     Current assets                                                          Rs. 491,966,601      Rs. 578,779,869          $ 14,462,266
     Non-current assets                                                          116,530,955           149,178,392            3,727,596
     Current liabilities                                                         101,126,400           141,850,292            3,544,485
     Net current assets                                                          390,840,201           436,929,577           10,917,781
     Stockholders equity                                                         507,371,156           586,107,969           14,645,377

     Statement of income
                                                   For the year ending    For the year ending   For the year ending   For the year ending
                                                       March 31, 2006         March 31, 2007        March 31, 2008         March 31, 2008
     Revenues                                        Rs. 748,339,615      Rs. 1,292,078,682     Rs. 1,547,906,080           $ 38,678,313
     Gross profit                                        298,557,900            391,816,883           358,953,347              8,969,349
     Net income                                          212,970,685            188,841,818           142,755,642              3,567,107

     Infotech's equity in the profit of IASI, net of taxes was Rs.78,078,876, Rs. 71,764,422 and Rs. 54,253,425 (US$ 1,355,658) for the
     years ended March 31, 2006, 2007 and 2008.




                                                                   109
Consolidated Financial Statements - U.S. GAAP




9.   Borrowings
     Short-term debts
     Short-term debts consist of:
                                                                                                                            As of March 31
                                                                                        2007                   2008                    2008
     Working capital facility                                                 Rs. 108,700,000        Rs. 43,493,278             $ 1,086,789
     Short-term debts                                                         Rs, 108,700,000        Rs. 43,493,278             $ 1,086,789
     On July 2, 2007, Infotech America was approved by City National Bank for US$ 3,500,000 revolving line of credit maturing on July
     1, 2008. Interest rate for this loan is based on the bank's prime rate plus one half of one percent per annum or LIBOR interest rate
     plus two percent per annum, whichever is higher. The line of credit is guaranteed by Infotech India. As of March 31, 2008, only US$
     1,000,000 was utilized.
     Long-term Debts
     Long-term debts outstanding comprise of:
                                                                                                                            As of March 31
                                                                                         2007                   2008                  2008
     Secured Debts
     Hire purchase debts                                                        Rs. 1,739,039                     -                       -
     Term loans                                                                   150,000,000           380,541,558               9,508,784
     Capital leases                                                                 9,368,789                     -                       -
     Total Debts                                                                  161,107,828           380,541,558               9,508,784
     Less: Current portion of long-term debt                                        6,879,400           175,519,019               4,385,782
     Long-term debt, net of current portion                                   Rs. 154,228,428       Rs. 205,022,539             $ 5,123,002
     In the year ended March 31, 2007, Infotech has taken a Term Loan for Rs. 150,000,000 (US$ 3,748,126) from a bank bearing a fixed
     rate of interest of 8.50% for a period of 3 years, commencing February, 2008. The term loan is secured by land including superstructures.
     Vehicles and computers acquired under Hire Purchase Finance/Capital Leases are hypothecated to the banks/lenders as security for
     the amounts financed.
     Aggregate maturities of long-term debts subsequent to March 31, 2008, are Rs. 75,000,000 (US$ 1,874,063) in fiscal 2009, Rs.
     75,000,000 (US$ 1,874,063) in fiscal 2010 and Rs. 55,022,539 (US$ 1,374,876) in fiscal 2011.
     Unused Lines of Credit
     Unused lines of credit comprise of:
                                                                                                                            As of March 31
                                                                                         2007                   2008                   2008
     Packing credit and other lines of credit                                 Rs. 100,000,000        Rs. 99,925,000             $ 2,496,877
     Non-fund facilities                                                          103,112,788             66,745,265              1,667,798
     Total unused lines of credit                                             Rs. 203,112,788       Rs. 166,670,265             $ 4,164,675




                                                                    110
                                   INFOTECH Annual Report 2007 - 08




10. Earnings Per Share
    Basic earnings per share is computed on the basis of the weighted average number of shares outstanding (weighted average number
    of shares issued less unallocated, unvested or unexercised shares held by the Infotech Employee Trust). Allocated but unvested or
    unexercised shares not included in the calculation of weighted-average shares outstanding for basic earnings per share were 29,400 as
    of March 31, 2006, 2007 and 2008 respectively. Diluted earnings per share is computed on the basis of the weighted average number
    of shares outstanding plus the effect of outstanding stock options using the "treasury stock" method.
    In addition to the above, the unallocated shares held by Infotech ESOP Trust, which are by definition unvested, have been excluded
    from the calculations. Such shares amounted to 82,680 as of March 31, 2006, 2007 and 2008 respectively.
    The components of basic and diluted earnings per share were as follows:
                                                                                                                        As of March 31
                                                                 2006                 2007                  2008                  2008
    Net income                                        Rs. 467,207,017      Rs. 765,489,708      Rs. 696,030,000           $ 17,392,055
    Average outstanding shares                             45,172,800           45,765,725            50,292,960
    Dilutive effect of stock options                        1,026,282            1,070,422               649,473
    Share and share equivalents                            46,199,082           46,836,147            50,942,433
    Earnings per share
    Basic                                                    Rs. 10.34           Rs. 16.73             Rs. 13.84                 $ 0.35
    Diluted                                                  Rs. 10.11           Rs. 16.34             Rs. 13.66                 $ 0.34




