Subex Limited Annual Report 2010

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FY2010 Annual Report · Subex Limited

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2 0 1 0 - 2 0 1 1 A N N U A L R E P O R T

While the business has taken several twists and turns, we have stayed

focused on modifying a variety of facets of the business resulting in

considerable improvement on many fronts.

THE SUBEX

PROMISE...

Change is the only constant phenomenon. Your company has stayed true to

that adage. Ever since our entry into the world of telecom software a decade

ago, we have evolved at a constant pace with regard to technology and

revenue model. The result has been an ever expanding set of products and

continuing innovation on every front of the business including technology,

products and delivery model.

Aristotle once said, “The future is not something true men enter. The future

is something they shape with their own hands.” As can be seen from the

manner in which your company has evolved over the past ten years, we have

been shaping our future meticulously and carefully. While we have indeed

faltered on certain occasions, we have demonstrated resilience and have

fought our way back. That is the genetic code of this organization which you

chose to be investors of.

01 02 04 06 08 09 10 12 13

ﬁnancial
highlights

letter to
shareholders,
customers &
friends

answering
the needs
of the telco
2.0 model

managed
services-the
time is now!

succeeding
internationally

subex-2.0
enabling a
ﬂuid market
place

customer
orientation

STARS-
above &
beyond

subex
charitable
trust

FINANCIAL

HIGHLIGHTS

Particulars (Consolidated)

Figures in Rs. Million

Except Key Indicators

Total Income

Operating proﬁts (EBITDA) Before Exceptional Items

Depreciation & Amortization

Proﬁt Before Tax and Exceptional Items

Proﬁt After Tax and Exceptional Items

Share Capital

Reserves & Surplus

Net Worth

Gross Fixed Assets

Net Fixed Assets

Total Assets

Key Indicators

Earnings Per Share (Rs.)

Cash Earnings Per Share (Rs.)

Book Value Per Share (Rs.)

Debt (Including Working Capital) Equity Ratio

EBITDA / Sales (%)

Net Proﬁt Margin (%)

Return On Year End Net Worth (%)

Return On Year End Capital Employed (%)

4,925.92

1,411.17

104.50

882.46

787.79

693.10

1,337.93

2,094.20

1,638.65

130.38

7,552.21

12.47

7.68

30.22

2.61

29.23

16.32

37.62

10.43

14 15 18 25 32 45 70 93

board
of directors

management
team

directors’
report

corporate
governance

management
discussion &
analysis

ﬁnancial
review -
standalone

ﬁnancial
review -
consolidated

shareholder’s
information

WWW.SUBEXWORLD.COM

TO OUR SHAREHOLDERS, CUSTOMERS AND FRIENDS

SUBASH MENON
Founder Chairman,
Managing Director & CEO

DEAR SHAREHOLDER
We need to view business as a continuum. So, it is appropriate to
continue from where we left off last year. Last year i.e. in FY10
ended on 31st March, 2010, we had once again become proﬁtable
at the Operational Proﬁt After Tax level. We had then said that
our objective in FY11 will be to improve our proﬁtability at every
level. I am both proud and glad to inform you that we did exactly
what we set out to do in FY11. As is our practice, let us take a
look at those ﬁgures before we delve deeper into the qualitative
aspects.

The core of our business i.e. Product business grew
15% in US Dollar terms and about 8% in Indian Rupee
terms. More signiﬁcantly, EBITDA grew from 23.8% in
FY10 to 33% in FY11. This resulted in EBITDA for the
whole company moving up from 20% to 29%. Above
all, Operational Proﬁt After Tax (PAT) which is arrived
at by excluding Exceptional Items increased from
Rs. 208 Mln to Rs. 838 Mln.

Progression Over the Years
While the business has taken several twists and
turns, we have stayed focused on modifying a variety
of facets of the business resulting in considerable
improvement on many fronts. One critical element
has been the contribution from Annuity business.
Annuity business, by nature lends stability and
predictability to the revenue stream thereby creating
an excellent base to build on. This foundation enables
the company to explore other opportunities while
charting a steady course. In the just concluded
ﬁnancial year, Annuity constituted 42% of the total
revenue. This ﬁgure was 36% two years ago, in FY09
and is slated to grow to more than 50% in the next
2 to 3 years. Support and Managed Services are the
two components of this revenue stream. A natural
consequence of this increase in Annuity, which is a
highly proﬁtable operation, has been the increase

in EBITDA. This is quite clear from the graph given
below.

While revenue remained constant
from FY09
to FY11, EBITDA increased from 11.5% to 33%.
Apart from Annuity, reduction in cost also has
had a salutary impact on EBITDA. Cost of operation
has been coming down consistently over the
past four years. This has been achieved through a
systematic program of replacing high cost resources
in overseas locations with lower cost resources
in India while ensuring that knowledge is transferred
efﬁciently and quality of service to customers
is maintained. Further, the company has been
engaged in identifying and culling all unwanted costs
through extensive rationalization.

The reduction in revenue from FY09 to FY10 was
followed by a smart growth of 15% in US Dollar
terms from FY10 to FY11. This also contributed to
the increase in EBITDA. Given the growth in order
intake that we witnessed in the just concluded
ﬁnancial year, revenue is set to grow faster in the
years to come. That should enable us to maintain
or slightly improve the EBITDA margin in the
products business. Buttressing all these ﬁgures is the
metamorphosis that the business has undergone in
the past couple of years with respect to technology
and offering. Let us take a closer look at that.

EBITDA
-22%

EBITDA
11.5% EBITDA
23.8%

EBITDA
33%

EBITDA
16%

EBITDA
41%

FY06

FY07

FY08

FY09

FY10

FY11

5000
4000
3000
2000
1000
0
-1000
-2000

Revenue

Expenses

EBITDA

All figures in Rs. Mln.

02 WWW.SUBEXWORLD.COM

The Future
Aristotle once said, “The future is not something
true men enter. The future is something they
shape with their own hands.” As can be seen from
the manner in which your company has evolved
over the past ten years, we have been shaping our
future meticulously and carefully. While we have
indeed faltered on certain occasions, we have
demonstrated resilience and have fought our way
back. That is the genetic code of this organization
which you chose to be investors of. Abraham
Lincoln once remarked, “I will prepare and some
day my chance will come”. Your company too has
been preparing – be it with respect to products
or delivery model or people or markets that
we operate in. And we strongly believe that our
chance has come.

We have now been presented with an opportunity
to change the fortunes of our customers, telecom
carriers all over the globe, and thereby add
tremendous value to their businesses. We have
now been presented with an opportunity to
increase our relevance to our customers and craft
deep and engaging partnerships with them. And
ﬁnally, we have once again been presented with
an opportunity to add ever lasting value to those
who have supported us through thick and thin –
our shareholders. While thanking each and every
one of you for your unstinting support, I reiterate
the commitment of each and every Subexian to
make the most of this opportunity, in the interest
of every stakeholder of the company.

Technology and Offering –
The Evolution
Change is the only constant phenomenon. Your
company has stayed true to that adage. Ever since
our entry into the world of telecom software a
decade ago, we have evolved at a constant pace
with regard to technology and revenue model.
The result has been an ever expanding set of
products and continuing innovation on every front
of the business including technology, products
and delivery model. What started off as a single
product – fraud management – has now morphed
into a holistic platform called Revenue Operation
Centre, ROC™. ROC covers every part of
the revenue chain and presents an end-to-end
picture to the users thereby empowering them
to improve the efﬁciency of their operations,
resulting in improved revenue and proﬁt. ROC,
today, encompasses fraud management, revenue
assurance, cost management, credit management,
interconnect management, inter- party settlement,
route optimization and data integrity management.

This over arching nature of the offering has made
it very valuable for telcos who are being buffeted
by commoditization of their products and business
models. ROC enables them to collect and analyze
a vast quantity of data to arrive at conclusions on
the health of different parts of their business and
network and then to take appropriate actions
with the help of an extensive work ﬂow. ROC has
thus evolved as a reliable and complete solution
without being plagued by the ill effects of poor
inter-operability and lack of data integrity. Several
telcos across the world – in both developed
and developing countries – have opted for ROC
resulting in a high level of traction. The fact that
ROC is a pioneering offering has improved both
the stature of your company and it’s prospects.

While selling and implementing ROC, it became
obvious that the telecom carriers, despite their
deep expertise and wide experience, still lacked the
knowledge required to take advantage of a broad
platform such as ROC. This was aggravated by the
non-availability of skilled personnel within their
organizations. That presented a new opportunity
for your company and we have been exploiting
the same over the past few years. What started
off as mere bureau operation has now matured
into managed services and full ﬂedged outsourcing.
This delivery model is fast emerging as a key
differentiator and has also led to a considerable
increase in contract size while maintaining a
healthy proﬁt margin.

WWW.SUBEXWORLD.COM

ANSWERING THE NEEDS
of the Telco 2.0 model

SUDEESH YEZHUVATH
Chief Operating Ofﬁcer
& Wholetime Director

We live in interesting times where we are witnessing the
telecommunications industry going through its various
phases of existence. From a very young, high growth
industry, it is now starting to reﬂect “middle age” with all
the complexities that one can expect with such evolution
and at such a rapid pace. Growth through new subscribers
is no longer possible in developed markets today with
high penetration levels approaching saturation in some
countries. One recent survey pointed out that there are
ﬁve Billion mobile phones today in a world of six Billion
people! In the developing markets, there is still growth in
subscriber numbers but the intense, hyper-competition
that exists in these markets has resulted in ARPU falling
to lower and lower levels. As can be expected, the industry
has been searching for new business models to meet these
challenges and we now are seeing the advent of a new
model often referred to as the “Telco 2.0 Model”.

Thus far, the telecom business has been about selling
voice, data, content etc. directly to retail users. The
telco provided these services, billed the customers
directly and collected the moneys. Interestingly,
70% of all executives in telecoms companies think
that revenues from this model will decline steadily.
In the digital world, there are many business
providers – Retailers, Content Providers, Application
Developers, Advertisers to name a few – who want
to have access to telecom subscribers. Telecom
services are a great means for these new providers
to deliver or market their products to end users.
Telcos have the ability to support these providers
reach subscribers by way of identiﬁcation of the right
subscribers, promotions, delivery of the service,
billing for the service and collection of amounts due.
Telcos have the ability to deliver, bill for and collect
against micro transactions using processes that
already exist in their business. This represents an
opportunity for the telcos to generate revenues from
both sides of their business; the network and the

customer billing side. This provides the opportunity
to move from a one-sided to a two-sided commercial
model.

As can be expected, this new business opportunity
poses new threats and risks. To grow proﬁtability,
telcos are facing signiﬁcant challenges in trying to
grow their revenue and efﬁciently manage their costs.
They cannot afford to have revenue leakages, fraud,
billing mistakes, customer churn or process mishaps
that lead to revenue loss. This risk is even more
accentuated in the 2.0 model because Telcos are
reselling goods and services from other vendors and
any leakage will mean signiﬁcant cash loss. Further,
the value of such goods and services could also be
potentially much higher. All this has resulted in an
environment wherein the telcos are on a continual
quest to reduce cost and improve efﬁciencies. This
has resulted in a need which outlines three clear
objectives – Protect Revenues, Manage Costs and
Assure Operations.

04 WWW.SUBEXWORLD.COM

Protecting Revenue is about ensuring that there
are no leakages in the revenue chain, no defrauding
of the telco by rogue “subscribers” and ensuring
that there is no loss because of extending credit
to risky customers. Managing Costs focuses
on reducing unnecessary or excess payments
to partners, reducing stranded assets and
making best use of existing infrastructure. In the
Assuring Operations, telcos are trying to manage

risks better as unmanaged risks result in cost
escalation.

It is very evident that the Telco 2.0 model is the
future of the telecom world and the risks posed
by the new business model are equally clear. As
a result, there is increased attention on the three
areas mentioned above and Subex’s offerings are
squarely focused in this space as shown in the
chart below:

Telcos need to process huge volumes of data to
spot linkages to help them improve efﬁciencies
and this needs to be done in near real time.
Subex’s pioneering Revenue Operations Centre
(ROCTM) allows telcos to achieve this objective.
The ROC takes in data from a variety of systems –
including the Fraud Management System, Revenue
Assurance System, Cost Management System, Data
Integrity Management System etc. – and correlates
all the data to provide Actionable Intelligence
to help telcos make decisions and act quickly.
Various analysts have come up with studies
that indicate the signiﬁcance and relevance of
Actionable Intelligence in the new world. The
ROC is not only a reporting solution but is
also a response platform. In short, the ROC
addresses the need of agile operations in the Telco
2.0 world.

As discussed above, one critical need is to assure
business operations and telcos are moving more

and more to business models that assure the
business outcome. This is why one sees an
increasing trend of outsourcing operations in IT,
in the network and in business systems. Telcos
realize that vendors that have a comprehensive
solution suite in a particular business space are
well positioned to carry out operations in that
area and are outsourcing the responsibility for
those operations. Subex’s strengths and expertise
is in the Business Optimisation space and the
company is seeing signiﬁcant increase in the need
for Managed Services with its customers.

In summary, the Telco 2.0 business model
represents the evolution of the telecom world to
its next phase of growth but has many inherent
risks and threats. Subex, with its ROC and
Managed Services, is well positioned to help telcos
overcome these problems, move to Telco 2.0
and play a signiﬁcant role in the next phase of the
telecommunications market.

WWW.SUBEXWORLD.COM

MANAGED SERVICES
the time is now!

VINOD KUMAR
Group President

I am sure you have come across a number of press
releases last ﬁnancial year about our Managed Services
wins and the increasing importance of this business
in our portfolio. Overall the tailwinds that drive this
business are in our favour and with the global economy
cautiously back on track; I believe the time is just right
for Managed Services.

Globally service providers are increasingly realizing
that their in-house teams do not utilize their BSS/
OSS products fully, thereby resulting in lower than
expected returns on investments. They lack the
product expertise that is so important to operate
these sophisticated products to their maximum
potential; the domain expertise that is needed
to stay abreast with emerging risks; and the
operations expertise that is critical to sustaining
beneﬁts from these products on a long term.
This is precisely the concern that Subex alleviates
through Managed Services.

An extremely popular engagement model in
service providers are
network operations,
now increasingly turning to Managed Services
for BSS/OSS operations. But it is not just cost
rationalization alone that is driving this trend.
Rather, a Managed Service engagement for BSS/
OSS serves a larger objective of optimizing the
business and improves customer experience, while
freeing signiﬁcant management bandwidth to focus
on core priorities.

Most operators have seen the beneﬁts others
in the industry have realized through Managed
Service engagements in other areas and hence
reasonably agree with potential value through a
similar engagement in BSS/OSS:

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in sweating the BSS/OSS asset to its maximum,
having developed the software itself

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domain having spent signiﬁcant time operating in
the same

(cid:115)(cid:0)(cid:0)A one stop shop (a single contract with a single

interface)

(cid:115)(cid:0)(cid:0) A

stringent
performance

service

level agreement

for

(cid:115)(cid:0)(cid:0)A clear roadmap for the BSS/OSS software to
account for new services and scalability for
subscriber growth

At Subex, we are uniquely positioned to leverage
these positive justiﬁers to add value to service
providers while also creating a new revenue
stream for our company. So how exactly is this
business different from our traditional license
business? One, we are responsible for running
the service provider’s business operations on a
day-to-day basis; two, we are accountable for
results – the SLAs and KPIs are far more stringent;
and three, we also advise the service provider on
advancing their BSS/OSS functions up the maturity
level. The Managed Services business is also rather
different from a delivery model perspective.
Figure 1. illustrates this difference:

The beneﬁts of such an engagement to Subex
are three-fold. One, we have a longer term
visibility over revenues, typical Managed Services
engagements range from 3 to 5 years. Secondly,
the Managed Services engagement model thrives
on trusted partnership between the vendor and
the service provider. This deeper engagement
helps us to build long lasting relationships,
thereby providing incremental cross-sell and up-
sell opportunities. Lastly, running the service
provider’s business operations gives us signiﬁcant
insights into their most pressing challenges that
we look to solve by building new features in our
product roadmaps.

06 WWW.SUBEXWORLD.COM

Traditional License Model

Service Bureau ‘Hosted’ Model

Managed Services

Implementation/
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Services
(Product Vendor)

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MSP’s role
(cid:2)(cid:3)Host application
(cid:2)(cid:3)Own hardware
(cid:2)(cid:3)Own development and deployment
(cid:2)(cid:3)Provide full application support
(cid:2)(cid:3)Own product adoption & ROI
(cid:2)(cid:3)Support full operations

Legend Vendor scope Telco scope

Figure 1: BSS/OSS Engagement Models

Managed services

You would be pleased to know that our Managed
Services experts are already at work at over 30
such programs, processing 20 billion+ CDRs
monthly and running applications on over a 100
servers. In fact our Managed Services:
(cid:115)(cid:0)(cid:0)Experts help improve BSS/OSS productivity by

15-20%,

(cid:115)(cid:0)(cid:0) Our SLA-based accountable operations increase

service provider ROI by 20%,

(cid:115)(cid:0)(cid:0)Our technology makes BSS/OSS operations

more than 15% efﬁcient,

(cid:115)(cid:0)(cid:0)We also offer on-site support staff to augment
service providers’ in-house experts, thereby
helping ramp up operations at least 10-15%
faster,

(cid:115)(cid:0)(cid:0)And most importantly, our Managed Services
help free up management bandwidth signiﬁcantly
and thereby improve organizational efﬁciency by
7-9%.

Almost intuitively, we call these SMART services
leveraging proven technology. They complement
service providers’ existing operations just as much
as transform their businesses.

As the Managed Services business grows, we are
mindful of the fact that our customers recognize
us for our core Revenue Operations Center
(ROC™) technology. And we leverage it very well
in the Managed Services business as well. It helps
us automate processes and provide a future proof
solution to our customers’ needs. With over
200 customers, and 300+ implementations of the
ROC, this huge base of current users provide us
signiﬁcant opportunities to add value through the
Managed Services model.

A quick glance at the following illustrations should
be enough to convince you of the value this
model adds to service providers and hence its
sustainability in the Subex business mix:

(cid:115)(cid:0)(cid:0)A service provider that fell short on in-house
skills to utilize its Revenue Assurance solution
to its maximum capabilities realized savings of
USD 15 million on engaging us through Managed
Services. And they recovered their investments
within a short span of just 8 months

(cid:115)(cid:0)(cid:0)Another operator’s fraud management team
could not keep pace with emerging frauds.
Our Managed Services experts took complete
fraud management
accountability
their
operations,
leading
technology, and the operator now has clear
visibility over fraud management operations,
application usage and output and can expect
higher ROI

leveraging our

industry

for

(cid:115)(cid:0)(cid:0)In yet another case, an operator struggled to
track movement of its active network assets
which are directly like to revenue. Through a
combination of Managed Services and cutting
edge technology, this operator not just avoided a
substantial capital loss, but also synchronized and
automated its process for “as-is” network and
FAR for complete network asset lifecycle and
movement tracking

(cid:115)(cid:0)(cid:0)And an operator whose inventory was 60% out of
sync with its network uncovered a large number
of stranded and unused assets thereby reducing
its cost by 40% through effective automation and
off-shoring

That’s what I call smarter BSS/OSS operations.
Managed Services or Commercial-Off-The-Shelf
(COTS) solutions in isolation can only optimize
service provider business as much. It is an
effective use of technology by experienced domain
and operations’ experts that protect operator
revenues, manage their costs, optimize fulﬁllment,
and assure operations – a story that I have seen
resonate so well with senior service provider
executives worldwide, that it leads me to believe
that the time is just right for BSS/OSS Managed
Services.

WWW.SUBEXWORLD.COM

SUCCEEDING
internationally

PAUL SKILLEN
President - EMEA

The team at Subex has built a truly international
business with an Indian heart that thinks globally and
acts locally.

Subex has travelled a long way on the momentum of
the ﬁrst steps taken by the founders. If one were to
place a pin on a map of the world in each location that
we have business, it would be clear that the Subex
business spans the globe with few exceptions. This
is a remarkable achievement which carries both the
rewards and resilience of a truly global business.

The challenges we have overcome along this
road have been many, and setting aside the very
practical matters of dealing with our customer -
their contracts, currency and other complexities
such as language, regulation and technical matters,
all of which are hurdles in the path of a truly
international business, if I were to single out
one crucial characteristic that has enabled us to
prevail in good times, and bad times, it would be
our cultural dexterity. Subex is a business in which
we have developed a company structure and
culture that has both the durability and diversity
to dovetail into the broad range of cultures of our
clients and employees.

Two examples of where this approach is paying off
are in Spain and Latin America, with our rapidly
expanding relationship with Telefónica, and in the
Middle East, with the re-enforcing of our business
with Saudi Telecom. Both examples demonstrate
how, with a world class and compelling business
proposition and a local touch, we can add real
value to both our clients and to Subex.

Even in the darker moments of this year, with
much of Europe locked in the grips of the
economic downturn and the matters arising from
what has come to be known as the Arabic Spring,
our local teams and their knowledge, connection,
and experience ensured that the disruption to
our business in these regions was minimised, even
negated, when many of our competitors took
ﬂight.

It seemed appropriate that I was able to welcome
our customers to our Customer Conference in
Rome last September. “All roads lead to Rome”
as they say and our Conference hotel lay on
one of the ancient roads. Customers came from
many countries and shared their experiences of
problems and solutions amongst friends. Some
problems such as fraud and the constant drive to
deliver new services are international issues and
hearing a fresh perspective on an old challenge is
always helpful. We are looking forward to meeting
everyone again later in the year at the User
Conference in Madrid.

Particular mention must be made of
the
Subex’s teams progress in the African and Latin
American markets where we have seen signiﬁcant
development of our business, even in challenging
conditions.

In no particular order, our business is led, in
the respective geographies by teams of British,
American, Australian, Irish, Australian, German,
Canadian, Greek, Arab, Italian, Spanish, African,
and Indian nationals. This diversity, allows us
to think globally while acting locally. We are
in a strong position to leverage the accelerating
properties of a low cost centre of operations
with detailed and intimate knowledge of the
customers and the geographies within which they
operate.

08 WWW.SUBEXWORLD.COM

SUBEX 2.0

enabling a ﬂuid market place

For anyone watching the Communications sector, it is
clear another disruption is afoot. As I look ahead to the
new ﬁscal year, I am bolstered by the fact that Subex
is uniquely positioned to capitalize upon this market
opportunity.

GREG LE NEVEU
President - Americas

Over the past year, Subex quietly applied its
innovative spirit to evolve our solutions and
engagement approach to enable the business
intelligence and models needed to drive a ﬂuid and
dynamic Network and “Over the Top” Services
Market. The opportunity for our Customers,
Subexians, and Shareholders becomes clear when
you look more closely at what is behind the buzz
of late in the Communications market.

The predictions of the 1990s Broadband Boom
are ﬁnally proving out as an increasing number of
bandwidth hungry “smart devices” and services
fuel the next wave of a connected world. A
vibrant and innovative ecosystem has grown
out of this momentum. A new breed of Service
Provider is bringing new services and applications
to market at an unprecedented pace. These
new entrants quickly access mass markets via
“Over the Top”(OTT) distribution models that
leverage Communication Provider’s networks.
This conﬂuence of events – connected devices,
applications, services, and “over the top” models
- are driving unparalleled network utilization, and
with it disrupting a number of previously proven
business models.

Increasingly

As often happens with disruption, initial resistance
emerges to embracing and enabling a new
eco-system.
is growing
between the Network Provider and the OTT
ecosystem as these markets respond to the
uncertainties involved with capturing each side’s
share of the consumer’s wallet. Evidence of this
friction emerges daily.

friction

Grappling with how to monetize growing network
fuelled by OTT services,
largely
utilization
Communications Providers
introducing
bandwidth caps and usage based pricing models
for broadband services. OTT providers are testing
Net Neutrality regulations as the cheap and
seemingly limitless network it built its business
models upon face increased restrictions. Major
content and media providers are seeking ways to

are

secure and track the use of their content in face
of fears they will fall victim to the same disruption
that occurred in the music industry. These moves
are all examples of defensive moves and market
friction that, left unsolved, could stall growth and
innovation.

Over the past year the Americas team took up the
question - what if there was a better way for our
customer to prosper from this market disruption?
All these challenges beg for more graceful means
for the market to operate and prosper. There have
to be more efﬁcient and ﬂuid means to proﬁtability
than restricting usage or forcing regulation and
bureaucracy in to the eco-system. Fortunately,
with friction comes opportunity. In removing
these impediments to this eco-system’s growth
and innovation, Subex can uniquely contribute to
the progress and power of a connected world.

How? By enabling the next generation of business
and revenue sharing models needed for both CSP’s
and OTT providers to thrive. In short, this market
thrives through different forms of partnership and
new ways for eco-system players to focus upon and
monetize their core strengths. Subex’s investment
over the past year in ROC Analytics, Interparty
Management and Governance, and Managed
Services provide the pillars Service Providers need
to forge and proﬁt from these partnerships. In
doing so, we will provide the bridge to a ﬂuid and
proﬁtable market between the Network and the
OTT provider.

The opportunity to unleash our next phase of
growth and transform our business is right before
us. Subexians are realizing this opportunity as they
always have – through an unwavering commitment
to our customer to add value and innovate. So
it is with great expectations that I look forward
to working with Subexians and our Customers
to realize the prospects of this next phase of
disruption and growth and chart our own 2.0
Transformation.

WWW.SUBEXWORLD.COM

CUSTOMER
orientation

SEKHARAN Y MENON
President - APAC

To be successful and maintain success in business,
organizations need to step into the shoes of their
customers, understand the challenges they face and
ﬁnd the best possible way to solve these problems. A
sales transaction is just the beginning of a relationship
between a solution provider and its customer. The
deal is generally signed in anticipation and expectation
that the solution provider will make a sincere effort to
understand the customer’s problems and help him in
designing and implementing a solution.

Moments of truth occur when the customer starts
to experience the beneﬁts of such an engagement.
The beneﬁts may be in the solution provider’s ability
to understand their speciﬁc needs, their approach to
solving speciﬁc problems or their experience to come
up with a holistic, “Customer Orientated” approach to
the situation.

Strong Customer Orientation is essential in
winning respect and conﬁdence of customers.
As the saying goes, a good customer reference is
a sale half done or a deal half won. The process
of satisfying customers and having them provide
a positive reference involves a lot of hard work.
Effort needs to be put behind all the speciﬁc
activities that they will point to as being useful
or something they might like about the service
provider’s culture. It is a culture of Customer
Orientation that makes any business successful
and this article describes the key requirements to
make it happen in a service provider.

Inculcate the belief that we exist
because of our customers
To be a customer centric organization, it is
critical for the entire organization to understand
the central role customers play. While it is the
simple fact that most organizations and businesses
exist because of its customers, this fact it is not
always well understood at all levels within the
organization. The fact remains that we need our
customers more than the customers need us. It
is the responsibility of leaders and managers to
help their teams understand this reality and make
it part of their belief. My personal experience is
that creating this awareness changes the behavior
of the entire organization.

10 WWW.SUBEXWORLD.COM

Demonstrate partnership approach
Although customers often use the term “vendor”
in their conversations and discussions, they really
expect a partnership approach from the vendors.
By signing a Contract or Purchase Order, most
customers believe that they are sharing their
burden or problems with the vendor or solution
provider. Solving the customer’s problem becomes
the joint responsibility of both the customer and
the solution provider. So, it is important for the
solution provider to demonstrate the partner
approach to really satisfy the customer’s need and
build a relationship.

Solution orientation
When faced with problems, customers want
solutions. They want the vendor to focus on ﬁnding
a solution even if it means a lot of extra work.
When a customer needs a solution, they don’t
want lots of discussion or whether the solution is
inside or outside the scope of the contract. They
want a solution and if the vendor can understand
that requirement and remain solution orientated
then it helps to create a strong bond between the
customer and the solution providing organization
and builds the relationship.

Looking at the larger picture
In any engagement, it is critical to have a view of
the larger picture. In the interest of long term
business goals, we might be forced to make some
short term compromises and go out of the way to
support our customer. Such acts have a positive
impact on the long term relationship so it is critical
that we are not too clouded by any short term
losses. In such situations, the decisions have to be
taken looking at the larger picture.

Crisis management - understanding the
impact
Managing crisis situations in customer engagements
are an inevitable part of today’s corporate life.
While trying to manage a crisis situation, in
addition to understanding the problem and its
root cause, one has to also understand the impact
of that crisis on the customer organization and
the people involved. It could be either a business
impact on the customer organization or an impact
on the individuals involved from the customer
organization or both. While trying to address the
problem, one should also look at possible ways
of dealing with the impact of what has already
happened. It is not enough only to solve the
immediate problem and feel that from that point
onwards there is no lingering business or personal
impact.

Help building conﬁdence
Although the commercial relationship is between
two organizations, what inﬂuences success most
is the business relationship between the people
in these organizations. So it is important for
individuals dealing and engaging with customers
to get the message across to their contacts in
customer organization that they will do all that
is required to handle and solve difﬁcult situations
and they have the full backing of their organization.
Genuine escalations happen when the customer
organization is not conﬁdent that the point of
contact in the solution providing organization is
able to solve their problem. So it is important that
the vendor is continuously checking the comfort
and conﬁdence level of the customer to deal with
any issues as early as possible.

Customer orientation at Subex
Subex as an organization focuses a lot on ensuring
it is customer orientated. Subex generates a lot
of repeat business from its existing customers.
One important factor that enables this is the way
Subex engages with its customers and its response
to situations when customers are in need. In my
personal experience, I feel that Subex’s customer
supportive attitude (Customer Orientation) is
one of the most important factors that has helped
Subex grow to the current level from a small start-
up. I could recite a list of situations where Subex
rose to the occasion and went out of the way to
support its customers. The leadership team in
Subex constantly convey the customer orientation
message to various levels within Subex through
various forums and sessions. Subex’s business
team always describes customer orientation as
one of our great strengths and most of our existing
customers will testify this is true.

Subex is still an organization in a growth phase so
we pay special attention to maintain the high level
of customer orientation across the organization. I
am convinced that the customer orientated culture
is part of the Subex DNA and that we will replicate
it where ever and whenever we work with our
customers. Subex’s leadership team and Middle
Management are not complacent and constantly
recognize Subexians who embody the spirit of
championing the customer’s cause. Customer
orientation is what our customers want and it is
what we strive to deliver to them every day.

WWW.SUBEXWORLD.COM

STARS

ABOVE & BEYOND

Subexian Name
Sabiha Alam
Tony Adolphus
James Cote
Ravi Mittal
Satish Kumar Ballepu
Surendranath Kondu
Kalluru Jahnavi
George P T
Anurag Jain
Vikas K N
Balaji Bagur Krishnaprasad
Richard Recinto
Deepak J Nayak
Arqum Beg
Sumanth Balasubramanya
Arvind M
Ramnath Ramachandran
Jayendran S
Arun Rishi Kapoor
Basil Brown
Rohith P
Lukas Brogli
Harsha Burly
Sudarshan T S
Rajini Dixit
Andrew Guest
Tony Mee
Chris Sears
Vinny Woodward
Martin Bedford
Akshatha Kashinath Suvarna
Thilakh Jacob Chacko
Gareth Deacon
Gordon Ide
Antonio Sacco
Luka Jankovic
Yan Faubert
Joel Gosselin
Lucia Savatti
Vickie Bendele
Richard Taplin
Pramod K P

Function
Engineering (P)
BT
PSO (P)
Engineering (P)
Engineering (P)
Engineering (P)
Engineering (P)
Engineering (P)
PSO (P)
Engineering (P)
Engineering (P)
PSO (P)
Engineering (P)
Engineering (P)
Engineering (P)
Product Management (P)
Engineering (P)
Engineering (P)
PSO (P)
Presales (P)
Engineering (P)
PSO(P)
Engineering (P)
Engineering (P)
CEO’s & COO’s Ofﬁce
PSO(P)
BT
BT
PSO (P)
PSO (P)
Engineering (P)
Engineering (P)
PSO (P)
PSO (P)
Engineering (P)
Engineering (P)
Engineering (P)
Engineering( P)
Facilities & Administration
Corporate (P)
Engineering (P)
Engineering (P)

12 WWW.SUBEXWORLD.COM

SUBEX

CHARITABLE

TRUST

60 students through Nurture Merit Program

Prerana Resource Centre

physically and mentally challenged girls

1Provided educational support to
2Sponsored water and electricity bills to
3Supported Swanthana, a centre for
4Provided educational support to children in
5Support provided for medical expenses
6Support provided for medical expenses for
7Sponsored note books for students

a heart patient at Narayana Hrudayalaya

of a Government school in Bangalore

Ananda Marga School, Kolar district

for 2 Cancer patients

WWW.SUBEXWORLD.COM

BOARD OF DIRECTORS

SUBASH MENON
Founder Chairman, Managing Director & CEO

SUDEESH YEZHUVATH
Chief Operating Ofﬁcer &
Wholetime Director

V BALAJI BHAT
Independent Director

VINOD R SETHI
Independent Director

HARRY BERRY
Independent Director

ANDREW GARMAN
Independent Director

ANIL SINGHVI
Independent Director

SANJEEV AGA
Independent Director

14 WWW.SUBEXWORLD.COM

MANAGEMENT TEAM

SUBASH MENON
Founder Chairman,
Managing Director & CEO

SUDEESH YEZHUVATH
Chief Operating Ofﬁcer &
Wholetime Director

MARK NICHOLSON
Chief Technology Ofﬁcer

VINOD KUMAR
Group President

ANURADHA
Senior Vice President -
Engineering

MONISHA TAMBAY
Vice President -
Human Resources

GREG LENEVEU
President - Americas

PAUL SKILLEN
President - EMEA

SEKHARAN Y MENON
President - APAC

RAMANATHAN J
Vice President - Finance &
Company Secretary

DAVID HALVORSON
General Counsel

WWW.SUBEXWORLD.COM

This page is intentionally left blank

general review &

accountability

WWW.SUBEXWORLD.COM

DIRECTORS’ REPORT TO THE MEMBERS OF SUBEX LIMITED

Your Directors have pleasure in presenting the 17th Annual
Report of the Company on the business and operations
together with the audited results for the year ended
March 31, 2011.

FINANCIAL RESULTS

Amount in Rs. Million

Consolidated

Standalone

2010-11 2009-10 2010-11 2009-10

4,827.50 4,630.78 3,135.53 3,201.44

1,411.17

947.23 1,188.03

999.19

528.71

637.74

435.24

510.05

882.46

309.49

752.79

489.14

(50.48)

794.72

(27.08)

891.66

831.98 1,104.21

725.71 1,380.80

44.19

101.25

10.62

12.19

787.79 1,002.96

715.09 1,368.61

Revenue

Proﬁt before Interest,
Depreciation, Tax,
Amortization & Exceptional
items

Interest, Depreciation &
Amortization

Proﬁt before Exceptional
items & tax

Exceptional Items

Proﬁt before tax

Provision for taxes

Proﬁt after tax

APPROPRIATIONS

Interim Dividend

Preference Dividend

Dividend proposed on equity
shares

Provision for tax on Dividends

Transfer to General Reserve

Surplus carried to Balance Sheet

787.79 1,002.96

715.09 1,368.61

RESULTS OF OPERATIONS

During the ﬁnancial year ended March 31, 2011, the total
revenue on a consolidated basis increased by 4% to reach
Rs. 4,827.50 Million. The Company has made a proﬁt of
Rs. 787.79 Million for the ﬁnancial year 2010-11 as against proﬁt
of Rs. 1,002.96 Million in the previous year.

On standalone basis, the total revenue stood at Rs. 3,135.53
Million. The net proﬁt for the ﬁnancial year 2010-11 was
Rs. 715.09 Million.

BUSINESS

18 WWW.SUBEXWORLD.COM

in their revenue chain, Service Fulﬁllment solutions enable
the carriers to fulﬁll the needs of their subscribers through
provisioning and activation of services. Subex conceptualizes
and develops software products at its facilities in Bangalore
and is focused on the telecom business segment. Subex
has sales and support ofﬁces in the United States, Canada,
UK, UAE, India, Singapore and Australia. Subex is the global
leader in Business Optimization for communications service
providers.

Commoditization of the industry is the largest threat that
telecom operators around the world are facing. This, coupled
with the need to roll out new products and services at regular
intervals, is proving to be a tough combination for the telcos.
Subex is well positioned to address the needs of the telecom
carriers and help them to overcome these challenges. Our
pioneering platform, the Revenue Operations Centre (ROCTM)
brings together business intelligence, domain knowledge and
workﬂow support. ROC acts as the underpinning solution
on which telcos can build their processes to achieve several
objectives like, lower cost, higher margin, higher revenue etc.
Further, the Company offers Managed Services around its
products which enable the operators to take advantage of its
deep domain expertise to improve their operational efﬁciency.

CHANGES IN SHARE CAPITAL

The authorised share capital of the Company is Rs. 1,300,000,000
(Rupees One Thousand Three Hundred Million only) divided
into 128,040,000 (One Hundred and Twenty Eight Million and
Forty Thousand only) equity shares of Rs. 10 (Rupees Ten only)
each and 200,000 (Two Hundred Thousand only) Preference
Shares of Rs. 98 (Rupees Ninety Eight only) each.

During the year, your Company has allotted 11,326,886 equity
shares, out of which:

(cid:2)(cid:3)7,197,607 equity shares were allotted upon conversion of
FCCBs aggregating to principal amount of US$ 12 Million,
out of Company’s US$98.7 Million 5% Convertible
Unsecured Bonds.

(cid:2)(cid:3)3,765 equity shares were allotted under ESOP 2005 scheme
and 1,260 equity shares were allotted under ESOP 2000
scheme, consequent to exercise of stock options.

(cid:2)(cid:3)4,124,254 equity shares were allotted on a preferential

basis to M/s KBC Aldini Capital Mauritius Limited.

As at March 31, 2011, the paid-up share capital of the Company
stood at Rs. 693,100,250/- comprising 69,310,025 equity shares
of Rs. 10/- each.

SUBSIDIARIES

SUBEX TECHNOLOGIES LIMITED

For the year ended March 31, 2011, Subex Technologies Limited
earned an income of Rs. 646.32 Million on a consolidated basis,

as against Rs. 801.35 Million last year and a net proﬁt of Rs. 7.50
Million as against a net loss of Rs. 5.73 Million last year.

Subex Technologies Inc is a direct subsidiary of Subex
Technologies Limited.

SUBEX (UK) LIMITED

For the year ended March 31, 2011, the consolidated income
of Subex (UK) Limited was Rs. 3,217.75 Million as against
Rs. 2,892.44 Million last year, and the net proﬁt was Rs. 115.98
Million as against a net proﬁt is Rs. 37.82 Million last year.

Subex (Asia Paciﬁc) Pte Limited and Subex Inc are direct
subsidiaries of Subex (UK) Limited.

SUBEX AMERICAS INC

For the year ended March 31, 2011, the consolidated income
of Subex Americas Inc was Rs. 1,205.44 Million as against
Rs. 984.77 Million last year, and net loss was Rs. 50.80 Million
as against Rs. 389.87 Million last year.

COMPLIANCE UNDER SECTION 212

The Ministry of Corporate Affairs (MCA) has vide General
Circular No: 2/2011 dated February 8, 2011 and General
Circular No: 3/2011 dated February 21, 2011 granted a general
exemption stating that the provisions of section 212 of the
Companies Act, 1956 in relation to subsidiaries’ accounts
shall not apply subject to compliance of certain conditions.
In accordance with the said circulars, the Board of Directors
of the Company, has in its meeting held on April 27, 2011,
given the consent for not attaching the balance sheet of the
subsidiaries concerned alongwith the balance sheet of the
Company. However, ﬁnancial information of the subsidiary
companies, as required to be provided by the said circulars, are
disclosed in Note II.11 under Schedule O to the Consolidated
Financial Statements. The Company will make available the
annual accounts of the subsidiary companies and the related
information to any investor of the Company who may be
interested in obtaining the same. The annual accounts of the
subsidiary companies will also be kept open for inspection by
any investor at the Registered Ofﬁce of the Company. The
Consolidated Financial Statements presented by the Company
include ﬁnancial results of its subsidiary companies.

FOREIGN CURRENCY CONVERTIBLE BONDS
(FCCBs)

As at March 31, 2011, the Company had outstanding FCCBs
aggregating to US$ 39 Million under its US$ 180,000,000 2%
Convertible Unsecured Bonds and US$ 54.80 Million under its
US$ 98,700,000 5% Convertible Unsecured Bonds. Both the
FCCBs are due for redemption in March 2012. The Company
is pursuing various options not limiting to fund raising in the
form of debt or equity, or a mix of both, and negotiations
with the current lenders, to meet any potential FCCBs debt
obligations that arise in March 2012. The Company ﬁrmly
believes that, with a combination of its internal cash accruals in

the next ﬁnancial year and on achieving successful closure on
these options in the coming months, it would be able to meet
all repayment obligations that arise during ﬁnancial year ending
March 31, 2012.

EMPLOYEE STOCK OPTIONS SCHEMES

Your Company has introduced various Stock Option plans
for its employees. Details of these, including grants to
Directors and Senior Management issued during the year are
given below.

EMPLOYEE STOCK OPTION PLAN-1999 (ESOP - I)

This scheme was instituted during 1999 and managed by Subex
Foundation with a corpus of 120,000 equity shares initially.
Since the scheme was formulated prior to the promulgation of
Securities and Exchange Board of India (Employee Stock Option
Scheme and Employee Stock Purchase Scheme) Guidelines,
1999, the Company has discontinued the scheme.

EMPLOYEE STOCK OPTION PLAN-2000 (ESOP - II)

During 1999-2000, your Company established the Employee
Stock Option Plan 2000, under which options have been
allocated for grant to the employees of the Company and its
subsidiaries. The Company has obtained in-principle approval
for listing up to a maximum of 883,750 equity shares to be
allotted pursuant to exercise of options granted under the
scheme. This scheme has been formulated in accordance
with the Securities and Exchange Board of India (Employee
Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999.

In accordance with the scheme, a Compensation Committee
has been formed, which grants options to the eligible employees.
The options are granted at a price, which is not less than 85%
of the average of the closing price of the equity shares during
the 15 trading days preceding the date of grant on the stock
exchange where there is highest trading volume during this
period. Unless otherwise resolved, the options granted vest
over a period of 1 to 4 years and can be exercised over a period
of 3 years from the date of vesting.

During the year 2008-09, the Company amended the ESOP
2000 scheme by inclusion of provisions allowing employees to
voluntarily surrender their vested/unvested options at any time
during their employment with the Company.

EMPLOYEE STOCK OPTION PLAN-2005 (ESOP - III)

Under this scheme, an initial corpus of 500,000 options was
created for grant to the eligible employees, with each option
convertible into one fully paid-up equity share of Rs. 10/-. This
scheme has been formulated in accordance with the Securities
and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999. The
corpus of the scheme was further enhanced by 1,500,000
options during the ﬁnancial year 2007-08. The Company has
obtained the requisite in-principle approvals from the stock

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exchanges for the purpose of listing of equity shares arising out
of exercise of options granted under the scheme.

The Compensation Committee grants options to the eligible
employees in accordance with the provisions of the scheme.
The options are granted at a price, which is not less than 85%
of the average of the closing price of the equity shares during
the 15 trading days preceding the date of grant on the stock
exchange where there is highest trading volume during this
period. Unless otherwise resolved, the options granted vest
over a period of 1 to 4 years and can be exercised over a period
of 3 years from the date of vesting.

During the year 2008-09, the Company amended the ESOP
2005 scheme by inclusion of provisions allowing employees to
voluntarily surrender their vested/unvested options at any time
during their employment with the Company.

EMPLOYEE STOCK OPTION PLAN-2008 (ESOP - IV)

During 2008-09, your Company instituted the Employee Stock
Option Plan-2008 vide approval of shareholders through the
postal ballot mechanism. A corpus of 2,000,000 options has
been created for grant to the eligible employees under the
scheme. The Scheme has been formulated in accordance
with the Securities and Exchange Board of India (Employee
Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999. The Company has obtained the requisite
in-principle approvals from the stock exchanges for the purpose
of listing of equity shares arising out of exercise of options
granted under the scheme.

The Compensation Committee grants options to the eligible
employees in accordance with the provisions of the scheme.
The options are granted at a price, which is not less than 85%
of the average of the closing price of the equity shares during
the 15 trading days preceding the date of grant on the stock
exchange where there is highest trading volume during this
period. Unless otherwise resolved, the options granted vests
over a period of 1 to 4 years and can be exercised over a period
of 3 years from the date of vesting.

Additional information as at March 31, 2011 required to be
disclosed as per Securities and Exchange Board of India
(Employee Stock Option Scheme and Stock Purchase Scheme)
Guidelines, 1999 is given as Annexure I to this report.

Your Company has complied with all the requirements as per
Clause 49 of the listing agreement of the Stock Exchanges,
as amended from time to time. The Auditor’s certiﬁcate on
compliance with Clause 49 is included under section on
Corporate Governance in this Annual Report. In addition,
your Company has documented its internal policies in line
with the Corporate Governance guidelines. The Management
Discussion & Analysis of the ﬁnancial position of the Company
has been provided as a part of this report.

DIRECTORS

As per Article 87 of the Articles of Association of the Company
read with section 255 and 256 of the Companies Act, 1956,
atleast two-third of the Directors shall be subject to retirement
by rotation. One-third of such Directors must retire from
ofﬁce at each Annual General Meeting of the shareholders
and a retiring director is eligible for re-election. Accordingly,
Mr. V Balaji Bhat retires by rotation and being eligible, has
offered to be re-appointed at the ensuing Annual General
Meeting.