                                                                 111
Consolidated Financial Statements - U.S. GAAP




11. Employee Benefits
    The Gratuity Plan
    The following table sets forth the funded status of the Gratuity Plan of Infotech, and the amounts recognized in Infotech balance sheet.
                                                                                                                               As of March 31
                                                                       2006                     2007                  2008               2008
     Accumulated Benefit obligation                           Rs. 41,576,282           Rs. 58,415,134      Rs. 81,972,393            $ 2,048,286
     Change in projected benefit obligation
     Projected benefit obligation at the
     beginning of the year                                       50,166,449               71,252,532          101,055,185              2,525,117
     Liability assumed on acquisition of Tele Atlas                5,625,052                        -                   -                      -
     Service Cost                                                15,997,807               22,093,629           26,689,179                666,896
     Interest Cost                                                 4,205,198                5,568,421           9,982,915                249,448
     Actuarial loss / (gain)                                     (1,604,535)                5,435,130           3,872,528                 96,765
     Benefits paid                                               (3,137,439)              (3,294,527)         (5,915,857)              (147,823)
     Projected benefit obligation at the
     end of the year                                              71,252,532             101,055,185          135,683,950              3,390,403
     Plan Asset at Fair Value
     Plan assets at the beginning of the year                      6,467,656                6,917,359           4,493,259                112,275
     Actual return on plan assets                                    481,025                  484,868             546,643                 13,659
     Employer contribution                                         1,591,831                  385,559           3,234,701                 80,827
     Benefits paid                                               (1,699,822)              (3,294,527)         (5,915,857)              (147,823)
     Actuarial gain / (loss)                                          76,669                        -                   -                      -
     Plan Asset at Fair Value                                      6,917,359                4,493,259           2,358,746                 58,938
     Funded status of the plan                                  (64,335,173)             (96,561,926)       (133,325,204)            (3,331,464)
     Unrecognized transition obligation / (asset)                    751,797                        -                   -                      -
     Unrecognized net actuarial loss / (gain)                      2,356,149                        -                   -                      -
     Accrued benefit cost                                   Rs. (61,227,227)             (96,561,926)       (133,325,204)            (3,331,464)
     The components of net gratuity cost are
     reflected below:
     Service Cost                                                15,997,807               22,093,629           26,689,179               666,896
     Interest Cost                                                 4,205,198               5,568,521            9,982,915               249,448
     Expected return on plan assets                                (481,025)               (484,868)            (546,643)               (13,659)
     Amortization of unrecognized transition obligation              107,521                 107,521              107,521                  2,687
     Actuarial loss / (gain)                                     (4,037,354)               5,435,130            3,872,528                 96,765
     Net gratuity cost                                        Rs. 15,792,147           Rs. 32,719,933      Rs. 40,105,500            $ 1,002,137
     Weighted average assumptions used to determine
     net gratuity cost and benefit obligations:
     Discount rate                                                  7.5% p.a                 8.0% p.a              8.0% p.a            8.0% p.a
     Long-term rate of compensation increase                      12.0% p.a        7.5% to 12.0% p.a    7.5% to 12.0% p.a     7.5% to 12.0% p.a

     Cash Flows
     Infotech expects to contribute Rs. 17,551,121 (US$ 438,559) to its Gratuity plan during the year ending March 31, 2009. The following benefit
     payments, which reflect expected future service, as appropriate, are expected to be paid:
     For the financial year ended March 31,                              Rs.
                2010                                              19,334,875
                2011                                              22,531,585
                2012                                              29,747,437
                2013                                              36,328,087
                2014 - 2019                                     208,202,095

     Infotech has invested the entire plan assets in debt securities and maintained by LIC of India.

                                                                         112
                                                                                                               1
                                  INFOTECH Annual Report 2007 - 08




   Effective March 31, 2007, Infotech adopted the provisions of SFAS No. 158. The following table presents the incremental effect of
   applying SFAS No. 158 on the Consolidated Statement of Financial Position:
                                                           Before          Adjustments                  After                  After
                                                      Application                                 Application            Application
                                                      of SFAS 158                                 of SFAS 158            of SFAS 158
   Current Assets-Deferred Taxes on Income          Rs. 60,490,862           Rs. 153,293         Rs. 60,644,155           $ 1,407,057
   Non Current Assets-Other assets (Non-Current)        75,114,314                65,696             75,180,010             1,744,316
   Total Assets                                       135,605,176                218,989           135,824,165              3,151,373
   Current liabilities - Other liabilities - others   313,650,703                450,994           314,101,697              7,287,742
   Other non-current liabilities                      206,434,191                193,282           206,627,473              4,794,141
   Total Liabilities                                  520,084,894                644,276           520,729,170            12,081,883
   Accumulated other comprehensive
   income/(loss), net of tax                             4,670,333              (425,287)             4,245,046                98,493
   Total Shareholders' Equity                    Rs. 3,053,272,608          Rs. (425,287)     Rs. 3,052,847,321          $ 70,831,725

   As at March 31, 2008, actuarial losses of Rs. 536,755 (US$ 13,412) were additionally recognized in Accumulated Other Comprehensive
   Income, net of tax of Rs. 182,443 (US$ 4,559). Consequently, actuarial losses amounting to Rs. 1,181,031 (US$ 29,511), net of tax of
   Rs. 401,432 (US$ 10,031) form part of Accumulated Other Comprehensive Income as at March 31, 2008.
   The contributions made to various employee benefit contribution funds are as follows:
                                                                                                                      As of March 31
                                                             2006                  2007                   2008                   2008
   Provident Fund                                   Rs. 46,754,165        Rs. 75,868,492        Rs. 94,557,035            $ 2,362,744
   Employee State Insurance Scheme                       1,522,205             4,091,046             7,837,616                195,842
   Superannuation Fund                                   6,749,134            12,717,537            22,291,822                557,017
   Contribution Pension Scheme                          48,990,782            75,904,299           131,426,839              3,284,029

12. Income Taxes
   The provision for income taxes consists of:
                                                                                                                  Year ended March 31
                                                              2006                  2007                  2008                   2008
   Foreign taxes
       Current                                       Rs.17,008,436       Rs. 102,992,926       Rs. 125,275,116            $ 3,130,313
       Deferred                                         13,528,860          (10,114,027)            13,045,890               325,984
   Domestic taxes
       Current                                          60,350,000            81,587,674            78,934,252              1,972,370
       Deferred                                         (7,549,715)           (6,992,750)           80,432,299              2,009,803
   Aggregate taxes                                  Rs. 83,337,581        Rs.167,473,823       Rs. 297,687,557            $ 7,438,470