The Board of Directors has, vide its resolution passed
on March 31, 2011, re-appointed Mr. Sudeesh Yezhuvath
as the Chief Operating Ofﬁcer & Wholetime Director
of the Company for the period from April 1, 2011 to
September 30, 2017. In accordance with the provisions of
Sections 198, 269, 309 read with Schedule XIII and other
applicable provisions of the Companies Act, 1956, the said
re-appointment is being placed before the Members for their
approval at the ensuing AGM. The terms and conditions of the
re-appointment including remuneration have been provided in
the notice convening the Annual General Meeting.

The Board of Directors has vide its resolutions dated April
11, 2011 and May 17, 2011 appointed Mr. Anil Singhvi and
Mr. Sanjeev Aga respectively as Additional Directors
of the Company to hold ofﬁce until the next Annual
General Meeting of the Company. Respective notices
under Section 257 of the Companies Act, 1956 have
been received from Members signifying their intention to
propose Mr. Anil Singhvi and Mr. Sanjeev Aga as candidates
for the ofﬁce of Director and accordingly resolutions are
being placed before the Members at the ensuing Annual
General Meeting.

CORPORATE GOVERNANCE

AUDIT COMMITTEE

Your Company strongly believes that the spirit of Corporate
Governance goes beyond the statutory form. Sound Corporate
Governance is a key driver of sustainable corporate growth and
long-term value creation for the stakeholders and protection of
their interests. Your Company endeavors to meet the growing
aspirations of all stakeholders including shareholders, employees
and customers. Your Company is committed to maintaining
the highest level of transparency, accountability and equity
in its operations. Your Company always strives to follow the
path of good governance through a broad framework of various
processes.

At its meeting held on April 27, 2011, the Board of Directors
of the Company appointed Mr. Anil Singhvi as a member of the
Audit Committee. At the same meeting, Mr. Subash Menon,
Founder Chairman, Managing Director & CEO stepped down
as a member and was elected as a permanent invitee to the
Committee. The Audit Committee presently has 5 Directors
as its members viz. Mr. V Balaji Bhat, Mr. Vinod R Sethi,
Mr. Andrew Garman, Mr. Harry Berry and Mr. Anil Singhvi. All
members of the Audit Committee are Independent Directors.
Mr. V Balaji Bhat is the Chairman of the Audit Committee.
The role, terms of reference, the authority and power of the

20 WWW.SUBEXWORLD.COM

Audit Committee are in conformity with the requirements of
section 292A of the Companies Act, 1956 and Clause 49 of
the Listing Agreement. Further details of the Audit Committee
have been provided in the report on Corporate Governance
forming part of this Annual Report.

AUDITORS

M/s. Deloitte Haskins & Sells (ICAI registration number
008072S), the Statutory Auditors of the Company retire at the
ensuing Annual General Meeting. The Statutory Auditors have
communicated their willingness to accept ofﬁce, if re-appointed
and have conﬁrmed that they are eligibile as per section 224(1B)
to be appointed as statutory auditors of the Company and are
not disqualiﬁed to hold ofﬁce as such in terms of section 226 of
the Companies Act, 1956.

The Auditors have expressed an unqualiﬁed opinion on the
ﬁnancial statements for the year ended March 31, 2011.

FIXED DEPOSITS

Your Company has not accepted any deposits
the public.

from

PARTICULARS OF EMPLOYEES

The particulars of employees required under Section 217(2A)
of the Companies Act, 1956 and Companies (Particulars
of Employees) Rules, 1975 as amended by Companies
(Particulars of Employees) Amendment Rules, 2011, read
with General Circular No. 23/2011 dated May 3, 2011
issued by MCA, are given at Annexure II appended hereto
and forming part of this report. In terms of Section 219(1)
(b)(iv) of the Companies Act, 1956, the report and accounts
are being sent to the shareholders excluding the aforesaid
annexure. Any shareholder interested in obtaining a copy of
the said annexure may write to the Vice President-Finance
& Company Secretary at the Registered Ofﬁce of the
Company.

INFORMATION UNDER SECTION 217(1)(e)
OF THE COMPANIES ACT, 1956 READ WITH
COMPANIES (DISCLOSURE OF PARTICULARS
IN THE REPORT OF BOARD OF DIRECTORS)
RULES, 1988

B. TECHNOLOGY ABSORPTION, ADOPTION AND

INNOVATION

Your Company has a strong R&D Division responsible for
developing technologies for its products in the telecom
domain. The Company holds several patents for its
technological innovations. The telecommunications domain,
in which your Company operates, is subject to a high level
of obsolescence and rapid technological changes. Your
Company has developed inherent skills to keep pace with
these changes. Since software products are the signiﬁcant
line of business of your Company, the Company incurs
expenses on product related Research & Development on
a continuous basis. These expenses are charged to revenue
under the respective heads and are not segregated and
accounted separately.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

Your Company has over the years shifted its focus from
software services to software products. This has resulted
in substantial foreign exchange earnings as compared to
previous years. The total foreign exchange inﬂow and
outﬂow during the ﬁnancial year 2010-11 was as follows:

i) Foreign Exchange earnings

ii) Foreign Exchange outgo

Rs. 2,893.49 Million
(Previous Year:
Rs. 2,910.89 Million)

Rs. 1,382.47 Million
(Previous Year:
Rs. 2,206.52 Million)

CORPORATE SOCIAL RESPONSIBILITY - SUBEX
CHARITABLE TRUST

Subex Charitable Trust extends the outlook of Subex as a
corporate entity into community service. The trust has been set
up to provide for welfare activities for under privileged and the
needy in the society. The trust is managed by Trustees elected
amongst the employees of the Company. During the year, the
Trust has provided active support for education of economically
challenged meritorious students, ﬁnancial assistance to old age
homes, orphanages and to individuals who needed medical help.
A gist of activities undertaken by the Trust has been provided
as a separate section in this Annual Report.

A. CONSERVATION OF ENERGY

HUMAN RESOURCE MANAGEMENT

The operations of your Company are not energy-intensive.
However, signiﬁcant measures are taken to reduce energy
consumption by using energy-efﬁcient computers and by
the purchase of energy-efﬁcient equipment. Your Company
constantly evaluates new technologies and invests to
make its infrastructure more energy-efﬁcient. Currently
your Company uses CFL ﬁttings and electronic ballasts to
reduce the power consumption of ﬂuorescent tubes. Air
conditioners with energy efﬁcient screw compressors for
central air conditioning and air conditioners with split air
conditioning for localized areas are used.

The Human Resource function constantly endeavours to
uphold the Subex Vision of “Deliver Value to Excel and Lead”.
The commitment and hard work of every member of the Subex
family has ensured that your Company lives by the values of
Fairness, Commitment and Innovation that we espouse.

During the year ended March 31, 2011, your Company surged
ahead on a lot of the initiatives that were launched in the
previous year. Hiring new members into the Subex team and
focusing on the drivers of Subexian satisfaction were the critical
focus areas. To that end your Company launched its own online

WWW.SUBEXWORLD.COM

Learning Management System called the Subex Academy. Your
Company also conducted a Subexian Satisfaction Survey. The
Subex family is in the top quartile in terms of their satisfaction
levels – an indication that the Company is doing things
right! Communication within the Company was stepped up.
Attraction, alignment, motivation and learning were the other
critical focus areas.

and of the proﬁt of the Company for the year ended on that
date.

c) that proper and sufﬁcient care has been taken for the
maintenance of adequate accounting records in accordance
with the provision of the Companies Act, 1956 for
safeguarding the assets of the Company and for preventing
and detecting fraud and other irregularities.

d) that the accounts for the year ended March 31, 2011 have

DIRECTORS’ RESPONSIBILITY STATEMENT

been prepared on a going concern basis.

In accordance with the provision of Section 217(2AA) of the
Companies Act, 1956, the Board of Directors afﬁrms:

a) that in the preparation of the annual accounts for the year
ended March 31, 2011, the applicable accounting standards
have been followed. Pursuant to, and in accordance with,
the approval of the Members and the Hon’ble High Court
of Karnataka to a proposal for reduction of securities
premium and capital reserve obtained during 2009-10, the
Company has utilised the Business Restructuring Reserve
for adjustment of certain expenses/impairments. Such
adjustment being at variance with applicable accounting
standards, necessary disclosure has been made in the Notes
to the accounts in Standalone and Consolidated Financial
Statements.

b) that the accounting policies have been selected and applied
consistently and it has made judgments and estimates that
are reasonable and prudent so as to give a true and fair view
of the state of affairs of the Company as at March 31, 2011

APPRECIATION/ACKNOWLEDGEMENTS

We thank our clients, vendors, investors and bankers for their
continued support during the year. We place on record our
appreciation for the co-operation and assistance provided by the
Central and State Government authorities particularly Software
Technology Park- Bangalore, SEZ authorities, Customs and
Central Excise authorities, Registrar of Companies, Karnataka,
the Income Tax department, Reserve Bank of India and various
authorities under the Government of Karnataka.

Your Directors also wish to place on record their deep
appreciation to Subexians at all levels for their hard work,
solidarity, co-operation and support, as they are instrumental in
your Company scaling new heights, year after year.

Place : Bangalore
Date : June 17, 2011

For and on Behalf of the Board

Subash Menon
Founder Chairman,
Managing Director & CEO

22 WWW.SUBEXWORLD.COM

ANNEXURE I

Additional Information as at March 31, 2011 as per Securities and Exchange Board of India (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999

Sl.
No.

Particulars

ESOP 2000

ESOP 2005

ESOP 2008

1. Net options granted as on March 31, 2011

Options granted during the year

Pricing formula

645,284

1,626,923

232,800

1,187,619

715,000

As mentioned earlier
in the report

3. Options vested but not exercised as on March 31,

195,189

820,819

82,464

2011

4. Options exercised as on March 31, 2011

Options exercised during the year

5. Money realized by exercise of options during the

year

6. The total number of shares arising as a result of
exercise of options during the year ended March 31,
2011

237,703

1,260

84,420

1,260

11,692

3,765

242,845.35

3,765

7. Options lapsed/cancelled/surrendered as on March

960,672

2,626,454

31, 2011

Options lapsed/cancelled/surrendered during the year

8. Variation of terms of options

9. No. of employees covered

10. Employee wise details of options granted during the

21,329

None

624

196,290

None

1840

year under review to:

(i) Senior managerial personnel

Mr. Vinod Kumar P

Mr. Ramanathan J

Ms. Monisha Tambay

Mr. David Halvorson

(ii) other employee receiving a grant in the year
of option amounting to 5% or more of options
granted during that year

Mr. Sekharan Menon

Ms. Anuradha

Mr. Mark Nicholson

Mr. Paul Skillen

Mr. Greg LeNeveu

Mr. Raj Kumar C

Mr. Shankar Roddam

Mr. Matthew Wilkinson

(iii) identiﬁed employees who were granted option,
during the year, equal to or exceeding 1% of the
issued capital (excluding outstanding warrants
and conversions) of the Company at the time of
grant

50,000

126,335

None

273

80,000

50,000

10,000

60,000

80,000

120,000

55,000

50,000

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Sl.
No.

Particulars

ESOP 2000

ESOP 2005

ESOP 2008

11. Diluted Earnings Per Share (EPS) pursuant to issue of
shares on exercise of option calculated in accordance
with Accounting Standard (AS) 20 ‘Earnings per
share’

12. Where the Company has calculated the employee
compensa tion cost using the intrinsic value of the
stock options, the difference between the employee
compensation cost so computed and the employee
compensation cost that shall have been recog nized if
it had used the fair value of the options.

Rs. 7.88

Proﬁt would have been lower by Rs. 34.77 Million.

The impact of this difference on proﬁts and on EPS
of the Company is:

Basic EPS would have been lower by Rs. 0.55 and Diluted EPS would
have been lower by Rs. 0.35.

13. Weighted-average exercise prices and weighted-
average fair values of options separately for options
whose exercise price either equals or exceeds or is
less than the market price of the stock.

14. Description of the method used during the year
to estimate the fair values of options, including the
following weighted-average information :

Weighted-average
exercise price is
Rs. 51.77

Weighted-average
exercise price is
Rs. 54.83

Black Scholes method of valuation

i. risk-free interest rate

ii. expected life

iii. expected volatility

iv. expected dividends

v. market price on grant date

8.00%

3 Years

48.39%

Rs. 60.37

Place : Bangalore
Date : June 17, 2011

Subash Menon
Founder Chairman, Managing Director & CEO

For and on Behalf of the Board

24 WWW.SUBEXWORLD.COM

REPORT ON CORPORATE GOVERNANCE

I. COMPANY’S PHILOSOPHY ON CODE OF

CORPORATE GOVERNANCE

Corporate Governance is about commitment to values and
ethical business conduct. It is about how an organization is
managed. Therefore situation, performance, ownership and
governance of the Company are equally important as regards
to the structure, activities and policies of the organization.
Consequently, the organization is able to attract investors, and
enhance the trust and conﬁdence of the stakeholders.

Subex Limited’s compliance with the Corporate Governance
guidelines as stipulated by the stock exchanges is described
in this section. The Company believes that sound Corporate
Governance is critical to enhance and retain investor’s trust.
Subex respects minority rights in its business decisions.

The Company’s Corporate Governance philosophy is based on
the following principles:

1. Satisfy the spirit of the law and not just the letter of the law.
2. Be transparent and maintain high degree of disclosure

levels.

the Company. The Company’s Corporate Governance
policies ensures, among others, the accountability of the
Board of Directors and the importance of its decisions to
all its participants viz., customers, employees, investors,
regulatory bodies etc. Subex Code of Corporate Governance
has been drafted in compliance with the code of “Corporate
Governance” as promulgated by the Securities and Exchange
Board of India (SEBI) in its meeting held on January 25, 2000 and
amendments made thereto, from time to time.

II. BOARD OF DIRECTORS

As at the date of this report, the Board of Directors of Subex
Limited comprises 8 Directors out of which 2 are Executive
Directors and 6 are Independent Directors. Mr. Anil Singhvi
and Mr. Sanjeev Aga were appointed as Additional Directors on
April 11, 2011 and May 17, 2011 respectively.

Details of the composition of the Board of Directors and their
attendance and other particulars are given below. These details
reﬂect the position as at March 31, 2011 and as such do not
include details of additional directors appointed after the end
of the ﬁnancial year.

3. Communicate externally, in a truthful manner, about how

the Company is run internally.

A. Composition and Category of Directors as on March 31,
2011

4. Comply with the laws in all the countries in which the

Category

Company operates.

Subex is committed to good Corporate Governance practices.
Consistent with this commitment, Subex seeks to achieve
a high level of responsibility and accountability in its internal
systems and policies. Subex respects the inalienable rights
of the shareholders to information on the performance of

Independent Directors
Promoter and Executive
Directors
Other Executive Directors
Total

No. of
Directors
4
1

1
6

66.66
16.67

16.67
100.00

B. Attendance of Directors at the Board Meetings and the Last AGM and Details About Directorships and Membership in

Committees as on March 31, 2011

Director

Position

No. of
Board
Meetings
Held

No. of
Board
Meetings
Attended

Last AGM
Attendance

No. of
Directorships
in Other
Companies (cid:2)

No. of
Committees
in Which the
Director is
Chairman (cid:2)

No. of
Committees
in Which the
Director is a
Member (cid:2)

Mr. Subash Menon

Founder Chairman,
Managing Director & CEO

Mr. Sudeesh Yezhuvath Chief Operating Ofﬁcer &

Wholetime Director

Mr. V Balaji Bhat

Independent Director

Mr. Vinod R Sethi

Independent Director

Mr. Harry Berry

Independent Director

Mr. Andrew Garman

Independent Director

Yes

(cid:2)(cid:3)Excluding private limited companies & overseas companies.
(cid:2)(cid:3)Includes only Audit Committee and Shareholder’s Grievance Committee. Memberships in Committees of Subex Limited are

included.

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C. Number and Dates of Board Meetings

5 (Five) Board meetings were held during the ﬁnancial year
2010-11. The dates on which meetings were held are as follows:

April 29, 2010
June 10, 2010
July 29, 2010
October 29, 2010
January 27, 2011

D. Brief Details of Directors Seeking Appointment

Recently, Mr. Anil Singhvi conceptualized and advised merger
of Enam, one of the largest investment banks in India, with Axis
Bank, a deal involving around US$ 500 Million.

Mr. Anil Singhvi is also Founder Director of Foundation for
Liberal and Management Education (FLAME), an educational
institute engaged in higher education. He is also closely
associated with SAMPARC- a non government organization
that helps to empower the destitute children. Apart from
this, he is also on the Indian Advisory Board of Habitat for
Humanity, an NGO involved with construction of Houses for
needy and poor people.

Mr. Sudeesh Yezhuvath

Mr. Anil Singhvi holds 60,000 equity shares of Subex Limited.

Mr. Sudeesh Yezhuvath heads the overall operations of Subex,
excluding the legal and ﬁnancial functions. He has been
associated with Subex since 1993 and has been instrumental
in building the software business of Subex. He has been closely
involved in the Company’s M&A activities, including the
integration process post acquisitions.

Mr. Sudeesh Yezhuvath holds a Bachelors degree
in
Instrumentation and Control. Mr. Sudeesh Yezhuvath has over
18 years of experience in the telecom ﬁeld and has presented
various papers on telecom and business operations in different
parts of the world.

Mr. Sudeesh Yezhuvath is the brother of Mr. Subash Menon,
Founder Chairman, Managing Director & CEO.

Mr. Sudeesh Yezhuvath holds 372,243 equity shares of the
Company.

Mr. V Balaji Bhat

Mr. V Balaji Bhat is a Chartered Accountant and Management
Consultant specializing in mergers & acquisitions, advisory
services and international taxation. He is associated with
various medium and large corporations in India and overseas
as an advisor and director. He is the Managing Director & CEO
of Primus Retail Private Limited (formerly Gitanjali Lifestyle
Products Private Limited). Primus Retail Private Limited is a
leading player in the growing retailing sector in India, engaged in
retailing and distribution of lifestyle products such as apparels,
footwear and related accessories.

Mr. V Balaji Bhat holds 31,000 equity shares of the Company.

Mr. Anil Singhvi

Mr. Anil Singhvi is Chairman of Ican Investments Advisors
Private Limited, a Corporate Advisory ﬁrm engaged in
Investment Banking and Corporate advisory.

Mr. Sanjeev Aga

Business leader, organization builder, adviser and mentor,
Mr. Sanjeev Aga’s career has traversed 38 years, and sectors
from consumer and services, entertainment and
light
engineering, to telecommunications.

In a business career commencing 1973, Mr. Sanjeev Aga held
senior positions in Asian Paints, Chellarams (Nigeria), and
Jenson & Nicholson. In 1987, he joined Blow Plast to head the
Furniture business, was made Chief Executive of Mattel Toys
in 1990, and in January 1993 was appointed Managing Director
of Blow Plast with multi-business responsibility including the
ﬂagship VIP Luggage business.

In November 1998, Mr. Sanjeev Aga was appointed CEO of
the telecom JV, Birla AT&T. He led the company through
expansions, mergers and acquisitions to be CEO of Birla
Tata AT&T, which was renamed Idea Cellular. In July 2002,
Mr. Sanjeev Aga left Idea to be with the Aditya Birla Group,
where from May 2005 until October 2006, he was Managing
Director of Aditya Birla Nuvo, a conglomerate with interests
spanning diverse group businesses.

With Idea’s shareholding changing to become an Aditya Birla
group entity, November 2006 saw Mr. Sanjeev Aga back
as Managing Director. The next four years were a period of
rapid progress for Idea. The company improved its national
market position from No.6 to No.3, joined the ranks of the 10
biggest global telcos, and importantly, became a highly regarded
proﬁtable company in a hyper-competitive sector. Mr. Sanjeev
Aga stepped down as Managing Director of Idea Cellular in
March 2011.

For 2009, Idea Cellular was named the ‘ET Emerging Company
of the Year’, and for 2010, Forbes India magazine shortlisted
Mr. Sanjeev Aga as a ‘Person of the Year’.

Mr. Sanjeev Aga is an Honours graduate in Physics from St.
Stephen’s College, Delhi (1971) and a post graduate from the
Indian Institute of Management, Kolkata (1973).

Mr. Anil Singhvi has over 30 years of experience in corporate
sector, out of which he spent 22 years with Ambuja Cements
Limited, where he rose from Manager to Managing Director
& CEO. A Chartered Accountant, Mr. Anil Singhvi played a
deﬁning role in making of Ambuja Cements.

Mr. Sanjeev Aga now engages in advisory and consultant roles
for corporates and not-for-proﬁt organizations.

Mr. Sanjeev Aga does not hold any equity shares of Subex
Limited.

26 WWW.SUBEXWORLD.COM

III. AUDIT COMMITTEE

A. Terms of Reference

The Audit Committee has, inter alia, the following mandate:

(cid:2)(cid:3)Overseeing the Company's ﬁnancial reporting process and
disclosure of its ﬁnancial information to ensure that the
ﬁnancial statements are correct, sufﬁcient and credible;

(cid:2)(cid:3)Recommendation of appointment and removal of external
auditor, ﬁxation of audit fee and also approval for payment
for any other services;

(cid:2)(cid:3)Reviewing, with the management, the quarterly ﬁnancial
statements before submission to the Board for approval;
(cid:2)(cid:3)Review of annual ﬁnancial statements before submission to

the Board;

(cid:2)(cid:3)Review of adequacy of internal control systems;
(cid:2)(cid:2) Review of adequacy of internal audit function, including
the reporting structure coverage and frequency of internal
audit, and

(cid:2)(cid:2) Review of the Company's ﬁnancial and risk management

policies.

The current charter of the Audit Committee is in line with
international best practices and the regulatory changes
formulated by SEBI and the listing agreements with the Stock
Exchanges on which Subex is listed.

B. Composition of Audit Committee as on March 31, 2011

Composition

Category

Mr. V Balaji Bhat, Chairman
Mr. Vinod R Sethi
Mr. Andrew Garman
Mr. Harry Berry
Mr. Subash Menon

Independent Director
Independent Director
Independent Director
Independent Director
Founder Chairman,
Managing Director & CEO

At the Board meeting held on April 27, 2011, Mr. Subash Menon,
Founder Chairman, Managing Director & CEO stepped down
as a member and was elected as a permanent invitee to the
Committee. At the same meeting, Mr. Anil Singhvi, Independent
Director was inducted as a member of the Audit Committee.

Mr. Ramanathan J, Vice President-Finance & Company Secretary
is the Secretary of the Audit Committee.

C. Meetings and Attendance During the Year

During the ﬁnancial year 2010-11, ﬁve Audit Committee
meetings were held on April 29, 2010, June 10, 2010, July 29,
2010, October 29, 2010, and January 27, 2011. The audited
ﬁnancial results for the ﬁnancial year ended March 31, 2011
were taken on record at the meeting held on April 27,
2011. The quarterly results for the quarters April-June 2010,
July-September 2010 and October-December 2010 were taken
on record on July 29, 2010, October 29, 2010, and January 27,
2011 respectively.

D. Attendance of Committee Members at the Audit Committee
Meetings Held During the Financial Year 2010-11

Member

Mr. V Balaji Bhat
Mr. Vinod R Sethi
Mr. Andrew Garman
Mr. Harry Berry
Mr. Subash Menon

No. of Audit
Committee
Meetings Held
5
5
5
5
5

No. of Audit
Committee
Meetings Attended
5
1
1
4
5

IV. REMUNERATION COMMITTEE

A. Composition of the Committee

Composition

Category

Mr. Vinod R Sethi, Chairman
Mr. V Balaji Bhat
Mr. Harry Berry

Independent Director
Independent Director
Independent Director

At the Board meeting held on April 27, 2011, Mr. Anil Singhvi,
Independent Director has been inducted as a member of the
Remuneration Committee.

The Committee considers the performance of the Company as
well as general industry trends while ﬁxing the remuneration
of Executive Directors. The Committee approved the
re-appointment of Mr. Sudeesh Yezhuvath as Chief Operating
Ofﬁcer & Wholetime Director w.e.f. April 1, 2011 based on the
terms and conditions including remuneration which are being
placed before the Members for their approval at the ensuing
Annual General Meeting.

B. Details of Remuneration of Directors

Amount in Rs.

Salary Commission

21,217,023

Total
21,217,023

19,570,155

Name
Mr. Subash
Menon

Mr. Sudeesh
Yezhuvath

Designation
Founder Chairman,
Managing Director
& CEO
Chief Operating
Ofﬁcer & Wholetime
Director

Note: Further details have been disclosed in Note II.8 under
Schedule P to the Standalone Financial Statements and Note II.7
under Schedule O to the Consolidated Financial Statements.

The following Directors have been allotted Stock Options
under the Employee Stock Options Scheme of the Company:

Name

Designation No. of
Options
Granted

Mr. V Balaji Bhat

Mr. Vinod R Sethi

Independent
Director
Independent
Director

7,500

No. of Options
Vested and
Exercised as on
March 31, 2011
7,500

7,500

WWW.SUBEXWORLD.COM

The aforementioned stock options were granted on the terms
and conditions mentioned in the Employee Stock Option
Plan-2000 of the Company.

During the ﬁnancial year under review, no additional
stock options were granted to any of the Directors of the
Company.

V. SHARE TRANSFER COMMITTEE

A. Composition of the Committee

Composition

Category

Mr. Sudeesh Yezhuvath, Chairman Chief Operating Ofﬁcer &

C. Details of Shareholding of Non- Executive Directors

Mr. Subash Menon

Wholetime Director

Founder Chairman,
Managing Director & CEO

In terms of Clause 49(IV)(E)(iv) of the Listing Agreement,
the details of shares held by Non-Executive Directors are as
under:

Authorised Representative of Share transfer Agents

B. Meetings During the Year

Name

No. of Shares Held
as at March 31, 2011

Mr. V Balaji Bhat

Mr. Vinod R Sethi

Mr. Andrew Garman

Mr. Harry Berry

31,000

The Non-Executive Directors were being paid sitting fees of
Rs. 2,500 for attending the Board meetings. At its meeting held
on April 27, 2011, the Board of Directors approved payment
to the Non-Executive Directors of sitting fees of Rs. 20,000
per meeting for attendance in the Audit Committee meetings
and Rs. 10,000 per meeting for attendance at the Board
meetings.

The Remuneration Committee determines and recommends
to the Board, the compensation payable to the Executive
Directors. All Board level compensation is approved by the
shareholders, where necessary, and is separately disclosed in
the ﬁnancial statements. Remuneration of Executive Directors
consists of a ﬁxed component and a performance based
commission. The compensation, however, shall be within the
parameters set by the shareholders meetings and the provisions
of the Companies Act, 1956. The Executive Directors have
entered into service contracts with the Company. Both the
Executive Directors have 3 months notice period with the
Company if they decide to terminate the contract. If the
termination is from the Company, the notice period shall be
12 calendar months. In case of severance from the Company,
Mr. Subash Menon is eligible for compensation of not less
than twenty times and Mr. Sudeesh Yezhuvath is eligible
for compensation not less than ﬁfteen times of their total
remuneration for the preceding 12 months from the date
of the notice. Subject to approval of members at the
forthcoming Annual General Meeting, the Non-Executive
Directors are eligible for payment of commission upto 1% of
net proﬁts of the Company and grant of upto 50,000 stock
options per Director in a ﬁnancial year and in the aggregate,
as may be decided by the Board of Directors (including
issuance of stock options
a committee thereof). The
is subject to the terms of the stock option schemes of the
Company.

28 WWW.SUBEXWORLD.COM

The Company holds Share Transfer Committee Meetings on
a periodical basis, as may be required, for approving, inter alia,
the transfers/transmissions/rematerialisation of equity shares.
The Company has appointed M/s. Canbank Computer Services
Limited, a SEBI registered transfer agent, as its Share Transfer
Agent with effect from November 6, 2001. The Share Transfer
Committee has passed the following resolutions during the
ﬁnancial year 2010-11 on the below dates:

Date of Approval

No. of
Transfer
Requests
Received

Shares
Pursuant to
the Deeds

Remateria-
lisation
Requests
Received

Equity
Shares
Involved

April 15, 2010

October 6, 2010

November 15, 2010

December 24, 2010

100

7,600

7,800

400

The Committee has vide resolution passed on September 21,
2010, approved the issuance of two duplicate share certiﬁcates
pertaining to 7,600 equity shares.

The Company ensures that the share transfers are effected
within one month of the receipt of request for transfer.

VI. INVESTOR GRIEVANCE COMMITTEE

A. Composition of the Committee

Composition

Category

Mr. V Balaji Bhat, Chairman
Mr. Sudeesh Yezhuvath

Independent Director
Chief Operating Ofﬁcer &
Wholetime Director

Mr. Ramanathan J, Vice President-Finance & Company Secretary,
is the Compliance Ofﬁcer of the Company.

The Committee is responsible for addressing the investor
complaints and grievances. The Committee meets on a periodic
basis to address the investor complaints like transfer of
shares, non-receipt of balance sheet, non-receipt of declared
dividends etc. Details of grievances of the investors are
provided in the “Shareholders’ Information” section of this
Annual Report.

VII. ESOP COMMITTEE (Compensation Committee)

The Company has instituted Employee Stock Option Schemes
in line with the Securities and Exchange Board of India
(Employee Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999. The Committee grants and
administers options under the stock options schemes to eligible
employees.

A. Composition of the Committee

Composition

Category

Mr. V Balaji Bhat, Chairman
Mr. Vinod R Sethi
Mr. Subash Menon

Independent Director
Independent Director
Founder Chairman,
Managing Director & CEO

The Committee meets on a periodic basis to administer the
ESOP schemes of the Company.

VIII. GENERAL BODY MEETINGS

A. Location and Time of the Last Three AGMs

April 1, 2009 for certain Permitted Utilizations as mentioned in
the explanatory statement to the notice of the Extraordinary
General Meeting held on March 4, 2010. The petition seeking
approval of the reduction was approved by the Hon’ble High
Court of Karnataka vide its order dated April 21, 2010. The
copy of the said order and the minute conﬁrming the reduction
was registered by the Registrar of Companies, Karnataka at
Bangalore vide its certiﬁcate dated May 11, 2010. In accordance
with the Proposal, the BRR has been utilised for adjustment
of certain expenses/impairments. Such adjustment being at
variance with applicable accounting standards, necessary
disclosure has been made in the Notes to the accounts in
Standalone and Consolidated ﬁnancial statements.

C. The Company has not been subjected to any penalties,
strictures by stock exchange(s)/SEBI or any statutory authorities
on any matter related to capital markets, during the last three
years.

D. The Company has complied with the listing conditions laid
down in the Listing agreement of the stock exchanges where
the equity shares of the Company are listed.

Year

Date of AGM

Venue

Time

X. MEANS OF COMMUNICATION

2007-2008

September 23, 2008

Registered ofﬁce

4.00 P M

A. Annual/Half Yearly and Quarterly Results

2008-2009

July 29, 2009

Registered ofﬁce

3.00 P M

2009-2010

September 13, 2010

Registered ofﬁce

3.00 P M

B. Location and Time of the Last Three EGMs

Year

2009-10

2010-11

Date of EGM

Venue

Time

October 20, 2009

Registered ofﬁce

10.30 A M

March 4, 2010

Registered ofﬁce

3.00 P M

February 9, 2011

Registered ofﬁce

3.00 P M

No special resolutions were passed at the last three AGMs of
the Company.

IX. DISCLOSURES

A. There are no material related party transactions of
the Company, with the Promoters, the Directors or the
management, their subsidiaries or relatives etc. that may
have potential conﬂict with the interests of the Company at
large. Transactions with the related parties are disclosed in
Note II. 6 under Schedule P to the Standalone Financial
Statements and Note II. 7 under Schedule O to the Consolidated
Financial Statements in the Annual Report.

B. A proposal for reduction and utilization of Securities
Premium and Capital Reserve under the provisions of section
78 read with section 100 to 104 of the Companies Act, 1956
was approved pursuant to the resolution passed by the Board
of Directors on February 8, 2010 and special resolution passed
by the Members at the Extraordinary General Meeting held on
March 4, 2010. The reduction, as aforesaid, envisages transfer
of certain amounts from the Securities premium and Capital
Reserves as on April 1, 2009 and thereafter, to a Business
Restructuring Reserve (BRR) to be utilized from or after

and Udayvani/Vijay Karnataka. The

The annual/half yearly/quarterly audited/un-audited results
are generally published in all editions of Financial Express/
complete
Mint
ﬁnancial statements are posted on the Company’s website
www.subexworld.com. Subex also regularly provides information
to the Stock Exchanges as per the requirements of the Listing
Agreements and updates the website periodically to include
information on new developments and business opportunities.

As part of the “Green Initiative in Corporate Governance”,
the Ministry of Corporate Affairs (MCA), Government of
India, through its Circular Nos. 17/2011 and 18/2011, dated
April 21, 2011 and April 29, 2011 respectively, has allowed
companies to send ofﬁcial documents to their shareholders
electronically considering its legal validity under the Information
Technology Act, 2000. Being a Company with strong focus
on green initiatives, Subex proposes to send all shareholder
communications such as the notice of General Meetings,
Audited Financial Statements, Directors’ Report, Auditors’
Report, etc., henceforth to shareholders in electronic form
to the E-mail Id provided by them and made available to us
by the Depositories. Members are requested to register their
E-mail Id with their Depository Participant and inform them of
any changes to the same from time to time. However, Members
who prefer physical copy to be delivered may write to the
Company at its registered ofﬁce or send an E-mail to
investorrelations@subexworld.com by providing their DP Id
and Client Id as reference.

B. Management’s Discussion and Analysis section has been
separately dealt with in the Annual Report.

XI. General shareholder information is provided in the
“Shareholders’ Information” section of the Annual Report.

WWW.SUBEXWORLD.COM

XII. Auditors’ Certiﬁcate with regard to compliance of
conditions of Corporate Governance as per Clause 49 of the
Listing Agreement entered into with the Stock Exchanges forms
part of this Annual Report.

XIII. Compliance with non-mandatory requirements of Clause
49 of the listing agreement

Clause 49 states that the non-mandatory requirements provided
therein may be implemented as per the Company’s discretion.
However, the disclosures of compliance with mandatory
requirements and adoption (and compliance)/non-adoption of
non-mandatory requirements shall be made in the section on
Corporate Governance in the annual report. The Company has
complied with the following non-mandatory requirements:

A. The Board

The Company has an Executive Chairman and as such disclosures
on maintenance of ofﬁce by a Non-Executive Chairman does
not arise. The Company ensures that the persons appointed
as Independent Directors have the requisite qualiﬁcations and
experience which would be of use to the Company and which
would enable them to contribute effectively to the Company in
their capacity as Independent Directors.

initiate electronic dissemination of ﬁnancial results to the
members.

D. Audit Qualiﬁcations

The Auditors have expressed an unqualiﬁed opinion on the
ﬁnancial statements for the year under review. The Company
always endeavours to move towards a regime of un-qualiﬁed
ﬁnancial statements.

E. Training of Board Members

All new Non-Executive Directors inducted into the Board are
given adequate orientation on the Company’s businesses, group
structure, risk management strategy and policies.

F. Mechanism for Evaluating Non-Executive Board Members

The Company compensates Non-Executive Directors keeping in
view the time and attention devoted by them for the Company.
While doing so, the Company evaluates the performance of the
Non-Executive Directors using various parameters. However
the Company is yet to formalize this evaluation by peer group
comprising entire Board of Directors, excluding the Director
being evaluated.

B. Remuneration Committee

G. Whistle Blower Policy

The Company has instituted a Remuneration Committee.
A detailed note on the Remuneration Committee has been
provided earlier in the report.

C. Shareholders’ Rights

face to

investors regularly
The Company communicates with
face meetings
through E-mails, telephone and
like investor conferences, earnings calls, company visits
and on road shows. The Company announces quarterly
ﬁnancial results within four weeks of the close of a quarter.
The Company publishes the quarterly ﬁnancial results in
leading business newspaper(s) as well as on the Company’s
website. The Company has not initiated sending half-yearly
declaration of ﬁnancial performance to the household of
shareholders so far. However, the Company intends to

The Company has established a mechanism for employees to
report concerns about unethical behaviours, actual or suspected
fraud or violation of our Code of Conduct. The mechanism
also provides for adequate safeguards against victimization of
employees who avail of the mechanism and also provide for
direct access to the Chairman of the Audit Committee in
exceptional cases. The employees are informed of this policy
through appropriate internal communications. None of the
employees have been denied access to this facility.

For Subex Limited

Place : Bangalore
Date : June 17, 2011

Subash Menon
Founder Chairman,
Managing Director & CEO

30 WWW.SUBEXWORLD.COM

DECLARATION BY THE CEO UNDER CLAUSE 49(I)(D) OF THE LISTING
AGREEMENT REGARDING ADHERENCE TO THE CODE OF CONDUCT

To,

The Members of Subex Limited

Conduct, as applicable for the Financial Year ended March 31,
2011.

In accordance with Clause 49(I)(D) of the Listing Agreement
with the Stock Exchanges, I hereby conﬁrm that, all the
Directors and the Senior Management personnel including
me, have afﬁrmed compliance to their respective Codes of

Place : Bangalore
Date : June 17, 2011

For Subex Limited

Subash Menon
Founder Chairman,
Managing Director & CEO

AUDITORS’ CERTIFICATE ON CORPORATE GOVERNANCE

To,

The Members of Subex Limited

1. We have examined the compliance of conditions of
Corporate Governance by Subex Limited [‘the Company’]
for the year ended March 31, 2011 as stipulated under
Clause 49 of the Listing Agreement of the Company with
the Stock Exchanges.

2. The compliance of conditions of Corporate Governance
is the responsibility of the management. Our examination
has been limited to a review of the procedures and
implementations thereof, adopted by the Company for
ensuring compliance with the conditions of the Corporate
Governance. It is neither an audit nor an expression of
opinion of the ﬁnancial statements of the Company.

In our opinion and to the best of our information
and according to the explanations given to us and
the representations made by the Directors and the
management, we certify that the Company has complied
with the conditions of Corporate Governance as stipulated
in Clause 49 of the above-mentioned Listing Agreement.

4. We further state that such compliance is neither an
assurance as to the future viability of the Company nor the
efﬁciency or effectiveness with which the management has
conducted the affairs of the Company.

For Deloitte Haskins & Sells
Chartered accountants

V Balaji
Partner
Membership No. 203685

Place : Bangalore
Date : June 17, 2011

WWW.SUBEXWORLD.COM

MANAGEMENT DISCUSSION AND ANALYSIS

India, Singapore and Australia. Subex is the global leader in
Business Optimization for communications service providers.

Commoditization of the industry is the largest threat that
telecom operators around the world are facing. This, coupled
with the need to roll out new products and services at
regular intervals, is proving to be a tough combination for the
telcos. Subex is well positioned to address the needs of
the telecom carriers and help them to overcome these
challenges. Our pioneering platform, the Revenue Operations
intelligence,
Centre
domain knowledge and workﬂow support. ROC acts as the
underpinning solution on which telcos can build their processes
to achieve several objectives like, lower cost, higher margin,
higher revenue etc. Further, we offer Managed Services around
our products which enable the operators to take advantage
of our deep domain expertise to improve their operational
efﬁciency.

together business

(ROCTM) brings

2. OPPORTUNITIES AND THREATS

Strategy

Strategy is a critical aspect in any business. The key elements
of our strategy are our offering, positioning and customer
acquisition and retention. We have always been at the leading
edge of technology and have evolved new concepts to enable
our customers to keep pace with changing scenarios. Using
our products, we have structured several solutions that
address and solve key problems faced by our customers. These
solutions are offered as a well integrated platform called ROC.
In addition to this, we also offer ROC in the form of Managed
Services thereby ensuring that our customers gain signiﬁcantly
from our solutions. This three pronged strategy has helped us
to weather the storm over the past couple of years.

3. BUSINESS SEGMENTS AND INDUSTRY OUTLOOK

3.1 Business Segments

Subex operates in two business segments – telecom software
products and telecom software services. The former is the key
focus area for the Company and is being discussed in detail.
The latter is staff augmentation services for telcos in the United
States and is fast losing its signiﬁcance as can be seen from the
business mix data provided herein.

Overview

Subex Limited (“Subex” or “the Company”) has its Equity
Shares listed on the National Stock Exchange of India Limited
(NSE) and the Bombay Stock Exchange Limited (BSE). The
Global Depositary Receipts (GDRs) of the Company are
listed on the London Stock Exchange (LSE). The Company’s
US$ 180,000,000 2% Convertible Unsecured Bonds are listed
on the London Stock Exchange (LSE) and US$ 98,700,000 5%
Convertible Unsecured Bonds are listed on the Singapore
Exchange Securities Trading Limited (SGX).

The management of Subex is committed to improving the levels
of transparency and disclosure. Keeping this in mind, an attempt
has been made to disclose hereunder, information about the
Company, its business, operations, outlook, risks and ﬁnancial
condition.

The ﬁnancial statements of the Company have been prepared in
compliance with the requirements of the Companies Act, 1956,
and the Generally Accepted Accounting Principles (GAAP) in
India or as per the accounting approved by the Hon’ble High
Court of judicature. The management of Subex accepts
responsibility for the integrity and objectivity of these ﬁnancial
statements, as well as for various estimates and judgments used
therein. The estimates and judgments relating to the ﬁnancial
statements have been made on a prudent and reasonable
basis, in order that the ﬁnancial statements reﬂect the form
and substance of transactions in a true and fair manner, and
reasonably present the state of affairs and proﬁts for the year
under review.

In addition to the historical information contained herein, the
following discussion may include forward looking statements
which involve risks and uncertainties, including but not limited
to the risks inherent in the Company’s growth strategy,
dependency on certain clients, dependency on availability of
qualiﬁed technical personnel and other factors discussed in this
report.

1. INDUSTRY

Your Company is a provider of solutions in the Business Support
Systems (BSS) and Operations Support Systems (OSS) areas
for telecom applications. The key sub-areas in BSS and OSS
are Revenue Maximization or Business Optimization, Billing
Systems, Mediation, Service Fulﬁllment and Service Assurance.
The Company operates in Business Optimization and Service
Fulﬁllment areas. While Business Optimization solutions
improve the revenues and proﬁts of the communications service
providers through identiﬁcation and elimination of leakages
in their revenue chain, Service Fulﬁllment solutions enable
the carriers to fulﬁll the needs of their subscribers through
provisioning and activation of services. Subex conceptualizes
and develops software products at its facilities in Bangalore and
is focused on the telecom business segment. Subex has sales
and support ofﬁces in the United States, Canada, UK, UAE,

32 WWW.SUBEXWORLD.COM

3.2 Telecom Software Products

ROC Fraud Management

Solutions for Business Optimization

Subex offers the Revenue Operations Centre (ROCTM) Solution
Suite for Business Optimization, which has solutions for
Revenue Assurance, Fraud Management, Credit Risk
Management, Partner Settlement, Route Optimization,
Cost Management, Service Fulﬁllment and Data Integrity
Management.

Revenue Operations Centre (ROC)

ROC functions as a ﬁnancial command and control centre for
the telcos by,

(cid:2)(cid:2) delivering

real-time

to
effectively monitor and control the operational and tactical
response

actionable

insights

and

(cid:2)(cid:2) providing an integrated platform that sits on top of all Subex

OSS/BSS products or 3rd party systems

(cid:2)(cid:2) linking service provider operations directly to ﬁnancial

health

The ROC Fraud Management solution is the next generation
fraud management solution built to deliver on a 3-step
philosophy of Detect-Investigate-Protect. It detects known fraud
types and patterns of unusual behaviour, helps investigate these
unusual patterns for potential fraud and uses the knowledge
thus generated to upgrade and protect against future intrusions.
It is built to drive fraud prevention by eliminating known frauds,
reducing free run time, augmenting internal controls and
through continuous Fraud Management process improvement.

ROC Fraud Management is differentiated by its unique
architecture that harnesses the power of proven rules-based
alarms and pattern matching driven by advanced statistical
techniques. Adding power to this hybrid detection system is
a set of strong case management tools. These tools provide all
relevant case data which are made easily accessible through a
single window in a fast web-based GUI.

The solution’s high ﬂexibility allows operators of different
sizes to customize rules to suit unique network and business
requirements.

ROC allows for the correlation of data across business systems,
creating an end-to-end view of the customer based on products,
services, revenues, margins, costs, and more. ROC also enables
service providers to deﬁne key cross-domain metrics and KPIs,
speciﬁc to their business strategy that can be monitored and
tracked.

Moreover, seamless visual alarm linking using third party
visualization software reduces
investigation efforts, thus
decreasing case turnover time. The solution has the ability
to detect fraud types in all telecom environments - Wireline
(PSTN, ISP, VoIP) and Wireless (2G, 2.5G, 3G) and across all
services - postpaid, prepaid, VAS, MMS, and M-commerce.

Subex ROC™ Portfolio
BUSINESS OPTIMIZATION SOLUTIONS

ASSURED OPERATIONS

ware

Customer Experience
Management

Product Performance
Management

Margin Driven
Management

PROTECTED REVENUES

MANAGED COSTS

OPTIMIZED FULFILLMENT

ROC Revenue Assurance

ROC Partner Settlement

ROC Fulfillment

ROC Fraud Management

ROC Route Optimization

ROC Data Integrity
Management

ROC Credit Risk
Management

ROC Cost Management

MANAGED SERVICES

SaaS
(SOFTWARE AS A SERVICE)

CONSULTING SERVICES

WWW.SUBEXWORLD.COM

ROC Revenue Assurance

ROC Revenue Assurance is a ﬁrst-of-its-kind, comprehensive
revenue assurance solution, designed to tackle critical revenue
assurance challenges across the entire revenue chain. It
offers a set of pre-conﬁgured solution templates to address
revenue assurance challenges inherent to individual service
verticals-Wireless, Fixed, Cable MSPs and MVNOs.

These solution templates address revenue assurance issues
across multiple functional areas such as service fulﬁllment,
usage integrity, retail billing, interconnect/wholesale billing and
content settlement.