                                                                113
Consolidated Financial Statements - U.S. GAAP




  A reconciliation between the provisions for income taxes to the amount computed by applying the statutory income tax rate to
  income before provision for income taxes is summarized below:
                                                                                                                      Year ended March 31
                                                               2006                    2007                      2008                   2008
  Net income before taxes (Rs.)                      Rs 474,660,682        Rs. 861,199,109         Rs. 937,255,453             $ 23,419,678
  Enacted tax rates in India                                 33.66%                  33.99%                   33.99%                 33.99%
  Computed tax expense (Rs.)                             159,770,786            292,721,577              318,573,129              7,960,348
  Less: tax effect due to non-taxable export income (75,640,610)              (166,271,956)            (111,624,058)            (2,789,207)
  Difference arising from different tax
  rate in other tax jurisdiction                           (960,881)                 733,436                (184,396)                (4,608)
  Stock compensation (non-deductible)                        194,954             26,391,853               23,846,082                 595,854
  Impairment / amortization of goodwill /
  intangibles (non-deductible)                             7,407,161               6,856,813                4,231,451                105,733
  Permanent differences                                   13,990,656             19,047,729               26,329,587                 657,912
  Changes in valuation allowance,
  including losses of subsidiaries                      (21,311,425)           (12,116,817)                 3,775,981                 94,353
  Effect of tax rate change                                (113,060)                 111,188              32,739,781                 818,085
  Total taxes recognized in the
  statement of income                                Rs. 83,337,581        Rs. 167,473,823         Rs. 297,687,557              $ 7,438,470
  The provision for foreign taxes as of March 31, 2006, 2007 and 2008 is due to income taxes payable by the foreign subsidiaries of Infotech.
  The tax effects of significant temporary differences that resulted in deferred tax assets and liabilities and a description of the financial
  statement items that created these differences are as follows:
                                                                                                                      Year ended March 31
                                                                                       2007                      2008                   2008
  Deferred tax assets:
  Operating losses                                                            Rs. 3,775,981                         -                       -
  Accounts receivable                                                            36,452,341               20,517,247                 512,674
  Employee Benefits                                                              55,715,000               75,792,114              1,893,856
  Others                                                                           2,184,190               2,652,062                  66,268
  Gross deferred tax assets                                                      98,127,512               98,961,423              2,472,798
  Less: Valuation allowance                                                      (3,775,981)                        -                       -
  Total deferred tax assets                                                      94,351,531               98,961,423              2,472,798
  Deferred tax liabilities:
  Unbilled Revenue on contracts                                                  30,505,063               25,518,679                 637,648
  Premises and equipment                                                         32,679,597              135,754,062              3,392,155
  Investments in associated companies and AFS                                    55,216,580               70,913,419               1,771,949
  Others                                                                           6,542,990                        -                       -
  Total deferred tax liabilities                                                124,944,230              232,186,160              5,801,752
  Net deferred income tax assets/(liabilities)                             Rs. (30,592,699) Rs. (133,224,737)                 $ (3,328,954)
  Operating loss carry-forwards for tax purposes of Infotech Europe amounted to approximately Rs. 11,109,095 and Rs. Nil ( US$ Nil)
  as of March 31, 2007 and 2008 and are available as an offset against future taxable income of such entities. These carry-forwards
  expire at various dates primarily over 10 years. Realization is dependent on such subsidiaries generating sufficient taxable income
  prior to expiration of the loss carry-forwards. A valuation allowance is established attributable to loss carry-forwards in subsidiaries
  where, based on available evidence, it is more likely than not that it will not be realized.
  In July 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” an interpretation of FASB
  Statement No. 109 ("FIN 48"). The Interpretation clarifies the accounting for uncertainty in income taxes recognized in a company's
  financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and
  measurement of a tax position taken or expected to be taken in a tax return. The Interpretation also provides guidance on derecognition,
  classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective from fiscal year
  beginning on April 1, 2007. As a result of the adoption of FIN 48, Infotech did not have to recognize any increase/decrease in the
  liability for unrecognized tax benefits related to tax positions taken in prior periods.