It ensures the proﬁt margins and operational agility through
reduction of service delivery costs. It is built on a highly
integrated platform using components-based technology to
provide striking performance, scalability, interoperability and
reliability.

The solution collects, collates and correlates the information
from switches, inventory, billing, partner invoices and ﬁnancial
systems to provide deeper insights about the cost aspects in an
easier to understand format through dashboards and reports.
It enhances margins by optimizing leased circuit costs, reducing
interconnect costs, assuring access costs and by automating
invoice veriﬁcation process.

Each solution template is ready-to-use and includes:
(cid:2)(cid:2) Set of appropriate health checks to monitor
(cid:2)(cid:2) Control points and interfaces to extract data
(cid:2)(cid:2) Reports & dashboards to present results, and
(cid:2)(cid:2) Workﬂow to monitor, action and close cases

Using these solution templates, operators can dramatically
reduce the time required to implement or extend the coverage
of their revenue assurance practice. Moreover, operators
can easily re-conﬁgure or re-model existing templates to
accommodate changing business requirements.

ROC Credit Risk Management

The ROC Credit Risk Management solution empowers
operators to continuously assess and mitigate risk presented
by subscribers throughout their lifecycle. It tracks risk in near
real-time during:

(cid:2)(cid:2) Subscriber acquisitioning
(cid:2)(cid:2) Ongoing usage
(cid:2)(cid:2) Collections and recovery

The solution provides the operator with a holistic view that
helps in understanding subscriber risk proﬁle and thereby aids
its management.

Further, it can quickly, and seamlessly, accommodate new
service information to provide an accurate picture of the
exposure at any point in time.

Allowing the operator to easily, and quickly, deﬁne various risk
indicators and controls enables the solution to adapt to local
cultural and regulatory requirements. This also enables the
operator to stay agile in changing socio-economic conditions
that affect the overall level of risk in a region.

ROC Cost Management

ROC Cost Management
is a state-of-the-art revenue
management offering from Subex, which helps service providers
effectively monitor and manage the cost of services. It enables
operators to efﬁciently manage the process of identiﬁcation,
collection and comparison of cost related data across multiple
sources such as partner invoices, inventory, orders and call
detail records.

34 WWW.SUBEXWORLD.COM

ROC Partner Settlement

The ROC Partner Settlement solution allows operators to
quickly and accurately settle charges with their interconnect,
network and content partners on a single, modular platform.
Shrinking margins have highlighted the increased need for
visibility of each deal’s impact on the operator’s bottom line.
For agreements with domestic and international partners, it
provides the ability to manage these major costs and revenues
on a day-to-day, hour-to-hour basis. As product bundles and
their related tariff plans become more complex, this ability to
see all revenues and related costs is vital to ensuring a healthy
bottom line.

ROC Partner Settlement is able to support multiple business
models within a single implementation through seamless
addition of necessary modules. Examples of such modules
include Retail, Wholesale and Satellite. The solution has been
designed to evolve with minimal impact to ongoing operations.

ROC Route Optimization

The ROC Route Optimization solution is designed to provide
operators with the tools to manage network cost information
supplied by other operators. Additional analysis on the impact
of current operator tariffs as well as forecasts on potential
future operator tariffs is also featured.

The system is capable of taking into account factors such as
call quality rate information, capacity and network costs in
calculating the optimum choice of operators.

ROC Route Optimization ensures that the entire end-to-end
process from dial code/destination operator rate imports to
switch updates is controllable and auditable. The solution is
fully supported by a comprehensive list of reports, and when
generating an optimized routing table the system provides an
integrated management of the routing table changes across
multiple business functions.

ROC Fulﬁllment

Operators these days are constantly ﬁghting over decreasing
ARPU and increasing churn. In order to stay competitive and
proﬁtable in such a scenario, operators have to constantly
come out with new and innovative services which increase

customer involvement and help in reducing churn. Creation of
new services is a very complex and time consuming process.
ROC Fulﬁllment solution from Subex helps in simplifying the
above for operators by automating the service creation process
and reducing the time to market for these services from
months to just a few days. Through its unique Service Creation
Environment, operators can easily create new service deﬁnitions
and workﬂows. Moreover the service catalog helps in re-using
existing processes and service building blocks, which helps in
bringing consistency and reliability in the service fulﬁllment
process. It also has pre-deﬁned “service accelerators” which
capture the industry best practices and service deﬁnitions
out-of-the-box. Based on production proven, best-in-breed
fulﬁllment solutions from Subex, ROC Fulﬁllment’s catalog
driven service fulﬁllment approach helps operators to adapt
quickly to changing requirements, bring new and differentiated
service to the market rapidly, better serve customers with
on-demand offerings and support, and drive costs out of their
business through greater automation.

ROC Data Integrity Management

Subex is the pioneer of data integrity management, with over
a decade of experience in data integrity transformations with
the world’s leading service providers. ROC Data Integrity
Management is the industry’s ﬁrst Data Integrity Management
solution for improving the quality of data that drives key service
provider processes, resulting in lower costs and higher service
proﬁtability. ROC Data Integrity Management combines three
powerful data integrity functions: multi-layer network and
service discovery, data reconciliation and discrepancy analytics.
Leveraging inherent cross-domain intelligence and extensive
off-the-shelf network equipment support, ROC Data Integrity
Management discovers devices and logical services in diverse
network environments and reconciles this data with the
OSS/BSS on a continuous, controlled basis. The result
is consistent, relevant data throughout service provider
operations, enhancing the effectiveness and value of service
fulﬁllment, service assurance and billing systems.

3.3 Customer Base

Subex today serves over 200 customers spread across 70
countries. This includes 26 of the top 50 telcos globally. A
partial list of customers is given below:

APAC
Aircel
Airtel
Bakrie Telecom
BSNL
CAT
Chungwa Telecom
Dialog
Hutchison Telecom
Idea
Maxis

Americas
Bell Canada
Centennial Wireless

EMEA
Avea
BT
Cable & Wireless Claro
Comcast
Cell C
Century Link
Comcast
Global Crossing
Du
Econet
Level 3
Global Crossing Qwest
Rogers
Matrix
Sprint
Mobinil

Americas
Telefonica
Telmex
Telus
T Mobile
Verizon

EMEA
MTN

APAC
MTNL
Reliance Communications O2
Indosat
StarHub
Tata Teleservices Limited STC Kuwait
Vodafone India

Orange
Telefonica Spain

Swisscom
Telecom Egypt
Telecom Italia
Telenor
TeliaSonera
Vodafone

3.4 Revenue Model

Subex licenses its software solutions on per subscriber or per
transaction basis for every service stream of our customers,
resulting in continuous growth in license revenues depending
on the growth of the networks where the solutions are
installed. Another sustainable revenue stream is the support
revenue calculated as a function of the license revenue.
Further, we also have an additional stream of revenue namely,
customization.

While the above mentioned streams are directly related to the
license model, we also have embarked on an additional stream
of revenue namely Managed Services, which has been detailed
below.

Managed Services

Service providers are increasingly turning to a Managed Services
engagement model with Subex to derive higher returns from
their investments in BSS/OSS products, improve product
utilization, augment their teams with domain experts, improve
functional maturity through best practices and methodologies,
ensure accountability for results, and most importantly
free up limited bandwidth to focus better on strategic
priorities.

Subex’s Managed Services span the entire range of business
optimization solutions. We are uniquely positioned to address
service provider challenges through this model primarily on
account of three factors:

(i) Product Expertise: Given our long standing experience
of optimizing product performance as a result of a
strong product development
legacy and over 300
implementations

(ii) Domain Expertise: Having demonstrated our thought
leadership at various
industry
forums and events,
industry
in
and actively engaging
standards that help us stay in sync with emerging industry
needs

formulation of

(iii) Operations Expertise: On account of

incorporating
industry best practices, standard operating procedures, and
automation of key processes

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We call this concept SMART services leveraging proven technology.

The following graph gives the revenue from each of the stream
during the past several years:

4. RISKS AND CONCERNS

Risks are an inherent part of any business activity. Following are
the risks associated with our business:

4.1 Market

The business model of communications service providers is
highly dependant on consumer behaviour and any reduction
on spending by consumers will negatively impact the fortunes
of the telcos. That will result in reduction of investment by
the telcos and a consequent contraction of market for
our products. The communications industry continues to
experience consolidation and an increased formation of
alliances among communications service providers and between
communications service providers and other entities. Should
one of our signiﬁcant customers consolidate with a service
provider using a competing product and decide to discontinue
the use of our product(s), this could have a negative material
impact on our business. These consolidations and alliances may
cause us to lose customers or require us to reduce prices as
a result of enhanced customer leverage, which would have a
material adverse effect on our business. We may not be able to
offset the effects of any price reductions. We may not be able
to expand our customer base to make up any revenue declines
if we lose customers.

Subex is fully dependant on the telecom industry. As such, any
vagaries in the telecom business environment will considerably
impact the fortunes of the Company.

4.2 Technology and Personnel

Our industry is characterized by rapid technological changes
and frequent new service offerings. Signiﬁcant technological

3.5 Geographical Mix

We have a dominant presence in both developing and developed
markets. This is quite evident from the geographical mix given
below.

36 WWW.SUBEXWORLD.COM

changes could make our technology and services obsolete,
less marketable or less competitive. We must adapt to our
rapidly changing market by continually improving the features,
functionality, reliability and capability of our products to meet
changing customer needs. We may not be able to adapt to
these challenges or respond successfully or in a cost-effective
way. Our failure to do so would adversely affect our ability to
compete and retain customers or market share. Launching new
products is a key element of our growth and an inability to
bring new products with high demand to the market in a timely
manner will reduce our growth and proﬁtability.

Subex has set up processes and methodologies to address this
threat and to turn it into a strategic advantage by being in the
forefront of technological evolution. Regular skill upgradation
programs and training sessions that include attending global
conferences, employing specialized consultants etc. are
undertaken.

Retention of software personnel is another major risk being
faced by Subex. Towards this, the Company provides an
empowered atmosphere with extensive mentoring, career
counseling and constant learning opportunities in cutting edge
and challenging technologies.

4.3 Intellectual Property

Our success depends to a signiﬁcant degree upon the
protection of our software and other proprietary technology
rights. We rely on trade secret, copyright and trademark laws
and conﬁdentiality agreements with Subexians and third parties,
all of which offer only limited protection. The steps we have
taken to protect our intellectual property may not prevent
misappropriation of our proprietary rights or the reverse
engineering of our solutions. Legal standards relating to the
validity, enforceability and scope of protection of intellectual
property rights in several countries are uncertain and may
afford little or no effective protection of our proprietary
technology. Consequently, we may be unable to prevent
our proprietary technology from being exploited abroad,
which could require costly efforts to protect our technology.
Policing the unauthorized use of our products, trademarks
and other proprietary rights is expensive, difﬁcult and, in
some cases, impossible. Litigation may be necessary in the
future to enforce or defend our intellectual property rights,
to protect our trade secrets or to determine the validity
and scope of the proprietary rights of others. Such litigation
could result in substantial costs and diversion of management
resources, either of which could harm our business.
Accordingly, despite our efforts, we may not be able to prevent
third parties from infringing upon or misappropriating our
intellectual property.

4.4 Infringement

Third parties could claim that our current or future products
or technology infringe their proprietary rights. Any claim of
infringement by a third party, even those without merit, could

cause us to incur substantial costs defending against the claim, and
could distract our management from our business. Third parties
may also assert infringement claims against our customers. These
claims may require us to initiate or defend protracted and costly
litigation on behalf of our customers, regardless of the merits of
these claims. If any of these claims succeed, we may be forced
to pay damages on behalf of our customers. We also generally
indemnify our customers if our services infringe the proprietary
rights of third parties. If anyone asserts a claim against us
relating to proprietary technology or information, while we
might seek to license their intellectual property, we might not
be able to obtain a license on commercially reasonable terms
or on any terms.

4.5 Variability of Quarterly Operating Results

The quarterly operating results of the Company have varied in
the past due to reasons like seasonal pattern of hardware and
software capital spending by customers, information technology
investment trends, achievement of milestones in the execution
of projects, hiring of additional staff and timing and integration
of acquired businesses. Hence, the past operating results
and period to period comparisons may not indicate future
performance. The management is attempting to mitigate this risk
through expansion of client base geographically and increase of
steady annuity revenue. Despite those efforts, variability could
continue.

4.6 Statutory Obligations

Subex has registered with Special Economic Zone for software
development activities and has availed Customs Duties,
Sales Tax and Central Excise exemptions. The non-fulﬁllment
of export obligations may result in penalties as stipulated
by the Government and this may have an impact on future
proﬁtability.

4.7 Environmental Matters

Software development, being a pollution-free industry, is not
subject to any environmental regulations.

4.8 Foreign Exchange

Subex has substantial exposure to foreign exchange related
risks on account of revenue from export of software and
outstanding liabilities. These are hedged with banks and risks
mitigated to the extent possible. Despite this, particularly given
the volatility in the foreign exchange market, there could be
signiﬁcant variations.

4.9 Taxation

Consequent to the end of STPI related tax beneﬁts for Subex,
we have moved to a Special Economic Zone (SEZ). While tax
protection is expected to continue under the SEZ scheme,
there is a signiﬁcant amount of uncertainty in the regulatory
environment. This could potentially lead to incidence of higher
tax.

WWW.SUBEXWORLD.COM

4.10 Litigation

There is an increasing trend in litigation regarding intellectual
property rights, patents and copyrights in the software industry.
There also exist other corporate legal risks. Currently, Subex
has no material litigation pending against it in any court in India
or abroad.

4.11 Contractual Obligation

In terms of the contract entered into by Subex with its customers
in the ordinary course of business, it is obliged to perform and
act according to the contractual terms and regulations. Failure
to fulﬁll the contractual obligations arising out of such contracts
may expose Subex to ﬁnancial and other risks.

The management has taken sufﬁcient measures to cover all
of its contractual risks and does not foresee any major liability
due to its non-fulﬁllment of any contractual terms and
conditions.

4.12 Debt Obligations

raising in the form of debt or equity and possible conversion of
FCCBs into equity shares prior to redemption.

5. INTERNAL CONTROL SYSTEMS AND THEIR
ADEQUACY

Management maintains internal control systems designed to
provide reasonable assurance that assets are safeguarded,
transactions are executed in accordance with management’s
authorization and properly recorded, and accounting records
are adequate for preparation of ﬁnancial statements and other
ﬁnancial information. The internal audit function also carries
out Operations Review Audits to improve the processes
and strengthen control of the existing processes. The Audit
Committee periodically reviews the functions of internal audit.

Pursuant to clause 49 of the Listing Agreement, the CEO/CFO
has to accept responsibility for establishing and maintaining
internal controls for ﬁnancial reporting and that they have
evaluated the effectiveness of internal control systems of the
Company pertaining to ﬁnancial reporting and that they have
disclosed to the auditors and the Audit Committee, deﬁciencies
in the design or operation of such internal controls, if any, of
which they are aware and the steps they have taken or propose
to take to rectify these deﬁciencies.

The adequacy of the Company’s internal controls are tested
from time to time and control deﬁciencies, if any, identiﬁed
during the assessments are addressed appropriately.

6. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

6.1 Key Financials and Ratio Analysis

Financial Highlights/Year ending 31st March

Total Income
Operating Proﬁts (EBITDA) Before Exceptional items
Depreciation & Amortization
Proﬁt /(Loss) Before Tax & Exceptional Items
Proﬁt/(Loss) After Tax & Exceptional Items
Equity Dividend %
Share Capital
Reserves & Surplus
Net Worth
Gross ﬁxed Assets
Net Fixed Assets
Total Assets (Net)
Key Indicators
Earnings/(Loss) Per Share - Rs.
Cash Earnings/(Loss) Per Share - Rs.
Book Value Per Share - Rs.
Debt (including Working capital) Equity Ratio
EBITDA/Sales - %
Net Proﬁt Margin - %
Return on Year End Net Worth %
Return on Year End Capital Employed %

38 WWW.SUBEXWORLD.COM

Amount in Rs. Million except as otherwise indicated

2011

2010

2009

Standalone Consolidated
Standalone Consolidated
Consolidated
5,725.56
3,239.51
3,261.16 4,747.81
4,925.92
662.06
999.19
947.23
1,188.03
1,411.17
228.83
88.15
163.58
55.50
104.50
(1.58)
489.14
309.49
752.79
882.46
(1,883.63)
1,368.61
1,002.96
715.09
787.79
Nil
Nil
Nil
Nil
Nil
348.47
579.83
579.83
693.10
693.10
3,464.34
2,932.03
2,093.05
2,361.23
1,337.93
3,844.51
3,568.98
2,730.00
3,117.50
2,094.20
1,746.33
708.83
1,638.65 725.49
1,605.11
195.75
63.73
130.38
306.65
97.53
9,217.96 9,753.02 15,902.45
8,412.59
7,552.21

Standalone
3,025.63
559.16
136.46
70.13
(1,782.11)
Nil
348.47
4,167.89
4,562.67
764.23
163.34
15,830.78

12.47
7.68
30.22
2.61
29.23%
16.32%
37.62%
10.43%

11.32
7.61
44.98
1.70
37.89%
22.81%
22.94%
8.50%

25.87
7.87
47.08
2.32
20.46%
21.66%
36.74%
11.06%

35.30
(2.06)
61.55
1.73
31.21%
42.75%
38.35%
14.03%

(54.05)

(51.14)
23.62 12.61
130.93
110.33
2.28
2.83
18.57%
11.85%
(59.19%)
(33.73%)
(39.06%)
(49.00%)
(11.92%)
(12.78%)

7. COMMENTARY ON FINANCIAL STATEMENTS

7.1 Share Capital

7.1.1 Of the equity paid-up capital, the Company had issued the
following shares towards consideration other than cash.
(cid:2)(cid:2) 115,000 shares of Rs. 10/- each, towards the balances in
the current account of partners, Mr. Subash Menon and
Mr. Alex J. Puthenchira, on the takeover of Subex Systems, a
partnership ﬁrm, by the Company during 1993-94.

(cid:2)(cid:2) 4,626,940 Shares of Rs. 10/- each to all eligible shareholders
as on March 31, 1999 in the ratio of 1:1 by capitalizing the
General Reserves.

(cid:2)(cid:2) 12,840 shares of Rs. 10/- each to the erstwhile owners of
M/s. Ivth Generation Inc., towards part consideration of the
cost of acquisition of that Company at Rs.1,023/- per share
during 1999-2000.

(cid:2)(cid:2) 10,878,784 Shares of Rs. 10/- each to all eligible shareholders
as on January 6, 2006 in the ratio of 1:1 by capitalizing the
securities premium.

(cid:2)(cid:2) 1,109,878 Shares of Rs. 10/- each to the GDR holders as on

April 7, 2006 at Rs. 400/-.

(cid:2)(cid:2) 11,728,728 Shares of Rs. 10/- each to the GDR holders as on
June 22, 2006 towards consideration of the cost of acquisition
of Azure Solutions Limited at Rs.532.24 per share

7.1.2 During 2006-07 the Company issued 219,551 (including
Bonus shares, wherever options are eligible) shares of Rs. 10/-
each to various Employees on exercise of Stock Options granted
under the Employee Stock Option Plan (ESOP – II & III).

7.1.3 During 2007-08, the Company issued 31,364 (including
Bonus shares, wherever options are eligible) shares of Rs. 10/-
each to various Employees on exercise of Stock Options granted
under the Employee Stock Option Plan (ESOP – II & III).

7.1.4 During 2009-10, the Company issued 1,203 equity shares
of Rs. 10/- each under its ESOP III scheme and 1,210 equity
shares of Rs. 10/- each under its ESOP II scheme to various
Employees on exercise of Stock Options.

issued 4,000,000
7.1.5 During 2009-10, the Company
equity shares of Rs. 10/- each, on a preferential basis, to M/s
Woodbridge Consultants, an entity belonging to Promoters/
Promoter group, at an issue price of Rs. 80/- per share.

7.1.6 During 2009-10, the Company issued 19,133,637 equity
shares allotted upon conversion of FCCBs aggregating to
principal amount of US$ 31.9 Million, out of its US$ 98.7
Million 5% Convertible Unsecured Bonds, in accordance with
the terms and conditions thereof.

7.1.7 During 2010-11, the Company issued 4,124,254 equity
shares of Rs. 10/- each, on a preferential basis, to M/s KBC
Aldini Capital Mauritius Limited, at an issue price of Rs 81/- per
share.

7.1.8 During 2010-11, the Company issued 7,197,607 equity
shares allotted upon conversion of FCCBs aggregating to
principal amount of US$ 12.0 Million, out of its US$ 98.7

Million 5% Convertible Unsecured Bonds, in accordance with
the terms and conditions thereof.

7.1.9 During 2010-11, the Company issued 3,765 equity shares
of Rs. 10/- each under its ESOP III scheme and 1,260 equity
shares of Rs. 10/- each under its ESOP II scheme, to various
Employees upon exercise of Stock Options.

7.1.10 There are no calls in arrears.

7.2 Reserves and Surplus

7.2.1 Capital Reserve of Rs.13.00 Million was created by credit
of the notional premium on 12,840 equity shares of Rs. 10/-
each valued at a price of Rs.1,023/- per share and issued to the
owners of IVth Generation Inc, USA as part consideration for
the transfer of their shareholding to Subex Systems Limited.

During the year 2009-10, additions to capital reserve due
to restructuring of FCCBs net of expenses amounted to
Rs. 1,786.54 Million, reductions due to transfer to Business
Restructuring Reserve amounted to Rs. 1,700 Million and
deferred interest on restructured FCCBs amounted to
Rs. 203.06 Million.

During the year 2010-11, additions to capital reserve due to
reversal of accrued interest on conversion of FCCBs into
equity shares amounted to Rs. 159.89 Million, reductions due
to transfer to Business restructuring reserve amount to Rs. 40
Million and deferred interest on restructured FCCBs amounted
to Rs. 122.27 Million.

7.2.2 Securities Premium Account represents the premium
collected on:

(cid:2)(cid:2) 971,000 equity shares issued at a premium of Rs. 65/- per

share through an Initial Public Offer in 1999-00.

(cid:2)(cid:2) 330,800 equity shares issued at a premium of Rs. 740/-
per share to Mutual Funds and Bodies Corporate on a
preferential basis during 1999-00.

(cid:2)(cid:2) 1,887,000 equity shares issued at a premium of Rs. 88/- per
share to holders of ROCCPS on conversion of preferential
shares of Rs. 98/- each, namely Intel Capital, Toronto
Dominion Bank and UTI Venture Funds during 2004-05.
(cid:2)(cid:2) 1,538,459 equity shares issued at a premium of Rs. 290/-
per share to holders of FCCBs on conversion of the
bonds at a price of Rs. 300/- per share during 2004-05 and
2005-06.

(cid:2)(cid:2) 1,109,878 equity shares issued at a premium of Rs. 390/-
per share to holders of GDR at a price of Rs. 400/- during
2006-07.