                                                                  114
                                    INFOTECH Annual Report 2007 - 08




13. Employee Stock Option Plans
    1999 Infotech Employee Stock Offer Scheme (ESOP Plan)
    In 1998-99, Infotech set up Infotech Employee Stock Offer Scheme (ESOP Plan) and allotted 161,800 equity shares of Rs. 10 (US$
    0.22) each at a premium of Rs. 45 (US$ 1.01) per share to the Infotech ESOP Trust ("Trust"). Trust allocates options to the
    employees on the recommendation of the management and upon the receipt of full payment upfront. The options so allocated are
    under lock-in period (i.e., the date of transfer of the shares from Trust to the employee) and it differs from offer to offer. Where the
    employee leaves Infotech before the expiry of the lock-in-period the options allocated to such employee stands transferred to Trust
    at a predetermined price of Rs. 55 (US$ 1.24). Hence, the lock-in-period has been considered as vesting period. However, Trust and
    Infotech have a discretionary power to waive the restriction on selling such stock to Trust.
    Infotech nominates the trustees of Trust and all the existing trustees are employees of the Company. Trust transfers stocks only on
    the specific instructions of Infotech and not entitled to carry any activities other than those specified in the Trust deed. Hence, the
    financial statements of Trust have been consolidated with the financial statements of Infotech.
    Changes in number of shares representing stock options outstanding were as follows:
                                                                                                                     Year ended March 31
                                                                         2006                   2007                       2008
                                                          Number of       Weighted       Number Weighted           Number Weighted
                                                             shares        Average      of shares    Average      of shares     Average
                                                                           Exercise                  Exercise                  Exercise
                                                                              Price                    Price                      Price
    Balance at the beginning of the year                       29,400        Rs. 18       29,400         Rs. 18       29,400        Rs. 18
    Granted                                                         -             -            -              -            -             -
    Exercised                                                       -             -            -              -            -             -
    Forfeeted -                                                     -             -            -              -            -
    Balance at the end of the year                             29,400        Rs. 18       29,400         Rs. 18       29,400        Rs. 18
    2001 Associate Stock Option Plan (ASOP 2001)
    Infotech instituted ASOP 2001 in April 2001 and earmarked 225,000 equity shares of Rs. 10 each for issue to the employees under
    ASOP. Under ASOP 2001, options will be issued to employees at an exercise price, which shall not be less than the market price on
    the date of grant. These options vest over a period ranging from one to three years from the date of grant, starting with 10% at the
    end of first year, 15% at the end of one and half years, 20% after two years, 25% at the end of two and half years and 30% at the end
    of third year.
    Changes in number of shares representing stock options outstanding were as follows:
                                                                                                                     Year ended March 31
                                                                    2006                        2007                       2008
                                                          Number of Weighted             Number Weighted           Number Weighted
                                                             shares   Average           of shares    Average      of shares     Average
                                                                      Exercise                       Exercise                  Exercise
                                                                         Price                         Price                      Price
    Balance at the beginning of the year                       83,910            34        38,550           28        13,500            42
    Granted                                                         -                           -            -             -             -
    Exercised                                                (43,710)            20      (23,250)           12             -             -
    Forfeited                                                 (1,650)            24       (1,800)           12             -             -
    Balance at the end of the year                             38,550        Rs. 28        13,500           20        13,500            42
    Exercisable at the end of the year                         25,050        Rs. 39         3,375        Rs.42         2,700        Rs. 42
    Weighted average fair value of
    options granted during the year                                  -             -            -             -             -             -


                                                                  115
Consolidated Financial Statements - U.S. GAAP




  2002 Associate Stock Option Plan (ASOP 2002)
  Infotech instituted ASOP 2002 in October 2002 and earmarked 575,000 equity shares of Rs.10 each for issue to the employees under
  ASOP. Under ASOP 2002, options will be issued to employees at an exercise price, which shall not be less than the market price on
  the date of grant. These options vest over a period ranging from one to three years from the date of grant, starting with 10% at the
  end of first year, 15% at the end of one and half years, 20% after two years, 25% at the end of two and half years and 30% at the end
  of third year.
  Changes in number of shares representing stock options outstanding were as follows:
                                                                                                                  Year ended March 31
                                                                   2006                     2007                         2008
                                                       Number of    Weighted         Number Weighted            Number Weighted
                                                          shares     Average        of shares    Average       of shares      Average
                                                                     Exercise                    Exercise                    Exercise
                                                                        Price                      Price                         Price
  Balance at the beginning of the year                     995,496         43        239,085          43           46,025           44
  Granted                                                        -                                                      -            -
  Exercised                                              (681,282)         43       (162,235)            42       (7,550)      863.34
  Forfeited                                               (75,129)         44        (30,825)            44     (22,350)        129.96
  Balance at the end of the year                           239,085        Rs. 43       46,025        Rs. 42        16,125       126.52
  Exercisable at the end of the year                       193,060        Rs. 41       18,819        Rs. 44        4,680         43.11
  Weighted average fair value of
  options granted during the year                                 -             -            -             -            -             -

  2004 Associate Stock Option Plan (ASOP 2004)
  Infotech instituted ASOP 2004 in October 2004 and earmarked 1,150,000 equity shares of Rs.10 each for issue to the employees
  under ASOP. Under the ASOP 2004, options will be issued to employees at an exercise price, which shall not be less than the market
  price on the date of grant. These options vest over a period ranging from one to three years from the date of grant, starting with 10%
  at the end of first year, 15% at the end of one and half years, 20% after two years, 25% at the end of two and half years and 30% at
  the end of third year.
  Changes in number of shares representing stock options outstanding were as follows:
                                                                                                                 Year ended March 31
                                                                 2006                       2007                        2008
                                                       Number of Weighted            Number Weighted            Number Weighted
                                                          shares   Average          of shares    Average       of shares     Average
                                                                   Exercise                      Exercise                   Exercise
                                                                      Price                        Price                       Price
  Balance at the beginning of the year                      15,000            47    1,974,000            88    2,157,354            47
  Granted                                                2,185,500            88      775,000           109       45,000        269.11
  Exercised                                                 (1,500)           47    (310,801)            47    (382,860)         69.93
  Forfeited                                              (225,000)            47    (280,845)            47    (147,229)        253.45
  Balance at the end of the year                         1,974,000            88    2,157,354            47    1,672,265        224.76
  Exercisable at the end of the year                       591,646        Rs. 85      140,223        Rs. 89      207,760    Rs. 175.81
  Weighted average fair value of
  options granted during the year                                 -       Rs. 88             -      Rs. 109             -   Rs. 269.11