(cid:2)(cid:2) 11,728,728 equity shares

issued at a premium of
Rs. 522.24 per share to holders of GDR at price of Rs. 532.24
during 2006-07.

(cid:2)(cid:2) 258,353 (including Bonus shares, wherever options are
eligible) equity shares allotted to the employees under ESOP
II & III Scheme as per the provisions of the Scheme at various
premiums.

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(cid:2)(cid:2) 26,331,244 equity shares were allotted upon conversion of
FCCBs aggregating to principal amount of US$ 43.9 Million,
out of its US$ 98.7 Million 5% Convertible Unsecured
Bonds, in accordance with the terms and conditions
thereof

(cid:2)(cid:2) 4,000,000 equity shares were allotted, on a preferential
basis, to M/s Woodbridge Consultants, an entity belonging
to Promoters/Promoter group, at an issue price of Rs. 80/-
per share including a premium of Rs. 70/- per share

(cid:2)(cid:2) 4,124,254 equity shares of Rs. 10/- each, on a preferential
basis, to M/s KBC Aldini Capital Mauritius Limited, at an
issue price of Rs 81 per share including a premium of 71 per
share

7.2.3 Business Restructuring Reserve created pursuant to order
of Honourable High Court of Karnataka :

(cid:2)(cid:3)During the year 2009-10, Rs. 5,000 Million and Rs. 1,700
Million were transferred to Business Restructuring Reserve
from securities premium and capital reserve respectively.
Out of the said amount, Rs. 6,499.79 Million were utilised
(as explained in Note II.1 of Schedule P and Schedule O
to the Standalone and Consolidated Financial Statements
respectively) and consequently, the balance in Business
Restructuring Reserve as of March 31, 2010 was Rs. 200.21
Million.

transferred

(cid:2)(cid:3)During the year 2010-11, Rs. 1,700 Million and Rs. 40
to Business Restructuring
Million were
Reserve from securities premium and capital reserve
respectively. Out of the said amount, Rs. 1,830.37 Million
were utilised (as explained in Note II.1 of Schedule P and
Schedule O to the consolidated ﬁnancial statements)
and consequently, the balance in Business Restructuring
Reserve as of March 31, 2011 was Rs. 109.84 Million on
Consolidated basis.

7.3 Employee Stock Options

In accordance with the Securities and Exchange Board of India
(Employee Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999, the Company amortizes the excess
of market price of the underlying equity shares as on the date of
the grant of the option over the exercise price of the option, to
be adjusted over the period of vesting. The net amount carried
in respect of stock options outstanding at March 31, 2011
amounts to Rs.63.17 Million (Previous Year: Rs. 57.12 Million).

7.4 Deferred Tax

In accordance with the generally accepted accounting principles
in India Deferred Tax assets of Rs. 12.18 Million (Previous
Year 12.18 Million) on a standalone and consolidated basis and
Deferred Tax Liabilities to Rs. 0.89 Million (Previous Year– 1.00
Million) on consolidated basis, have been carried forward.

7.5 Secured Loans

On consolidated basis, the secured loan of Rs. 979.98 Million
(Previous Year: Rs. 1,588.88 Million) outstanding in the books
as at March 31, 2011 consists of Rs. 9.16 Million pertaining to
motorcars ﬁnanced by the Company through Hire purchase

40 WWW.SUBEXWORLD.COM

scheme with the ﬁnanciers and is secured by hypothecation of
the vehicles and Rs.200 Million pertaining to the Short term loan
from Axis Bank Limited secured by charge on Current Assets
and pledge of a portion of shares held by Promoter group, and
Rs. 770.82 Million pertaining to working capital loan from Axis
Bank Limited and State bank of India secured by the charge on
Fixed and Current Assets.

On standalone basis, the secured loan of Rs. 949.51 Million
(Previous Year: Rs.1433.62 Million) as at March 31, 2011 consists
of Rs. 9.16 Million pertaining to motorcars ﬁnanced by the
company through Hire purchase scheme with the ﬁnanciers and
is secured by the hypothecation of vehicles and Rs. 200 Million
pertaining to the Short term loan from Axis Bank Limited secured
by the charge on Current Assets and pledge of a portion of
shares held by Promoter group, and Rs. 740.25 Million pertaining
to the working capital loan from Axis Bank Limited State Bank of
India secured by the charge on Fixed and Current Assets.

7.6 Unsecured Loans

On a consolidated basis, the unsecured loan outstanding in the
books as at March 31, 2011 consists of:

a. Rs. 1,739.21 Million (Previous Year: Rs. 1,751.10 Million)
relating to Foreign Currency Convertible Bonds issued in
ﬁscal 2006-07. The bonds carry interest of 2% per annum
and are redeemable by March 9, 2012 if not converted
into equity shares as per terms of issue. These bonds are
listed in the Professional Securities Market of London Stock
Exchange. The premium payable on these bonds is accrued
over the life of the bonds and is carried under Current
Liabilities & Provisions.

b. Rs. 2,443.80 Million (Previous Year: Rs. 2,999.32 Million)
relating to Foreign Currency Convertible Bonds issued in
ﬁscal 2009-10 as a result of restructuring existing bonds
mentioned in (a) above. The bonds carry interest of 5% per
annum and are redeemable by March 9, 2012 if not converted
into equity shares as per terms of issue. These bonds are
listed on the Singapore Exchange Securities Trading Limited.
The premium payable on these bonds is accrued over the
life of the bonds and is carried under Current Liabilities &
Provisions.

c. Rs. Nil (Previous Year: Rs. 2.25 Million) relates to an

unsecured loan availed in one of the subsidiaries.

d. Rs. 294.13 Million (Previous Year: Nil) relating to working

capital loan from Banks and ﬁnancials Institutions

On a standalone basis, the unsecured loan outstanding in the
books as at March 31, 2011 consists of:

c. Rs. 162.57 Million (Previous Year: Nil) relating to working

capital loan from Banks and ﬁnancials Institutions.

7.7 Fixed Assets

7.7.1 The value of intangible assets, based on the valuation
report by independent valuers, is being depreciated over 5
years in accordance with the Company’s assessment of useful
life thereof and has been fully written of during the year.

7.7.2 During the year, the Company added Rs. 40.15 Million
on consolidated basis and Rs. 24.08 Million on standalone
basis, to its gross block. The Company disposed off certain
assets no longer required. The Company’s net block of ﬁxed
assets was Rs. 130.38 Million (Previous year Rs. 195.75 Million)
on consolidated basis and Rs. 63.73 Million (Previous year
Rs. 97.53 Million) on standalone basis.

7.8 Investments

7.8.1 During 1999, the Company had acquired the whole of the
outstanding common stocks numbering 3,000 of no par value
of IVth Generation, Inc., New Jersey, USA, Consequent to the
acquisition, IVth Generation Inc, a wholly owned subsidiary of
the Company, has been renamed as “Subex Technologies Inc.”
During 2007-08, the Company ﬁled an application with Hon’ble
High Court of Karnataka to transfer the Services Business
Division (which included the investment in Subex Technologies
Inc.) to Subex Technologies Limited, a wholly owned subsidiary
of Subex Limited under a scheme of arrangement. On obtaining
the order from the Hon’ble High Court of Karnataka, the
Company has transferred the Services business to Subex
Technologies Limited with effect from September 1, 2007
(appointed date) at an aggregate consideration of Rs. 310
Million. In accordance with the order of the Hon’ble High
Court, the Company shall receive 3,000,000 shares of Subex
Technologies Limited valued at Rs. 30 Million in settlement
of the consideration with the balance Rs. 280 Million being
treated then as unsecured loan taken by the subsidiary from
the Company.

7.8.2 On June 23, 2006, the Company acquired the entire share
holding of Azure Solutions Limited, UK. The consideration was
discharged by issue of 11,728,728 GDRs each representing one
equity share of Rs. 10/- at a premium of Rs. 522.24 per share
and cash of Rs. 214.57 Million.

7.8.3 During the year 2007-08, the Company completed the
acquisition of Syndesis Limited, Canada, a company engaged in
Service Assurance and fulﬁllment space in the Telecom service

industry. Pursuant to the acquisition, Syndesis Limited has been
renamed as Subex Americas Inc.

7.8.4 During the year 2009-10, the Company recognized an
amount of Rs. 5,000 Million as diminution in carrying value
of investments in Subex Americas Inc. Consequently, the
investment carrying value as of March 31, 2010 is Rs. 2,749.57
Million.

7.8.5 During the year 2010-11, the Company recognized an
amount of Rs. 1,500 Million as diminution in carrying value
of investments in Subex Americas Inc. Consequently, the
investment carrying value as of March 31, 2011 is Rs. 1,249.57
Million.

7.8.6 During the year 2010-11, the Company recognized an
amount of Rs. 40 Million as diminution in carrying value of
investments in Subex Technologies Limited Consequently, the
investment carrying value as of March 31, 2011 is Nil.

7.9 Sundry Debtors

7.9.1 During the year, on a standalone basis the Company has
securitized a portion of its receivables amounting to Rs. 368.01
Million (Previous year: Rs. 286.65 Million) with Axis Bank Limited
and on consolidated basis Rs. 1,082.01 Million (Previous Year:
Rs. 957.87 Million).

7.9.2 The major customers of the Company are the telecom
and cellular operators overseas and in India. The receivables
are spread over a large customer base. There is no signiﬁcant
concentration of credit risk on a single customer, but for the
majority of the services business coming from AT&T, USA.

7.9.3 All the debtors are generally considered good and
realizable and necessary provision has been made for debts
considered to be bad and doubtful. The level of sundry debtors
is normal and is in tune with business trends requirements.

7.9.4 Sundry Debtors outstanding as at March 31,2011 as a
percentage of total revenue is 12.54% as against 10.35% in the
previous year, on a consolidated basis.

7.9.5 The age proﬁle on consolidated basis is as given below:

Amount in Rs. Million

Period in days

Less than 180 days
More than 180 days
Total

561.98
43.44
605.42

March 31, 2011
Value

March 31, 2010
Value

%
92.82
7.18
100.00

446.84
32.37
479.21

%
93.25
6.75
100.00

The age proﬁle on standalone basis is as given below:

Period in days

March 31, 2011
%

Value

Less than 180 days
More than 180 days
Total

1,597.98
17.61
1,615.59

98.91
1.09
100.00

Amount in Rs. Million

March 31, 2010
Value
1,241.01
11.04
1,252.05

%
99.12
0.88
100.00

WWW.SUBEXWORLD.COM

7.9.6 The management believes that the overall composition
and condition of sundry debtors is satisfactory. The provision
for doubtful debts stands at Rs. 84.09 Million (Previous Year
Rs. 105.99 Million) on consolidated basis and Rs. 72.64 Million
(Previous Year Rs. 92.08 Million) on standalone basis.

7.10 Cash and Bank Balances

The bank balances in India includes both rupee accounts and
foreign currency accounts. The ﬁxed deposit of Rs. 5.97
Million (Previous Year 25.97 Million on consolidated basis and
standalone basis is the margin money with the bankers for
establishing bank guarantee/issuing corporate credit cards.

7.11 Loans and Advances

7.11.1 Advances recoverable in cash, kind or value to be received
are primarily towards prepayments for value to be received.
Advance income tax, net of provision for taxation represents
payments made towards tax liability pending assessment and
refunds due.

7.11.2 Deposits represent rent deposit, electricity deposit,
telephone deposits and advances of like nature.

7.11.3 Loans Due from Group Companies (Standalone Basis)

Subex (UK) Limited
Subex (Asia Paciﬁc) Pte Limited
Subex Americas Inc
Subex Inc
Subex Technologies Limited

Amount in Rs. Million

2010-11 2009-10
0.50
45.98
312.89
(0.04)
168.47

-
-
400.88
-
169.47

Advances to Subex Technologies Limited provided for during
the year 2010-11 for Rs. 169.47 Million (Previous Year : Nil)
out of utilisation of BRR.

7.12 Provisions

Provisions for taxation represent income tax, dividend tax
and wealth tax liability. The provision would be set off upon
assessment of Tax.

Provisions on a consolidated basis also includes redemption
premium
accrued on Foreign Currency Convertible
bonds – Rs. 1,140.35 Million (Previous Year – Rs. 612.71 Million),
Provision for Other Long Term Employee Beneﬁts Rs. 359.20
Million (Previous Year: Rs. 628.60), and Differential Interest
on Restructured FCCBs Rs. 80.79 Million (Previous Year:
Rs. 203.06) MTM Losses on Option contracts – Nil (Previous
Year Rs. 0.95 Million) on consolidated basis.

7.13 Other Matters

7.13.1 Letters of Credit

The Company has an outstanding Letters of credit amounting
to Rs. Nil (Previous Year: Rs. 23.25 Million) on consolidated
and standalone basis. These letters of credit are in the nature
of procurement of capex.

42 WWW.SUBEXWORLD.COM

7.13.2 Guarantees

On Standalone Basis

The Company has provided Corporate Guarantees to Banks for
credit facilities availed by its wholly owned subsidiaries to the
amount of Nil (Previous Year: Rs. 500 Million). The subsidiaries
had utilized such facilities to the extent of Nil (Previous Year:
Rs. 155.26 Million).

7.14 Proﬁt & Loss Account

7.14.1 Income

The Company derives its income from providing Software
Development Services and licensing of Software Products.

The segment wise break up of income on consolidated basis is
given below:

Amount in Rs. Million except percentages

Particulars

2010-11

2009-10

Software Products
Software Services
Total

Value
4,181.18
646.32
4,827.50

%
86.61
13.39
100.00

Value
3,829.43
801.35
4,630.78

%
82.70
17.30
100.00

7.14.2 Geographically, the Company earns income from sale
of software services to USA and software products to most of
the countries.

7.15 Non Operating Income

7.15.1 Non Operating income consists of income derived by the
Company from bad debts recoveries, reversal of provision for
doubtful debts and proﬁt on sale of ﬁxed assets and income from
a right to use of trademark.

7.16 Expenditure

7.16.1 The staff cost decreased to Rs. 2,615.24 Million (Previous
Year: Rs. 2,968.34 Million) on consolidated basis and increased
to Rs. 764.89 Million (Previous Year: Rs. 658.48 Million) on
standalone basis.

The Company incurred administration and other expenses at
16.64% of its total Income during the year as compared to 15.04%
during the previous year on consolidated basis and 39.66% of its
total income during the year as compared to 48.14% during the
previous year on a standalone basis.

7.17 Operating Proﬁts

During the year, on consolidated basis, the Company earned
an Operating Proﬁt before Interest, depreciation, tax and
exceptional items of Rs. 1,411.17 Million being 28.65% of
total income as against Rs. 947.23 Million at 19.95% during
the previous year. On a standalone basis, the Company earned
Operating Proﬁt/(Loss) before Interest, depreciation, tax and
exceptional items of Rs. 1,188.03 Million being 36.43% of total
income as against Rs. 999.19 Million at 30.84% during the
previous year.

7.18 Interest and Bank Charges

The Company incurred an expenditure of Rs.424.21 Million
(Previous year: Rs. 474.16 Million) on consolidated basis and
Rs. 379.74 Million (Previous year: Rs. 421.90 Million) on
standalone basis. The interest paid is related to temporary
overdrawls and securitized receivables and
interest on
FCCBs.

7.19 Depreciation

7.19.1 The provision for depreciation for the year amounted
to Rs. 104.50 Million (Previous Year: Rs. 148.23 Million)
on consolidated basis and Rs. 55.50 Million (Previous Year:
Rs. 88.15 Million) on standalone basis.

7.19.2 The intangible assets i.e. IPRs and goodwill are being
depreciated over 5 years in accordance with the Company’s
assessment of useful life thereof. Accordingly, an amount of
Rs. 18.49 Million (Previous Year: Rs. 50.85 Million) has been
charged towards depreciation.

7.20 Provision for Tax

The Company has provided for its tax liability in India and
overseas after considering the exemptions for income from
software services and products under the various applicable tax
enactments.

7.21 Net Proﬁt

On consolidated basis, the net proﬁt of the Company amounted
to Rs. 787.79 Million, as against Rs. 1,002.96 Million during
the previous year. On standalone basis, the net proﬁt of the
Company amounted to Rs. 715.09 Million as against Rs. 1,368.61
Million during the previous year.

7.22 Earnings Per Share

Basic Earnings per share computed on the basis of number of
common stock outstanding for the year was Rs. 12.47 per share
(Previous year: Rs. 25.87 per share) on consolidated basis and
Rs. 11.32 per share (Previous year: Rs. 35.30 per share) on
standalone basis.

8. MATERIAL DEVELOPMENTS
IN HUMAN
RESOURCES/INDUSTRIAL RELATIONS FRONT,
INCLUDING NUMBER OF PEOPLE EMPLOYED

Subexians

Our greatest assets are our people - Subexians! Subexians are
our biggest differentiator and how we deﬁne our capability
requirements, training needs and retention strategies becomes
crucial. The Subex work culture hinges on our core values of
Fairness, Innovation and Commitment and nurtures initiative
and creativity, bringing out the best in every Subexian. We know
that when Subexians realize their full potential, we can achieve
our broader business goals. The Subex population is spread
across the globe in our multiple ofﬁces. The larger centers
are our ofﬁces in Bangalore, London, Toronto and Denver.

As of March 31, 2011, we had 1051 Subexians on our rolls
globally.

Human Resources at Subex is centralized at our corporate
headquarters in Bangalore, with regional HR teams providing
local support aligned to the global HR strategy. The HR team
provides a competitive edge to the business by enabling and
supporting a very unique business model of value based delivery,
processes and programs on global product development and
delivery capabilities on the one hand and complex distributed
managed services delivery capabilities on the other. HR at
Subex consistently strives to adopt leading best practices
in designing and deploying HR process and programs across
various areas like recruitment, total rewards management,
talent management, organizational development, performance
management, change management, learning and development,
mergers and acquisitions etc.

Recruitment

During the year, the recruitment team had to execute a well
thought out manpower planning and analysis exercise and adopt
global recruitment best practices to fulﬁll the organization’s
talent requirements. In addition to the well established
processes (like “Coffee with the Hiring Manager”, “Post-
offer feedback”, Subexian referral program, partner feedback,
interviewer feedback, etc.), already entrenched in the Subex
way of adding talent to our team, the focus this year was on
enhancing the quality of the various touch-points with potential
Subexians through employer branding and strong messaging.

The main sources for hires were referrals from Subexians
(the best bring the best!), campus recruitments, placement
consultants, website postings and walk-ins. We explored
innovative processes on the campus recruitment side, where we
introduced a process of “hiring for learnability”. This process,
we believe, will add scalability to our model while continuing to
give us great technical talent like we have had before.

One of the key focus areas for the recruitment team was to
attract high quality resources into Subex. A new challenge was
to add the capability of doing “just-in-time” recruitment for
the managed services part of the business. For this we have
created a dedicated “sourcing engine” to focus on ramping up
the managed services team in line with business growth.

Induction and Training

Welcoming new Subexians into our fold continues to be
extremely critical for us. We believe that the quality of induction
that new hires go through determines how successful they are
in the Company and has a huge impact on retention. We have
customized the induction based on the role and function that
new Subexians join in. This has resulted in having more targeted
induction, yielding greater beneﬁts.

For the new engineering recruits that we welcomed into
Subex this year, we had a packed agenda spanning across 2
months. In addition to the regular induction, they also went
through additional training programs tailored to their area of

WWW.SUBEXWORLD.COM

technology. In addition, we provided them with out-bound
training at Pegasus to inculcate in them our Subex values and
help them bond as a team.

On the learning and development side, the focus this year
was on the launch of Subex Academy - a global Learning and
Development Platform (supporting instructor led training, on
the job learning, as well as e-learning) that would enable a role
based curriculum led approach to learning, while streamlining
the training process as well as ensuring global reach and
appropriateness of content. This automated platform adds
signiﬁcant value to training identiﬁcation, design, delivery and
evaluation. This has been very well received by Subexians
globally and is a giant stride on the path of continuous learning!

Two batches of the Bullet Proof Manager program graduated
this year at Subex. This is a program that is being internally
managed and conducted by senior Subexians. The year long
development program targeted at ﬁrst time and mid-level
managers to enhance their leadership and management skills.
We now have over 60 Bullet-Proof Managers at Subex!

This year also saw 43 Subexians get certiﬁed in Fraud
Management through the TUFF certiﬁcation (an internationally
recognized Fraud Management certiﬁcation).

Performance Management System

During the past year, we focused on ensuring adoption of the
new Cascading Key Result Areas (KRAs) system within the
organization. Cascading KRAs help in aligning the individual’s
KRAs to the corporate, functional and departmental KRAs. The

KRAs along with the new competency model which comprises
four categories of competencies (F.E.L.T) provide Subexians
with a complete view of what the organization expectations
from them are.

Foundation Competencies are the basic Values based
competencies required by all in Subex. Excel competencies
are those that are required to do your current job really
well. Lead Competencies focus on the future needs and are
the skills required to succeed in leadership roles. Technical
Competencies take care of the core areas of the role -
knowledge about our products, the various technologies and
domains. These, along with the KRAs help build and reinforce
the performance oriented culture at Subex.

Compensation

Compensation at Subex is multi-dimensional and consists of
salary, beneﬁts, stock options, health and disability insurance.
The Company benchmarks its compensation package against
industry data and strives to achieve a balanced position.
The Company provides robust and comprehensive cash
compensation and beneﬁts as per industry trends. We
also arrive at the salary bands of Subexians by conducting
comprehensive job matching, data validation and quality audits.
We have achieved 36% penetration (i.e. 36% of Subexians
were rewarded in the past year monetarily) with the newly
launched Rewards and Recognition program called STARS. The
satisfaction levels of Subexians with the recognition culture at
Subex came out as high on the Subexian Satisfaction Survey – a
testimonial to the efﬁcacy of the program.

44 WWW.SUBEXWORLD.COM

ﬁnancial review
subex limited (standalone)

WWW.SUBEXWORLD.COM

AUDITORS’ REPORT

1. We have audited the attached Balance Sheet of Subex
Limited (“the Company”) as at March 31, 2011, the Proﬁt
and Loss Account and the Cash Flow Statement of the
Company for the year ended on that date, both annexed
thereto. These ﬁnancial statements are the responsibility
of the Company’s Management. Our responsibility is to
express an opinion on these ﬁnancial statements based on
our audit.

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

3. Without qualifying our opinion, we draw attention to
Note II.3.A and II.3.B of Schedule P regarding the existence
of certain liabilities and commitments which are due for
payment during the ﬁnancial year ending March 31, 2012
and the management’s plans for meeting the same as
detailed in Note I.1 of Schedule P. The Company’s ability to
continue as a going concern is dependent on the successful
outcome of the management plans.

4. Without qualifying our opinion, we draw attention to Note
II.1 of Schedule P. As more fully explained therein, during
the year the Company has, in accordance with the Proposal
approved by the Hon’ble High Court of Karnataka, debited
expenses of Rs. 1,550.37 Million (net) to the Business
Restructuring Reserve, instead of recording such expenses
in the Proﬁt and Loss Account as required by Accounting
Standard 5 ‘Net Proﬁt or Loss for the Period, Prior Period
Items’.