                                                                116
                                     INFOTECH Annual Report 2007 - 08




    Information about number of equity shares representing stock options outstanding as of March 31, 2008:
                                                                                                                        Year ended March 31
                                                                            Outstanding                               Exercisable
         Range of                                      Weighted             Weighted        Number of            Weighted          Number of
         Exercise Price                                  Average             Average             shares            Average               shares
         (per share)                               Exercise Price          remaining        arising out      Exercise Price      arising out of
                                                      (per share)     contractual Life      of options          (per share)             options
         19 to 28                                              19                     -          29,400                   -                  -
         29 to 43                                               -                     -               -                   -                  -
         44 to 47                                               -                     -               -                   -                  -
         48 to 71                                               -                     -               -                   -                  -
         72 to 107                                              -                     -               -                   -                  -
         108 to 160                                        129.03                  0.95          45,525              129.39              9,975
         161 to 240                                        236.79                  2.30         985,565              251.71            135,490
         241 to 362                                        355.00                  3.80         600,000              355.00             60,000
         363 to 542                                             -                     -               -                   -                  -
         543 to 813                                        546.22                  2.69          70,800              506.22              9,675
    Stock-based compensation
    Infotech's Consolidated Financial Statements as of and for the year ended March 31, 2008 reflect the impact of SFAS 123R. In
    accordance with the modified prospective transition method, Infotech's Consolidated Financial Statements for the prior periods have
    not been restated to reflect, and do not include, the impact of SFAS 123R. As required by SFAS 123R, management has made an
    estimate of expected forfeitures and is recognizing compensation costs only for those equity awards expected to vest. Upon adoption
    of SFAS 123R, Infotech had no cumulative adjustment on account of expected forfeitures for stock-based awards granted prior to
    April 1, 2006. During the year ended March 31, 2008, Infotech recorded stock -based compensation related to stock options of Rs.
    70,156,169 (US$ 1,753,028) on graded vesting basis for all unvested options granted prior to and options granted after the adoption
    of SFAS 123R. As of March 31, 2008, there was Rs. 97,885,911 (US$ 2,445,925) of unrecognized compensation cost related to
    unvested options which is expected to be recognized over a weighted average period of 3.10 years Infotech issues new shares to
    satisfy share option exercise. Cash received from option exercises amounted to Rs. 99,756,809, Rs. 34,199,935 and Rs. 62,081,051
    (US$ 1,551,251) for the years ended March 31, 2006, 2007 and 2008 respectively.
    The fair value of each option award is estimated on the date of grant using the Black Scholes option-pricing model. The following
    table gives the weighted-average assumptions used to determine fair value:
                                                                                                                                Year Ended
                                                                                                                              March 31, 2008
    Dividend yield                                                                                                           0.65% to 0.80%
    Expected volatility                                                                                                     64.53% to 93.00%
    Risk-free interest rate                                                                                                  6.06% to 7.55%
    Expected term (in years)                                                                                                            3.63
    Expected Term: The expected term represents the period that the Company's stock-based awards are expected to be outstanding.
    Risk-Free Interest Rate: The risk-free interest rate is based on the applicable rates of government securities in effect at the time of grant.
    Expected Volatility: The fair values of stock-based payments were valued using a volatility factor based on the Company's historical
    stock prices.
    Expected Dividend: The Black Scholes option-pricing model calls for a single expected dividend yield as an input.
    Estimated Pre-vesting Forfeitures: When estimating forfeitures, the Company considers voluntary termination behavior. Estimated forfeiture
    rates are trued-up to actual forfeiture results as the stock-based awards vest.
14. Segmental Reporting
    SFAS 131, "Disclosure about Segments of an Enterprise and Related Information" establishes standards for the way that public
    business enterprises report information about business segments and related disclosures about products and services, geographical
    areas and major customers.

                                                                     117
Consolidated Financial Statements - U.S. GAAP



  Management evaluates Infotech Group's performance and allocates resources based on an analysis of various performance indicators
  by business verticals and geographical segmentation of customers.
  During the year ended March 31, 2005, consequent to the goals realignment exercise undertaken by Infotech Group, it has realigned
  its organization and businesses on vertical lines. The previous segmentation on GIS Services, Engineering Services and Software
  Development is now restructured into two vertically oriented businesses: Utilities, Telecom, Government (or UTG) and Engineering,
  Manufacturing, Industrial Products (or EMI). Both businesses cater to the specific requirements of customers in their respective user
  segments. While the erstwhile GIS Services and Engineering Services businesses are captured under UTG and EMI respectively, the
  Software Development business has been apportioned to the two vertical segments based on the nature of the development work
  delivered. All functions (delivery, sales & marketing, human resources and finance) have been reorganized along the verticals.
  The management believes that such vertical realignment will enhance internal synergies and customer-focus, enabling the Group to
  achieve its internal growth objectives. It will also enable the Group move up the value chain of service offerings, create deeper,
  stronger relationships with customers and improve potential of participating in larger deals. A brief description of these verticals is
  given below:
  I.   Utilities, Telecom and Government (UTG)
       UTG vertical services customers in industries such as power, gas, telecom, transportation and local government. Infotech
       Group's service offerings to the UTG vertical include data conversion, data maintenance, photogrammetry and IT services. The
       segment information for the year ended March 31, 2006, includes the results of Tele Atlas which was acquired on April 11, 2005.
  II. Engineering, Manufacturing, Industrial Products (EMI)
       EMI vertical services customers in industries such as aerospace, automotive, off-highway transportation and industrial and
       commercial products, engineering design, embedded software, IT solutions, manufacturing support, technical publications and
       other strategic customers. New business initiatives are also handled by this vertical.
       Revenue in relation to these verticals is categorized based on items that are individually identifiable to that vertical. Geographical
       segmentation is driven based on the location of the respective clients and these are North America, Europe and Rest of the
       World. Geographic information on revenue is collected based on individual customers invoiced.
       Fixed assets used in Group's business are not identified to any of the reportable segments and management believes that it is
       currently not practicable to provide segment disclosures relating to total assets and liabilities since a meaningful segregation of
       the available data is onerous.
       The segment disclosures for the previous year have been reclassified to conform to the current year's presentation.
       Business Segments
                                                                            UTG                          EMI        Consolidated Totals
       For the year ended March 31, 2006
       Revenues                                               Rs. 1,661,469,658            Rs. 1,979,936,725            Rs. 3,641,406,383
       Less: Inter-segment revenues                                                                                            (1,480,578)
       Revenues from external customers                                                                                     3,639,925,805
       Operating expenses                                        (1,273,641,136)              (1,536,607,996)             (2,810,249,132)
       Less: Inter-segment expenses                                                                                              3,809,007
       Segmental income                                                                                                       833,485,680
       Unallocable expenses                                                                                                  (387,463,424)
       Interest income                                                                                                           6,345,318
       Interest expense                                                                                                        (6,719,492)
       Other income, net                                                                                                        29,012,600
       Income before income taxes and equity
       in earnings of associated companies                                                                                    474,660,682
       Income taxes                                                                                                            83,337,581
       Equity in earnings of associated
       companies, net of taxes                                                                                                  75,883,916
       Net income                                                                                                         Rs. 467,207,017


                                                                  118
                          INFOTECH Annual Report 2007 - 08




                                                                 UTG                         EMI             Consolidated Totals
For the year ended March 31, 2007
Revenues                                                 2,113,681,445               3,316,543,467                   5,430,224,912
Less: Inter-segment revenues                                                                                            (4,842,009)
Revenues from external customers                                                                                    5,425,382,903
Operating expenses                                    (1,578,016,307)               (2,502,117,487)                (4,080,133,794)
Less: Inter-segment expenses                                                                                              5,588,493
Segmental income                                                                                                     1,350,837,602
Unallocable expenses                                                                                                 (543,554,875)
Interest income                                                                                                          12,131,614
Interest expense                                                                                                       (13,330,114)
Other income, net                                                                                                        55,114,882
Income before income taxes and equity in
earnings of associated companies                                                                                      861,199,109
Income taxes                                                                                                          167,473,823
Equity in earnings of associated companies, net of taxes                                                               71,764,422
Net income                                                                                                        Rs. 765,489,708

                                                                 UTG                         EMI             Consolidated Totals
For the year ended March 31, 2008
Revenues                                                2,588,227,603                4,173,891,382                  6,762,118,985
Less: Inter-segment revenues                                                                                          (20,856,512)
Revenues from external customers                                                                                    6,741,262,473
Operating expenses                                     (1,903,730,467)              (3,266,082,439)               (5,169,812,906)
Less: Inter-segment expenses                                                                                            22,011,448
Segmental income                                                                                                    1,593,461,015

Unallocable expenses                                                                                                (846,955,128)
Interest income                                                                                                        51,464,485
Interest expense                                                                                                     (36,074,864)
Other income, net                                                                                                     175,359,945
Income before income taxes and equity in earnings of associated companies                                             937,255,453
Income taxes                                                                                                          297,687,557
Equity in earnings of associated companies, net of taxes and Minority Interest                                         56,462,104
Net income                                                                                                           696,030,000


Geographic Segment
The revenues that are attributable to countries based on location of customers are as follows:
                                                                                   Revenues from external customers
                                                      2006                  2007                      2008                   2008
North America                             Rs.1,935,701,239     Rs. 2,599,983,150      Rs. 3,094,309,331             $ 77,319,074
Europe                                       1,516,941,388         2,545,561,858          3,109,315,276               77,694,034
Rest of the World                              187,283,178           279,837,895            537,637,866               13,434,230
TotalRs.                                     3,639,925,805     Rs. 5,425,382,903      Rs. 6,741,262,473            $ 168,447,338




                                                       119
Consolidated Financial Statements - U.S. GAAP




15. Concentration of Credit Risk
    Accounts receivable balances are typically unsecured and are derived from revenues earned from customers primarily located in
    United States and Europe. Infotech Group monitors the creditworthiness of its customers to which it grants credit terms in the
    normal course of business. The following table gives details in respect of percentage of revenues generated from top two and top ten
    customers:
                                                                                                                     Year ended March 31
                                                                                       2006                   2007                  2008
     Revenues generated from top two customers
          Customer I                                                                 24.20%                23.97%                 13.85%
          Customer II                                                                12.50%                10.01%                 10.56%
     Total revenues from top ten customers                                           64.10%                65.74%                 57.74%
16. Related Party Transactions
     Infotech has taken land and building on lease, for a period of 15 years, from Mrs. B. Sucharitha, whole time director. The lease
     agreement effective from July 1, 1995 provides monthly lease rent of Rs. 50,000 (US$ 1,250) subject to an increase of 20% in first
     three blocks of 3 years each and 30% increase for the remaining two blocks of three years. Lease rentals paid included in the selling,
     general and administrative overheads were Rs. 1,123,200, Rs. 1,179,360 and Rs. 1,610,560 (US$ 40,244) for the years ended March 31,
     2006, 2007 and 2008 respectively.
17. Contingencies and Commitments
     Contingencies
     The bank guarantees outstanding were Rs. 47,706,845 and Rs. 70,916,242 (US$ 1,772,020) as of March 31, 2007 and 2008 respectively.
     These guarantees are provided to Excise and Customs authorities for the purposes of maintaining a bonded warehouse. Infotech also
     provides guarantees to the customers towards the performance and execution of the projects as per the technical service agreements.
     The beneficiaries may revoke these guarantees if they suffer any losses or damage through the breach of any of the covenants
     contained in the agreements. Corporate guarantee given to subsidiary's bankers for subsidiary to obtain line of credit amounted to Rs.
     65,220,000 and Rs. 267,143,000 (US$ 6,675,237).
     Infotech is contesting the Income Tax Appellate Tribunal's (ITAT) order for the denial of certain export benefits under the Income
     Tax Act, 1961 on the grounds of the date of establishment of the Export Oriented Unit. The estimated contingency amounts to Rs.
     113,500,000 and Rs. 113,500,000 (US$ 2,836,082) as of March 31, 2007 and 2008 respectively. The petition contesting the ITAT's
     Order has been admitted by the High Court of Andhra Pradesh and management believes that it has strong merits for this petition
     and hence it will not have the material adverse affect on Infotech Group's results of operations, liquidity or financial position.
     Capital Commitments
     Infotech had contractual commitments (net of advances) for capital expenditure amounting to Rs. 292,987,557 and Rs. 613,459,407
     (US$ 15,328,821) as of March 31, 2007 and 2008 respectively.
     Operating leases
     Rental expense for operating leases amounted to Rs. 36,171,381, Rs. 80,677,041 and Rs. 131,192,839 (US$ 3,278,182) for the years
     ended March 31, 2006, 2007 and 2008 respectively. The future minimum lease commitments of Infotech Group under non-cancellable
     operating leases are as follows:
                                                                                                                    As of March 31
                                                                                                              2008                  2008
     2009                                                                                           Rs. 14,223,881              $ 355,419
     2010                                                                                                1,768,669                 44,194
     2011                                                                                                  299,386                  7,481
     Total Obligations                                                                              Rs. 16,291,936             $ 407,094