5. As required by the Companies (Auditor’s Report) Order,
2003 (CARO) issued by the Central Government in terms
of Section 227(4A) of the Companies Act, 1956, we give
in the Annexure a statement on the matters speciﬁed in
paragraphs 4 and 5 of the said Order.

(a) we have obtained all the information and explanations
which to the best of our knowledge and belief were
necessary for the purposes of our audit;

(b) in our opinion, proper books of account as required by
law have been kept by the Company so far as it appears
from our examination of those books;

(c) the Balance Sheet, the Proﬁt and Loss Account and the
Cash Flow Statement dealt with by this report are in
agreement with the books of account;

(d) in our opinion, the Balance Sheet, the Proﬁt and Loss
Account and the Cash Flow Statement dealt with by this
report are in compliance with the Accounting Standards
referred to in Section 211(3C) of the Companies Act,
1956, except to the extent indicated in paragraph 4
above for the reasons stated therein;

(e) in our opinion and to the best of our information and
according to the explanations given to us, the said
accounts, read together with the notes thereon and our
comments in paragraph 4 above, give the information
required by the Companies Act, 1956 in the manner so
required and give a true and fair view in conformity with
the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of

affairs of the Company as at March 31, 2011;

(ii) in the case of the Proﬁt and Loss Account, of the
proﬁt of the Company for the year ended on that
date; and

(iii) in the case of the Cash Flow Statement, of the cash
ﬂows of the Company for the year ended on that
date.

7. On the basis of the written representations received
from the Directors as on March 31, 2011 taken on record
by the Board of Directors, none of the Directors is
disqualiﬁed as on March 31, 2011 from being appointed as
a director in terms of Section 274(1)(g) of the Companies
Act, 1956.

For DELOITTE HASKINS & SELLS
Chartered Accountants
(Registration No. 008072S)

V. Balaji
Partner
(Membership No.203685)

6. Further to our comments in the Annexure referred to in

paragraph 5 above, we report that:

Place : Mumbai
Date : April 27, 2011

ANNEXURE TO THE AUDITORS’ REPORT (Referred to in paragraph 5 of our report of even date)

1. Having regard to the nature of the Company’s business/
activities/result, clauses iii (b) to (d), iii (f), iii (g), v, vi, viii,
xii, xiii, xiv, xix and xx of CARO are not applicable.

In respect of its ﬁxed assets:

(a) The Company has maintained proper records showing
including quantitative details and

full particulars,
situation of the ﬁxed assets.

(b) Some of the ﬁxed assets were physically veriﬁed
during the year by the Management in accordance
with a regular programme of veriﬁcation which, in
our opinion, provides for physical veriﬁcation of all
the ﬁxed assets at reasonable intervals. According
to the information and explanation given to us,
no material discrepancies were noticed on such
veriﬁcation.

46 WWW.SUBEXWORLD.COM

(c) The ﬁxed assets disposed off during the year, in our
opinion, do not constitute a substantial part of the ﬁxed
assets of the Company and such disposal has, in our
opinion, not affected the going concern status of the
Company.

3. In respect of its inventory:

(a) As explained to us, the inventories were physically
veriﬁed during the year by the Management at
reasonable intervals.

(b) In our opinion and according to the information and
explanation given to us, the procedures of physical
veriﬁcation of inventories followed by the Management
were reasonable and adequate in relation to the size of
the Company and the nature of its business.

(c) In our opinion and according to the information and
explanations given to us, the Company has maintained
proper records of its inventories and no material
discrepancies were noticed on physical veriﬁcation.

4. According to the information and explanations given to
us, the Company has neither granted nor taken any loans,
secured or unsecured, to/from companies, ﬁrms or other
parties listed in the Register maintained under Section 301
of the Companies Act, 1956.

5. In our opinion and according to the information and
explanations given to us, having regard to the explanation
that some of the Company’s transactions of purchase
of goods and services are of special nature and suitable

alternative sources are not readily available for obtaining
comparable quotations, there is an adequate internal
control system commensurate with the size of the
Company and the nature of its business with regard to
purchases of inventory and ﬁxed assets and for the sale of
goods and services. During the course of our audit, we have
not observed any major weakness in such internal control
system.

6. In our opinion, the internal audit functions carried out
during the year by a ﬁrm of Chartered Accountants
appointed by the Management have been commensurate
with the size of the Company and the nature of its business.

7. According to the information and explanations given to us

in respect of statutory dues:

(a) The Company has generally been regular in depositing
undisputed statutory dues, including Provident Fund,
Investor Education and Protection Fund, Employees’
State Insurance, Income-tax, Sales Tax, Wealth Tax,
Service Tax, Custom Duty, Excise Duty, Cess and
other material statutory dues applicable to it with the
appropriate authorities.

(b) There were no undisputed amounts payable in respect
of Provident Fund, Investor Education and Protection
Fund, Employees’ State Insurance, Income-tax, Sales
Tax, Wealth Tax, Service Tax, Custom Duty, Excise
Duty, Cess and other material statutory dues in arrears
as at March 31, 2011 for a period of more than six
months from the date they became payable.

(c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess which have not been

deposited as on March 31, 2011 on account of disputes are given below:

Statute

Nature of Dues

Forum where Dispute is
pending

Period to which
the amount relates

Income Tax Act, 1961 Income Tax (Incl. Interest) Hon’ble High court of Karnataka
Income Tax Act, 1961 Income Tax (Incl. Interest)

Income Tax Appellate Tribunal

Income Tax Act, 1961 Income Tax (Incl. Interest)

Income Tax Appellate Tribunal

2003-04
2004-05

2005-06

Amount
involved
(Rs. Million)

5.56
18.02

17.87

8. The Company does not have accumulated losses at March
31, 2011. The Company has not incurred cash losses in the
ﬁnancial year and in the immediately preceding ﬁnancial
year.

In our opinion and according to the information and
explanations given to us, the Company has not defaulted
in repayment of dues to banks, ﬁnancial institutions. The
Company has not issued debentures and accordingly there
are no amounts that were due to debenture holders.

10. In our opinion and according to the information and
explanations given to us, having regard to the explanation
that the Company has provided certain guarantees to
ﬁnancial institutions for loans taken by the subsidiaries of the
Company in order to support the subsidiaries’ operations,
the terms of such guarantees are not prima facie prejudicial
to the interests of the Company.

11. In our opinion and according to the information and
explanations given to us, the term loans have been applied
for the purposes for which they were obtained, other than
temporary deployment pending application.

12. In our opinion and according to the information and
explanations given to us and on overall examination of
Balance Sheet, we report that funds raised on short term
basis have not been used during the year for long term
investment.

13. According to the information and explanations given to us,
the Company has not made any preferential allotment of
shares to parties and companies covered in the Register
maintained under Section 301 of the Companies Act, 1956.

14. To the best of our knowledge and according to the
information and explanations given to us, no fraud on or by
the Company has been noticed or reported during the year.

For DELOITTE HASKINS & SELLS
Chartered Accountants
(Registration No. 008072S)

V. Balaji
Partner
(Membership No.203685)

Place : Mumbai
Date : April 27, 2011

WWW.SUBEXWORLD.COM

BALANCE SHEET AS AT

SOURCES OF FUNDS :

SHAREHOLDERS’ FUNDS :

Share Capital

Employees Stock Options Outstanding account

Reserves and Surplus

LOAN FUNDS :

Secured Loans

Unsecured Loans

TOTAL

APPLICATION OF FUNDS :

FIXED ASSETS & INTANGIBLES :

Gross Block

Less : Depreciation

Net Block

INVESTMENTS :

DEFERRED TAX ASSET

CURRENT ASSETS, LOANS & ADVANCES :

Sundry Debtors

Cash & Bank balances

Loans & Advances

Unbilled Revenue

Less : Current liabilities & Provisions

Current liabilities

Provisions

Net Current Assets

TOTAL

Schedule

March 31, 2011

March 31, 2010

Amount in Rs. Million

693.10

63.17

579.83

57.12

2,361.23

3,117.50

2,932.03

3,568.98

949.51

1,433.62

4,345.58

5,295.09

4,750.42

6,184.04

8,412.59

9,753.02

725.49

661.76

1,615.59

8.68

725.48

203.73

2,553.48

516.34

1,423.90

1,940.24

63.73

7,723.44

12.18

97.53

9,263.44

12.18

708.83

611.30

1,252.06

29.49

919.47

156.42

2,357.44

418.42

1,559.15

1,977.57

613.24

8,412.59

379.87

9,753.02

Signiﬁcant Accounting Policies & Notes to the Accounts

The Schedules referred to above form an integral part of the Balance Sheet

In terms of our report attached

For Deloitte Haskins & Sells For and on behalf of the Board
Chartered Accountants

V.Balaji
Partner

Subash Menon
Founder Chairman, Managing Director & CEO

Sudeesh Yezhuvath
Chief Operating Ofﬁcer
& Wholetime Director

V Balaji Bhat
Independent Director &
Chairman of Audit Committee

Mumbai
April 27, 2011

Ramanathan J
Vice President- Finance & Company Secretary

Bangalore
April 27, 2011

48 WWW.SUBEXWORLD.COM

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED

Schedule

March 31, 2011

March 31, 2010

Amount in Rs. Million

INCOME :
Sales & Services
Other Income
Total
EXPENDITURE :
Cost of Hardware, Software and Support Charges
Personnel Costs
Other Operating, Selling and Administrative Expenses
Financial Costs (Net)
Depreciation & Amortisation
Total

M
N
O
F

3,135.53
125.63
3,261.16

14.72
764.89
1,293.52
379.74
55.50
2,508.37

3,201.44
38.07
3,239.51

22.29
658.48
1,559.55
421.90
88.15
2,750.37

Proﬁt Before Taxation and Exceptional Items

752.79

489.14

Exceptional Items
Managerial Remuneration of earlier years
(Refer Note: II.8.A of Schedule P)
Exchange Gain/(Loss) on Restatement of FCCBs
Exchange Gain/(Loss) on intra group foreign
currency loans and advances

Proﬁt Before Tax
Provision for taxation

- Current tax (including Wealth Tax)
- Fringe Beneﬁt Tax
- Deferred tax

Proﬁt After Taxation
Balance brought forward from Previous year
Surplus carried to Balance Sheet
Earnings Per Share (Face value of Rs.10/- each)
(Refer Note II.7 of Schedule P)

- Basic
- Diluted

10.62
-
-

(33.27)

2.98

3.21
(27.08)
725.71

10.62
715.09
310.25
1,025.34

11.32
7.88

0.14
0.05
12.00

918.81

(27.15)
891.66
1,380.80

12.19
1,368.61
(1,058.36)
310.25

35.30
8.44

Signiﬁcant Accounting Policies & Notes to the Accounts
The Schedules referred to above form an integral part of the Proﬁt and Loss account

In terms of our report attached

For Deloitte Haskins & Sells For and on behalf of the Board
Chartered Accountants

V.Balaji
Partner

Subash Menon
Founder Chairman, Managing Director & CEO

Sudeesh Yezhuvath
Chief Operating Ofﬁcer
& Wholetime Director

V Balaji Bhat
Independent Director &
Chairman of Audit Committee

Mumbai
April 27, 2011

Ramanathan J
Vice President- Finance & Company Secretary

Bangalore
April 27, 2011

WWW.SUBEXWORLD.COM

CASH FLOW STATEMENT FOR THE YEAR ENDED

Schedule

March 31, 2011

March 31, 2010

Amount in Rs. Million

Cash ﬂow from Operating Activities
Net Proﬁt before Tax
Adjustments for :
a) Depreciation and amortization
b) Interest Income
c) Interest and bank charges
d) Proﬁt on sale of assets (net)
e) Employee stock compensation expenses
f) Provision for doubtful debts written off/(back)
g) Unrealised exchange ﬂuctuations
Operating Proﬁt before Working Capital Changes
Adjustments for :
a) Sundry Debtors
b) Loans and advances
c) Trade and other payables
Cash generated from/(used in) operations
a) Direct Taxes paid and Others [Refer Note II.13.3 Schedule P]

Net Cash provided by operating activities
Cash Flow from Investing activities
a) Purchase of Fixed Assets
b) Sale / disposal of ﬁxed assets
c) Interest received
d) Loans (given to)/repaid by Subsidiaries (Net)

Net Cash from Investing Activities
Cash Flow from Financing Activities
a) Proceeds/(Utilisation) from issue of shares/warrants/options
b) Proceeds from/(repayment) of short term borrowings - Net
c) Proceeds/(Repayment) from Long term borrowings
d) Dividends & Dividend tax paid
e) Interest and bank charges paid
f) Expenditure incurred on restructuring of FCCBs
g) Expenditure incurred on issue of Shares

Net Cash from Financing Activities
Net increase in Cash or Cash equivalents [A + B + C]
Effect of Exchange Differences on restatement of foreign
currency cash and cash equivalents
Cash or Cash equivalents at the start of the year
Cash or Cash equivalents at the close of the year *
* Refer Note II.13.3, Schedule P
Signiﬁcant Accounting policies & Notes to the accounts
The Schedule referred to above forms an integral part of the Cash ﬂow statement

725.71

55.50
(32.14)
411.88
(0.41)
2.61
-
(66.22)
1,096.93

(362.39)
11.86
(162.07)
584.33
(57.01)

527.32

(24.08)
2.79
32.14
(42.55)

(31.70)

334.55
395.97
(717.50)
(0.05)
(498.23)
-
(31.22)

(516.48)
(20.86)
0.05

29.49
8.68

1,380.80

88.15
(23.88)
445.77
(0.38)
4.57
(33.47)
(928.82)
932.74

(722.79)
(141.59)
(99.84)
(31.48)
(87.70)

(119.18)

(23.87)
1.45
22.29
245.76

245.63

320.24
224.14
(48.65)
(0.11)
(492.22)
(153.48)

(150.08)
(23.63)
0.08

53.04
29.49

In terms of our report attached

For Deloitte Haskins & Sells For and on behalf of the Board
Chartered Accountants

V.Balaji
Partner

Subash Menon
Founder Chairman, Managing Director & CEO

Sudeesh Yezhuvath
Chief Operating Ofﬁcer
& Wholetime Director

V Balaji Bhat
Independent Director &
Chairman of Audit Committee

Mumbai
April 27, 2011

Ramanathan J
Vice President- Finance & Company Secretary

Bangalore
April 27, 2011

50 WWW.SUBEXWORLD.COM

SCHEDULES TO ACCOUNTS FOR THE YEAR ENDED

Schedule

March 31, 2011

March 31, 2010

Amount in Rs. Million

SCHEDULE - A :
SHARE CAPITAL :
AUTHORISED :
128,040,000 Equity Shares of Rs. 10/- each
(Previous Year: 128,040,000 Equity Shares of Rs. 10/- each)
200,000 Redeemable Optionally Convertible Cumulative
Preference Shares (ROCCPS) of Rs.98/- each
Total
ISSUED, SUBSCRIBED AND PAID UP:
EQUITY :
69,310,025 Equity Shares of Rs. 10/- each
(Previous Year : 57,983,139 Equity Shares of Rs. 10/- each)
Of the above:

a) 115,000 shares of Rs.10/- each were allotted for
consideration other than for cash;
b) 4,626,940 shares of Rs.10/- each are allotted as Bonus
shares by capitalisation of General Reserve;
c) 12,840 shares of Rs.10/- each are allotted in part
settlement of cost of acquisition of subsidiary
d) 10,878,784 shares of Rs.10/- each are allotted as Bonus
shares by capitalisation of Securities premium;
e) 11,728,728 shares (GDRs) of Rs.10/- each are allotted in full
settlement of cost of acquisition of Azure Solutions Ltd

Total
SCHEDULE - B :
EMPLOYEES STOCK OPTIONS OUTSTANDING ACCOUNT :
Employees Stock Options Outstanding
Less: Deferred Employees Compensation Expenses
Total
SCHEDULE - C :
RESERVES AND SURPLUS :
Capital Reserve
Opening Balance
Additions due to:
- restructuring of FCCBs net of expenses [Refer Note II.1, Schedule P]
- reversal of accrued interest on conversion of FCCBs into Equity shares
Transferred to Business Restructuring Reserve [Refer Note II.1, Schedule P]
General Reserve
Securities Premium Account
Opening Balance
Additions due to conversion of FCCBs, ESOP and preferential placement
of equity shares
Expenses on issue of shares
Write back from/(accrual for) redemption premium on FCCBs (Net)
[Refer Note II.3, Schedule P]
Transferred to Business Restructuring Reserve [Refer Note II.1, Schedule P]
Business Restructuring Reserve [Refer Note II.1, Schedule P]
Opening Balance
Transferred from Securities Premium/Capital Reserve
Amounts utilised for Permitted Utilisations - net
Proﬁt & Loss Account
Total

1,280.40

19.60

1,280.40

19.60

1,300.00

693.10

579.83

693.10

579.83

74.40
17.28
57.12

37.06
177.98

71.88
8.71
63.17

34.68
177.98

153.57

1,583.49
-
(1,700.00)

4,894.70

1,562.63
-
749.20

37.06

-
37.62
(40.00)

2,206.53

785.71
(31.22)
(527.63)

(1,700.00)

733.39

(5,000.00)

2,206.53

200.21
1,740.00
(1,550.37)

-
6,700.00
(6,499.79)

389.84
1,025.34
2,361.23

200.21
310.25
2,932.03

WWW.SUBEXWORLD.COM

SCHEDULES TO ACCOUNTS FOR THE YEAR ENDED

March 31, 2011

March 31, 2010

Amount in Rs. Million

SCHEDULE - D :

SECURED LOANS :

Short Term:

Working Capital Loans from Banks

(Secured by charge on Fixed and Current Assets)

Loans from Banks [Refer Note II.13.6, Schedule P]

(Secured by charge on current assets and pledge of portion of
shares of Promoter Group)

Long Term:

Loans from Banks

[Amount repayable within one year: Rs. Nil, Previous Year: Rs. 708.93 Million]

Hire Purchase Loans from Banks

(Secured by hypothecation of assets ﬁnanced by these loans)

[Amount repayable within one year: Rs. 5.43 Million, Previous Year: Rs. 6.95 Million]

740.35

200.00

9.16

706.95

708.93

17.74

Total

949.51

1,433.62

SCHEDULE - E :

UNSECURED LOANS :

Short Term:

Working Capital Loans from Banks and Financial Institutions

162.57

[Refer Note II.13.6 of Schedule P]

Long Term:

Foreign Currency Convertible Bonds [Refer Note II.3, Schedule P]

Total

4,183.01

4,345.58

4,750.42

52 WWW.SUBEXWORLD.COM

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WWW.SUBEXWORLD.COM

SCHEDULES TO ACCOUNTS FOR THE YEAR ENDED

SCHEDULE - G :
INVESTMENTS :
(Long term, trade, unquoted)
In wholly owned subsidiaries
Subex Technologies Ltd., India
(Equity shares 3,999,994 fully paid up, at par value Rs.10/- each)
Provision for dimunition in the value of investment
[Refer Note II.1, Schedule P]
Subex (UK) Ltd., UK
(5,039,565,245 Equity shares fully paid, Par value of GBP 0.00001 each)
Subex Americas Inc, Canada
(100 equity shares fully paid; No par value )
Provision for dimunition in the value of investment
[Refer Note II.1, Schedule P]
Total

March 31, 2011

March 31, 2010

Amount in Rs. Million

40.00

(40.00)

40.00

6,473.87

7,749.57

(6,500.00)

1,249.57

(5,000.00)

2,749.57

7,723.44

9,263.44

SCHEDULE - H :
SUNDRY DEBTORS :
(Unsecured)
Outstanding for more than six months

- Considered Good
- Considered Doubtful

Others

- Considered Good

Less: Provision for Doubtful Debts
Total (considered good)

SCHEDULE - I :
CASH & BANK BALANCES :
Cash on hand
Balance with Scheduled Banks

- in Current Account in Indian Rupees
- in Deposit Account in Indian Rupees
- in Exchange Earner’s Foreign Currency Account
Balance with Non Scheduled Banks
- in Checking Account with Wachovia Bank, New Jersey
(Maximum outstanding during the year Rs. 0.06 Million,
Previous Year : 0.09 Million)
- in HSBC Bank - Paris
(Maximum outstanding during the year Rs. 0.55 Million,
Previous Year : 9.91 Million)

17.61
72.64

11.04
92.09

90.25

103.13

1,597.98

1,241.01

1,597.98
1,688.23
72.64
1,615.59

1,241.01
1,344.14
92.08
1,252.06

2.01
5.97
0.16

0.05

0.49

2.69
25.97
0.22

0.06

0.55

Total

8.68

29.49

54 WWW.SUBEXWORLD.COM

SCHEDULES TO ACCOUNTS FOR THE YEAR ENDED

SCHEDULE - J :

LOANS & ADVANCES (Unsecured)

(Considered Good)

Loans and advances recoverable in cash or in kind or for value to be received

Loans and advances to wholly owned subsidiaries

Advance Income Tax including TDS

Other Deposits

(A)

(Considered Doubtful)

Loans and advances to Wholly Owned Subsidiary

Less: Provision for Doubtful Advances

(B)

Total [(A)+(B)]

SCHEDULE - K :

CURRENT LIABILITIES & PROVISIONS :

Sundry Creditors

- Due to Micro & Small Enterprises [Refer Note II.13.10 of Schedule P]

- Due to Others

Advance received from Customers

Deferred Income

Duties & Taxes

Interest Accrued but not due

Unclaimed Dividends

PROVISIONS :

Taxation

Employee Beneﬁts

Warranty

March 31, 2011

March 31, 2010

Amount in Rs. Million

123.28

400.88

129.69

71.63

725.48

169.47

725.48

516.34

215.84

527.80

104.20

71.63

919.47

418.42

192.52

57.78

98.12

58.05

11.31

0.64

75.85

33.75

4.23

263.33

38.73

154.84

49.26

9.59

0.59

75.85

43.48

4.23

Others [Note II.13.4, Schedule P]

1,300.34

1,423.90

1,445.32

1,559.15

Total

1,940.24

1,977.57

WWW.SUBEXWORLD.COM

SCHEDULES TO ACCOUNTS FOR THE YEAR ENDED

March 31, 2011

March 31, 2010

Amount in Rs. Million

SCHEDULE - L :

OTHER INCOME :

Provision for Doubtful Debts written back/Bad Debts recovered

Other income

Proﬁt on sale of Fixed Assets (Net)

Exchange Fluctuation gain (Net)

Total

SCHEDULE - M :

PERSONNEL COSTS :

Salaries, Wages & Allowances

Contribution to Provident Fund and Other Funds

Other staff related costs

Total

SCHEDULE - N :

OTHER OPERATING, SELLING AND

ADMINISTRATIVE EXPENSES :

Software Purchases

Rent

Power, Fuel and Water Charges

Repairs & Maintenance

Insurance

Communication Costs

Printing & Stationery

Travelling & Conveyance

Rates & Taxes Including Filing Fees

Advertisement & Business Promotion (including Consultancy charges)

Marketing & Allied Service Charges

Exchange Fluctuation Loss (Net)

Miscellaneous Expenses

Directors sitting fees

Total

SCHEDULE - O :

FINANCIAL COSTS (NET):

Interest on FCCB and other term loans

Other Interest & Bank Charges

Interest on deposit accounts from banks
(Gross of TDS of Rs. 0.07 Million, Previous Year Rs. 0.19 Million)

Interest on Inter Company loans

Total

56 WWW.SUBEXWORLD.COM

15.34

11.66

0.41

98.22

125.63

705.57

32.54

26.78

764.89

5.15

88.49

22.08

34.06

13.17

12.24

4.68

117.47

5.54

29.12

959.83

1.69

33.47

4.22

0.38

38.07

615.54

29.17

13.77

658.48

6.06

95.34

22.36

25.82

11.63

14.67

3.25

81.46

8.49

52.27

1,201.39

36.35

0.46

1,293.52

1,559.55

170.97

240.91

(2.02)

(30.12)

411.88

(32.14)

379.74

244.17

201.61

(2.04)

(21.84)

445.78

(23.88)

421.90

SCHEDULE - P :

I.4. Fixed Assets and Intangibles

Signiﬁcant Accounting Policies and Notes to the Accounts

I. SIGNIFICANT ACCOUNTING POLICIES

I.1. Basis for Preparation of Financial Statements

The ﬁnancial statements have been prepared under the
historical cost convention on accrual basis in accordance with
the mandatory Accounting Standards or as per the Proposal
approved by the Honourable High Court of Karnataka.