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                                    INFOTECH Annual Report 2007 - 08




18. Shareholders’ Equity and Dividends
    Increase in Authorised Capital
    On July 19, 2006, the shareholders of Infotech approved for increase of authorized capital of the Company from 18 million equity
    shares to 60 million equity shares.
    Stock Split (in the form of stock dividend)
    On July 19, 2006 the shareholders of Infotech approved a two-for-one stock split (in the form of stock dividend) which was effective
    on August 4, 2006. Consequently, Infotech capitalized an amount of Rs. 76,462,035 (US$ 1,774,108) from its retained earnings to
    common stock.
    Further, the shareholders also authorized a two-for-one stock split of Infotech Enterprises Limited's common stock whereby each
    issued and outstanding equity share, par value Rs. 10 each, was split into two shares, par value Rs. 5 each. The record date of the split
    was August 4, 2006. All references in the financial statements to number of shares, per share amounts, stock option data and market
    prices of Infotech equity shares have been retroactively restated to reflect stock split, unless otherwise noted.
    Dividends
    Final dividends proposed by the Board of Directors are payable when formally declared by the shareholders, who have the right to
    decrease but not increase the amount of the dividend recommended by the Board of Directors. With respect to equity shares issued
    by Infotech during a particular financial year, cash dividends declared and paid for such financial year generally will be pro-rated from
    the date of issuance to the end of such financial year.
    Dividends payable to equity shareholders are based on the net income available for distribution as reported in Infotech unconsolidated
    financial statements prepared in accordance with the Indian GAAP. The net income in accordance with U.S. GAAP may, in certain
    years, either not be fully available or will be additionally available for distribution to equity shareholders. Under Indian GAAP, the
    retained earnings available for distribution to equity shareholders was Rs.1,399,319,130, Rs. 1,906,439,332 and Rs. 2,384,762,993
    (US$ 59,589,280) for the years ended March 31, 2006, 2007 and 2008 respectively.
    Under the Companies Act, dividends may be paid out of the profits of a company in the year in which the dividend is declared or out
    of the undistributed profits of previous fiscal years. Before declaring a dividend greater than 10% of the par value of its equity shares,
    a company is required to transfer its reserves to a minimum percentage of its profits for that year, ranging from 2.5% to 10%,
    depending upon the dividend percentage to be declared in such year. Dividends declared, distributed or paid by an Indian corporation
    are subject to a dividend tax of 16.995% including the presently applicable surcharge, of the total dividend declared, distributed or
    paid. This tax is not paid by the shareholders nor is it a withholding requirement, but rather a direct tax payable by the corporation.
19. Financial Instruments
    a) Forward Contracts
         Infotech enters into forward foreign exchange contracts where the counter party is generally a bank. Infotech considers the risks
         of non-performance by the counter party as non material.
         The following tables give details of outstanding foreign exchange forward contracts:
                                                                                                                            As of March 31
                                                                                         2007                   2008                  2008
         Aggregate contracted principal
         amounts of contracts outstanding:
         Forward Contracts                                                   Rs. 186,964,000      Rs. 2,749,979,500            $ 68,715,130
         Balance sheet exposure:
         Forward Contracts                                                      Rs. 3,682,500         Rs. 31,170,177              $ 778,865




                                                                   121
Consolidated Financial Statements - U.S. GAAP




         The outstanding foreign exchange forward and options contracts as of March 31, 2008 mature between one to five months.
         Gains/(losses ) on foreign exchange forward and options contracts are included under the head ing 'Other income/(expense)' in
         the statement of income and are as stated below:
                                                                                                               For the year ended March 31
                                                                 2006                    2007                   2008                   2008
         Forward Contracts                             Rs. (8,413,064)        Rs. 16,853,402         Rs. 57,212,788             $ 1,429,605
    b)   Fair Value of Financial Instruments
         The carrying amounts reported in the balance sheet for cash and cash equivalents, accounts receivables and other assets, accounts
         payable and other liabilities approximate their respective fair values due to their short maturity. The approximate fair value of the
         long-term debts, as determined by using the current interest rates was Rs. 127,500,000 and Rs. 205,022,539 (US$ 5,123,002) as
         of March 31, 2007 and 2008 respectively as compared to carrying amounts of Rs. 154,228,428 and Rs. 205,022,539 (US$
         5,123,002) as of March 31, 2007 and 2008 respectively.
20. Schedules of Balance Sheet and Statement of Income
    a)   Cash and Cash Equivalents
         Cash and cash equivalents consist of:
                                                                                                                           As of March 31
                                                                                       2007                    2008                  2008
         Cash and bank balances                                              Rs. 627,339,427        Rs. 588,340,195           $ 14,701,154
         Cash equivalents                                                         83,329,670             70,000,000              1,749,126
         Cash and cash equivalents                                           Rs. 710,669,097        Rs. 658,340,195            $ 16,450,280
    b)   Accounts Receivables, net
         Accounts receivable consist of:
                                                                                                                            As of March 31
                                                                                       2007                   2008                    2008
         Customers (trade)                                                 Rs. 1,432,399,301      Rs. 1,907,195,800           $ 47,656,067
         Less: allowance for doubtful debts                                       49,447,061             62,674,549               1,566,081
         Accounts receivable, net                                          Rs. 1,382,952,240      Rs. 1,844,521,251            $ 46,089,986
         The allowance for doubtful debts are established at amounts considered to be appropriate based primarily upon Infotech
         Group's past credit loss experience and an evaluation of potential losses on the outstanding receivable balances.
    c)   Allowance for Doubtful Accounts on Trade Accounts Receivable:
                                                                                                                            As of March 31
                                                                                       2007                    2008                    2008
         At the beginning of the year                                         Rs. 30,079,072         Rs, 49,447,061             $ 1,235,559
         Additions                                                                19,879,242             18,826,448                 470,426
         Write offs, net of recoveries                                                     -                      -                       -
         Change due to foreign exchange                                            (511,253)            (5,598,960)               (139,904)
         At the end of the year                                               Rs. 49,447,061         Rs. 62,674,549             $ 1,566,081




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                                INFOTECH Annual Report 2007 - 08




d)   Prepaid Expenses and Other Assets
     Prepaid expenses and other assets consist of:
                                                                                                                       As of March 31
                                                                                   2007                   2008                    2008
     Advance income tax, net of provision                                 Rs. 96,153,394       Rs. 131,537,940             $ 3,286,806
     Prepaid expenses                                                         46,833,077           168,054,967               4,199,275
     Loans and advances to employees                                          15,661,065             7,214,962                 180,284
     Advance for expenses                                                      5,291,326            15,143,503                 378,398
     Other receivables                                                        28,409,050            60,985,291               1,523,870
     Less: allowance for doubtful advances                                     (739,790)             (739,790)                (18,486)
     Prepaid expenses and other assets                                   Rs. 191,608,122       Rs. 382,196,873             $ 9,550,147
     Prepaid expenses principally include rent for office premises and software and hardware maintenance costs. Other receivables
     include restricted cash in the form of deposits placed with banks to obtain bank guarantees amounting to Rs. 5,300,761 and Rs.
     12,338,493 (US$ 308,308) as of March 31, 2007 and 2008 respectively and Rs. 878,212 and Rs. 953,711 (US$ 23,831) for interest
     accrued on deposits as of March 31, 2007 and 2008 respectively.
     Other receivables also include restricted bank balances of Rs. 889,511 and Rs. 1,261,393 (US$ 31,519) as of March 31, 2007 and
     2008 respectively. These balances pertain to dividend unclaimed by the shareholders. It also include gains / (losses) on outstanding
     foreign exchange forward contracts of Rs. 3,682,500 and Rs. 31,170,177 (US$ 778,865) as of March 31, 2007 and 2008 respectively
e)   Allowance for Doubtful Advances:
                                                                                                                       As of March 31
                                                                                   2007                    2008                  2008
     At the beginning of the year                                            Rs. 739,790            Rs. 739,790              $ 18,486
     Additions                                                                         -                      -                     -
     At the end of the year                                                  Rs. 739,790            Rs. 739,790              $ 18,486

f)   Other Non-Current Assets
     Other assets (non-current) consist of:
                                                                                                                       As of March 31
                                                                                   2007                    2008                   2008
     Electricity and other deposits                                        Rs. 9,047,670         Rs. 16,139,982              $ 403,298
     Rent and maintenance deposits                                           46,988,570              41,829,670              1,045,219
     Loans and advances to employees                                           2,314,072              2,314,072                 57,823
     Others                                                                  16,829,698              13,799,898                344,825
     Other non-current assets                                             Rs. 75,180,010        Rs. 74,083,622              $ 1,851,165

     Electricity and other deposits are primarily attributable to deposits with government and non-government organizations principally
     to obtain electricity supplies and leased telephone lines.
     Others include non-current portion of restricted cash in the form of deposits placed with banks to obtain bank guarantees
     amounted to Rs. Nil and Rs. Nil (US$ Nil) as of March 31, 2007 and 2008 respectively.




                                                               123
Consolidated Financial Statements - U.S. GAAP




  g)   Other Liabilities
       Other liabilities consist of:
                                                                                                               As of March 31
                                                                                2007               2008                   2008
       Accrued payroll                                                Rs. 168,873,491   Rs. 243,747,867            $ 6,090,651
       Accrued expenses                                                    54,617,077        43,840,282              1,095,459
       Amount payable to related parties                                      549,434                 -                      -
       Statutory payments                                                  54,411,554        22,682,137                566,770
       Unclaimed dividend                                                     889,511         1,261,394                 31,519
       Deferred Taxes on Income                                            30,505,046        25,518,679                637,648
       Others                                                               4,255,584           664,896                 16,615
       Other liabilities                                              Rs. 314,101,697   Rs. 337,715,255            $ 8,438,662

  h)   Other Income/(expenses), net
       Other income/(expenses), net consists of:
                                                                                                           Year ended March 31
                                                              2006              2007               2008                  2008
       Gain / (Loss) on exchange fluctuations      Rs. (11,153,265)    Rs. 12,585,185   Rs. (17,864,869)           $ (446,398)
       Profit / (Loss) on sale of investments               292,157                 -         20,058,579               501,214
       Dividend received on investments                   1,611,298                 -         89,282,373             2,230,944
       Gain / (loss) on forward contracts               (8,574,153)        16,853,402         57,212,788             1,429,605
       Liabilities/provisions no longer
       required written back                            23,321,496         16,121,504         6,112,945                152,747
       Others                                           23,515,068          9,554,791        20,558,129                513,697
       Other income, net                            Rs. 29,012,600     Rs. 55,114,882   Rs. 175,359,945            $ 4,381,809




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