The Company has outstanding foreign currency convertible bonds
(FCCBs) that are redeemable in March 2012, if not converted
earlier. Refer Note II.3.A and II.3.B below. The Company is
pursuing various options not limiting to fund raising in the form
of debt or equity, or a mix of both, and negotiations with the
current lenders, to meet any potential FCCB debt obligations
that arise in March 2012. The Company ﬁrmly believes that, with
a combination of its internal cash accruals in the next ﬁnancial
year and on achieving successful closure on these options in
the coming months, it would be able to meet all repayment
obligations that arise during ﬁnancial year ending March 31, 2012.
Consequently these ﬁnancial statements are prepared on a going
concern basis.

I.2. Use of Estimates

The preparation of the ﬁnancial statements in conformity with
Indian GAAP requires that management makes estimates and
assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent liabilities as at the date of
the ﬁnancial statements, and the reported amounts of revenue
and expenses during the reported period. Actual results could
differ from those estimates.

I.3. Revenue Recognition

Revenue from Contracts for software product license includes
fees for transfer of licenses, installation and commissioning. This
revenue is recognized under the percentage completion method
based on the extent of work determined to have been completed
as compared to the work involved in the overall scope of the
contract. In the event of any expected losses on a contract, the
entire amount is provided for in the accounting period in which
such losses are ﬁrst anticipated.

Revenue from sale of additional software licences are recognized
on transfer of such licenses.

Revenue from Software development is recognized on the basis
of chargeable time or achievement of prescribed milestones as
relevant to each contract.

Sale of hardware under reseller arrangements are recognized
on dispatch of goods to customers and are recorded net of
discounts, rebates for price adjustment, projections, shortage in
transit, taxes and duties.

Maintenance and service income is recognised on time proportion
basis.

Fixed assets are stated at cost of acquisition inclusive of freight,
duties, taxes and interest on borrowed money allocated to and
utilised for ﬁxed assets up to the date of capitalisation and other
direct expenditure incurred on ongoing projects. Assets acquired
on hire purchase are capitalised at gross value and interest
thereon is charged to revenue.

Acquired Intangibles are stated at cost inclusive of duties and
taxes. Costs incurred on self generated intangibles are expensed
as incurred.

I.5. Depreciation & Amortisation

Fixed assets and Intangibles are depreciated/amortised using the
straight-line method over the useful lives of assets. Depreciation
is charged on pro-rata basis for assets purchased/sold during the
year.

The rates of depreciation/amortization adopted are as under:

Particulars

Computers (including Software)
Furniture & Fixtures
Vehicles
Ofﬁce equipments
Intellectual Property Rights
Goodwill

Depreciation/Amortization
Rates (%)
25
20
20
20
20
20

Individual assets costing less than Rs. 5,000 are depreciated in full,
in the year of purchase.

I.6. Employee Stock Option Plans

Employee Stock Options are accounted in accordance with
the guidelines stipulated by SEBI. The difference between the
market price of the shares underlying the options granted on
the date of grant of option and the exercise price is expensed as
“Employees Compensation” over the period of vesting.

I.7. Employee Beneﬁts

The Company’s contribution to provident fund, a deﬁned
contribution scheme, is charged to the proﬁt and loss account
on accrual basis.

Liability for gratuity is funded with Life Insurance Corporation
of India (LIC) and SBI Life Insurance. Gratuity expense for
the year has been accounted based on actuarial valuation
determined under the projected credit unit method, carried
out at the end of the ﬁnancial year. Actuarial gains/losses are
recognized in full in the proﬁt and loss account. The retirement
beneﬁt obligation recognized in the balance sheet represents
the present value of the deﬁned beneﬁt obligations adjusted for
unrecognized past service cost and as reduced by the fair value
of scheme assets. Any asset resulting from this calculation is
limited to past service cost plus the present value of available
refunds and reduction in future contributions to the scheme.

Interest on investments and deposits are booked on a time
proportion basis taking into account the amount invested and the
rate of interest.

Liability for encashment of leave considered to be long term
liability is accounted for on the basis of an actuarial valuation.
Provision for outstanding leave credits considered as short term

WWW.SUBEXWORLD.COM

liability is as estimated by the management. Other short term
employee beneﬁts like medical, leave travel etc are accrued
based on the terms of employment on a time proportion basis

The Company has introduced long term employee compensation
plans under which certain employees are eligible for retention
and performance linked payouts. These payouts are accrued
as the services are rendered and/or when the speciﬁc criteria
are met.

I.8. Research and Development

Expenses incurred on research and development is charged to
revenue in the same year. Fixed asset purchased for research
and development are capitalized and depreciated as per the
Company’s policy.

I.9. Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded
at the exchange rates prevailing on the date of the transaction.
Monetary items denominated in foreign currencies at year end
are restated at the exchange rate on the date of the Balance
Sheet. Non-monetary items denominated in foreign currencies
are carried at cost. Exchange differences on settlement or
restatement are adjusted in the Proﬁt & Loss account. Premium
or discount on forward contracts is amortized over the life
of such contract and is recognized as income or expense, in
the Proﬁt and Loss account. Any proﬁt or loss arising on
cancellation or renewal or retirement of forward contract is
recognized in proﬁt and loss account.

I.10. Investments

Long term Investments are stated at cost less diminution in the
value of investments that is other than temporary.

I.11. Income Taxes

Income Tax comprises the current tax provision under the tax
payable method and the net change in the deferred tax asset
or liability in the year. Deferred Tax Assets and liabilities are
recognized for the future tax consequences of temporary
differences between the carrying values of the assets and
liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in
which the temporary differences are expected to be received
or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the income statement in the
period of enactment of the change.

Deferred tax assets are recognized and carried forward to the
extent that there is a reasonable/virtual certainty, as applicable,
that sufﬁcient future taxable income will be available against
which such deferred tax assets can be realized.

Minimum alternative tax (MAT) paid in accordance to the tax
laws, which gives rise to future economic beneﬁts in the form of
adjustment of future income tax liability, is considered as an asset
if there is convincing evidence that the Company will pay normal
income tax after the tax holiday period. Accordingly, MAT is
recognized as an asset in the balance sheet when it is probable
that the future economic beneﬁt associated with it will ﬂow to
the Company and the asset can be measured reliably.

58 WWW.SUBEXWORLD.COM

I.12. Cash Flow Statement

Cash ﬂow statement has been prepared in accordance with the
indirect method prescribed in Accounting Standard 3, issued
under the Companies (Accounting Standard) Rules 2006.

I.13. Preliminary and Share Issue Expenses

Expenses incurred during the Initial Public Offer, follow on offer
and issue of Bonus Shares are amortised over 5 years. Other
issue expenses are charged to the securities premium account.

I.14. Provisions and Contingencies

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

I.15 Impairment of Fixed Assets

At each balance sheet date, the Company reviews the carrying
amounts of its ﬁxed assets and intangibles to determine
whether there is any indication that those assets suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the
extent of impairment loss. Recoverable amount is the higher of
an asset’s net selling price and value in use. In assessing value
in use, the estimated future cash ﬂows expected from the
continuing use of the asset and from its disposal are discounted
to their present value using a pre-tax discount rate that reﬂects
the current market assessments of time value of money and the
risks speciﬁc to the asset.

Reversal of impairment losses recognized in prior years, if any,
is recorded when there is an indication that the impairment
losses recognized for the asset no longer exist or have
decreased. However, the increase in carrying amount of an
asset due to reversal of an impairment loss is recognized to the
extent it does not exceed the carrying amount that would have
been determined (net of depreciation) had no impairment loss
been recognized for the asset in prior years.

II. NOTES TO ACCOUNTS

II.1. Accounting Under the Proposal Approved by the Hon’ble High court

During the year ending March 31, 2010, the shareholders of the
Company approved the Board’s proposal (hereinafter referred
to as ‘the Proposal’) for transferring amounts from the Securities
Premium and Capital reserves as on or arising after April 1, 2009
(upto March 31, 2012) to a Business Restructuring Reserve (BRR)
to be utilized from April 1, 2009 for certain Permitted Utilisations
as mentioned in the Proposal.

The Proposal was approved by the Hon’ble High court of
Karnataka on May 4, 2010 and was registered with the Registrar
of Companies on May 11, 2010, thereby completing all the
requirements for the order to be effective.

Adjustments in the BRR in the previous year ended March 31, 2010

II.2. Contingent Liabilities

In accordance with the Proposal, the Board of Directors of the
Company had thus approved the following for ﬁnancial year
ended March 31, 2010

(cid:3)(cid:2)

transfer of amounts standing to the credit of Securities
premium and Capital reserve (including the Proﬁt of Rs.
1,583.49 Million arising out of reduction in liability to the
Foreign currency convertible bond holders pursuant to
the Restructuring of the US$ 180 Million Foreign currency
convertible bonds. Refer Note II.3.A below) to the extent
of Rs. 6,700 Million to the BRR.

(cid:3)(cid:2) utilization of the BRR for certain Permitted utilisations for

the amounts aggregating to Rs. 6,499.79 Million.

Adjustments in the BRR during the current year ended March 31, 2011

In accordance with the Proposal, the Board of Directors of the
Company have approved the following for ﬁnancial year ended
March 31, 2011

(cid:3)(cid:2)

transfer of Rs. 1,740 Million during the year from the
balances in Securities Premium Account and Capital
Reserve to the BRR.

(cid:3)(cid:2) utilization of the BRR for permitted utilisations to the

extent of Rs. 1,550.37 Million (net).

Had the Proposal not provided for the above, the effect of
accounting under the Accounting Standards referred to in Section
211(3C) of the Companies Act, 1956 would have been as under:

Amount in Rs. Million Except as Otherwise Indicated

Year
Ended
March
31, 2011

Year
Ended
March
31, 2010

1,540.00

5,000.00

390.78

871.19

(480.41)

628.60

1,450.37
100.00

6,499.79
-

In the Proﬁt & loss Account

The Loss under Exceptional Items
would have been higher as follows:
- Diminution in carrying value of

Investments

restructuring

- One time non-recurring expenses
including
fees,
advisory fees, specialised marketing
expenses
unrealizable
advances, etc

and

- One time non-recurring Long
term Retention beneﬁt plan
accrued / (reversed)

Sub-Total
Provision for doubtful debts/ write-
off of unrealizable Assets would
have been higher by:
One time non-recurring Proﬁt on
account of restructuring of FCCBs
under Exceptional items would have
been higher by
Proﬁt after Tax would have been lower
by
Basic and Diluted Earnings/(Loss)
per share would have been – Rs.

Receivables factored: Current Year - Rs. 368.01 Million (Previous
year - Rs. 286.65 Million)

Claims against the Company not acknowledged as debt: Current
Year – Rs. 64.52 Million (Previous year - Rs. 69.06 Million).
These claims relate to Indian Income Tax demands which are
being contested by the Company.

The Company has provided Corporate Guarantees to Banks
for credit facilities availed by its wholly owned subsidiaries to
the amount of Rs. Nil (Previous Year - Rs. 500 Million) at the
year end. These facilities were utilized to the extent of Rs. Nil
(Previous Year - Rs. 155.26 Million) by the subsidiaries.

II.3. A. Foreign Currency Convertible Bonds (FCCBs)

During the year 2006-07, the Company issued Foreign Currency
Convertible Bonds (the Old FCCBs) aggregating to US$ 180
Million. The bonds carry an initial interest rate of 2% per annum
and are redeemable by March 9, 2012, if not converted into
equity shares as per terms of issue.

During the year 2009-10, the Company restructured the Old
FCCBs by offering in exchange new FCCBs having a face value
of US$ 126 Million. Pursuant to the offer, Old FCCBs with a face
value of US$ 141 Million were exchanged for new FCCBs with
a face value of US$ 98.7 Million. The remaining bondholders
holding US$ 39 Million worth of Old FCCBs (out of the original
bondholders holding US$ 180 Million) didn’t chose the option
for restructuring and are thus outstanding at March 31, 2011
(were outstanding at March 31, 2010 also). Liability in respect
of the US$ 39 Million FCCBs at March 31, 2011 amounts to
Rs. 1,739.21 Million (Previous Year: 1,751.10 Million) (included
in Long Term Unsecured loans in Schedule E, under the head
Foreign currency convertible bonds).

The terms and conditions governing the US$ 39 Million FCCBs
outstanding are as follows:

a) Conversion of the bonds into equity shares at the option of

the bond holders at any time after April 18, 2007

b) Conversion Price – Rs.656.20 per share
c) Exchange Rate for purpose of conversion - 1 US$ = Rs.44.08
d) Interest of 2% per annum payable semi-annually in arrears
e) Redemption with yield to maturity guaranteed return of 8%

per annum, calculated on semi-annual basis

f) The Company can exercise an option to redeem the bonds
in whole or in part on or any time after March 9, 2010, but
prior to January 29, 2012, subject to appropriate approvals
at a price determined on the terms deﬁned in the offer
document.

g) Listing on the Professional Securities Market of London

Stock Exchange

(1,583.49)

h) Redeemable on March 9, 2012, if not converted into Equity

shares earlier.

1,550.37

4,916.30

(13.22)

(91.50)

The difference between the yield to maturity guaranteed rate
of return of 8% and the coupon rate of 2% represents the
premium payable on redemption and is charged to Securities
Premium over the life of the bonds.

B. New Foreign Currency Convertible Bonds (New FCCBs)

Out of the balance outstanding in the Business Restructuring
Reserve as at March 31, 2011, an amount of Rs. 280 Million is
reserved for adjustment in Consolidation.

During the ﬁnancial year 2009-10, in terms of the Company’s
offer to exchange and restructure its outstanding Old FCCBs,
the Company received Old FCCBs with a face value of US$ 141

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Million for issue of New FCCBs with a face value of US$ 98.7
Million. The new bonds carry an initial interest rate of 5% per
annum and are redeemable by March 9, 2012, if not converted
in to equity shares as per terms of issue.

The lease agreement for the above non-cancellable lease
provides for escalation of rentals at the end of 3 years of the
lease, which has been factored in the future minimum rentals
disclosed above.

Other terms and conditions governing the new FCCBs are as
follows:

a) Conversion of the bonds into equity shares at the option of
the bond holders at any time after November 2, 2009

b) Conversion Price - Rs.80.31per share
c) Exchange Rate for purpose of conversion - 1 US$ = Rs.48.17
d) Compensating the bond holders for the reduction in
principal amount by providing an increased interest element
in the New FCCBs of 5% per annum payable semi-annually
in arrears.

e) Redemption with yield to maturity guaranteed return of

20% per annum, calculated on semi-annual basis

g) Listing on the Singapore Exchange Securities Trading

Limited.

h) Redeemable on March 9, 2012, if not converted into Equity

shares earlier.

The difference between the yield to maturity guaranteed rate
of return of 20% and the coupon rate of 5% represents the
premium payable on redemption and is charged to Securities
Premium over the life of the bonds.

Out of the US$ 98.7 Million new FCCBs, bonds having a face
value of US$ 31.9 Million were converted into equity shares
as of March 31, 2010 and bonds with a face value of USD 12
Million were converted during the year ending March 31, 2011.
Consequently new FCCBs outstanding at March 31, 2011
amount to US$ 54.8 Million (Rs. 2,443.80 Million) (Previous
Year: 2,999.32 Million) and is included in Long Term Unsecured
loans in Schedule E, under the head Foreign currency convertible
bonds.

II.4. Operating Leases

The Company has entered into operating lease arrangements
for its ofﬁce facilities. These leases are for periods ranging from
1 to 5 years with an option to the Company for renewing at
the end of the initial term. Rental expenses for operating leases
included in the Proﬁt and Loss account for the year is Rs. 88.49
Million (Previous year - Rs. 95.34 Million)

The future minimum lease payments for non-cancelable
operating leases were:

Amount in Rs. Million

March 31,
2011

March 31,
2010

Within one year
Due in a period between
one year and ﬁve years
Due after ﬁve years

97.33
61.91

90.72
159.25

60 WWW.SUBEXWORLD.COM

II.5. Employees Stock Option Plan (ESOP)

ESOP – II

During 1999-2000, the Company established the Employee Stock
Option Scheme 2000 (“ESOP 2000”) under which options have
been allocated for grant to the employees of the Company and its
subsidiaries. The Company has obtained in-principle approval for
listing upto a maximum of 883,750 shares to be allotted pursuant
to exercise of options granted under the scheme. Each option
comprises one underlying equity share of Rs.10/- each and carries
an entitlement of bonus shares if and when declared. This scheme
has been formulated in accordance with the Securities and
Exchange Board of India (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines, 1999. As per the
scheme, the Compensation Committee grants the options to the
employees deemed eligible by the Advisory Board constituted
for the purpose. The options are granted at a price, which is
not less than 85% of the average market price of the underlying
shares based on the quotation on the Stock Exchange where the
highest volume of shares are traded for 15 days prior to the date
of grant. The shares granted vest over a period of 1 to 4 years
and can be exercised over a maximum period of 3 years from the
date of vesting.

The difference between the market price of the share underlying
the options granted on the date of grant of option and the
exercise price of the option are expensed over the vesting period
as per the SEBI guidelines. The net impact of the movement in
option grants during the period resulted in a charge of Rs. 0.03
Million (Previous Year: Rs. 2.12 Million) to the Proﬁt & Loss
Account during the year.

ESOP – III

During 2005-2006, the Company established the Employee
Stock Option Scheme 2005 (“ESOP 2005”) under which
500,000 options have been allocated for grant to the employees.
Subsequently, during the year 2006-2007, the number of
options allocated for grant to the employees was increased
to 2,000,000 options. The Company has obtained in-principle
approval for listing upto a maximum of 2,000,000 shares
pursuant to exercise of options granted under the scheme.
Each option comprises one underlying equity share of Rs.10/-
each. This scheme has been formulated in accordance with the
Securities and Exchange Board of India (Employee Stock Option
Scheme and Employee Stock Purchase Scheme) Guidelines,
1999. As per the scheme, the Compensation Committee grants
the options to the employees deemed eligible by the Advisory
Board constituted for the purpose. The options are granted
at a price, which is not less than 85% of the average market
price of the underlying shares based on the quotation on the
Stock Exchange where the traded volume is the highest for 15
days prior to the date of grant. The shares granted vest over a
period of 1 to 4 years and can be exercised over a maximum
period of 3 years from the date of vesting.

The difference between the market price of the share
underlying the options granted on the date of grant of option

and the exercise price of the option are expensed over the
vesting period as per the SEBI guidelines. The net impact of
the movement in option grants during the period resulted in
a charge of Rs. 2.43 Million (Previous Year: credit of Rs. 8.24
Million) to the Proﬁt & Loss Account during the year.

ESOP – IV

During 2008-2009, the Company established the Employee
Stock Option Scheme 2008 (“ESOP 2008”) under which
2,000,000 options have been allocated for grant to the
employees. The Company has obtained in-principle approval
for listing upto a maximum of 2,000,000 shares pursuant to
exercise of options granted under the scheme. Each option
comprises one underlying equity share of Rs.10/- each. This
scheme has been formulated in accordance with the Securities
and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999. As
per the scheme, the Compensation Committee grants the
options to the employees deemed eligible by the Advisory
Board constituted for the purpose. The options are granted at
a price, which is not less than 85% of the average market price
of the underlying shares based on the quotation on the Stock

Exchange where the traded volume is the highest for the 15
days prior to the date of grant. The shares granted vest over a
period of 1 to 4 years can be exercised over a maximum period
of 3 years from the date of vesting.

The difference between the market price of the share
underlying the options granted on the date of grant of option
and the exercise price of the option are expensed over the
vesting period as per the SEBI guidelines. The net impact of
the movement in option grants during the period resulted in a
charge of Rs. 3.75 Million (Previous Year : Rs. 0.54 Million) to the
Proﬁt & Loss Account during the year.

Method Used for Accounting for Share Based Payment Plan:

The Company has used intrinsic value method to account for
the compensation cost of stock option to employees of the
Company. Intrinsic value is the amount by which the quoted
market price of the underlying share exceeds the exercise price
of the option.

Employees’ Stock Options Details as on the Balance Sheet Date
are:

Particulars

2010-11

Options
(Nos)

Weighted Average
Exercise Price Per
Stock Option (Rs.)

2009-10
Options (Nos) Weighted Average
Exercise Price Per
Stock Option (Rs.)

Options outstanding at the beginning of the year
ESOP – II
ESOP – III
ESOP – IV
Granted during the year
ESOP – II
ESOP – III
ESOP – IV
Exercised during the year
ESOP – II
ESOP – III
ESOP – IV
Cancelled, Surrendered or Lapsed during the year
ESOP – II
ESOP – III
ESOP – IV
Options outstanding at the end of the year
ESOP – II
ESOP – III
ESOP – IV
Options exercisable at the end of the year
ESOP – II
ESOP – III
ESOP – IV
Options available for Grant at the end of the year
ESOP - II
ESOP - III
ESOP - IV

300,848
1,582,488
598,954

-
232,800
715,000

1,260
3,765
-

21,329
196,290
126,335

278,259
1,615,233
1,187,619

195,189
820,819
82,464

-
373,075
812,381

74.04
113.72
53.34

-
51.77
54.83

-
-
-

71.71
104.11
54.17

-
-
-

358,117
1,794,382
-

-
131,300
598,954

1,210
1,203
-

56,059
341,991
-

300,848
1,582,488
598,954

161,663
468,088
N.A

75.47
127.49
-

-
48.45
53.34

-
-
-

74.04
113.72
53.34

-
-
-

-
409,585
1,401,046

-
-
-

[Weighted average remaining contractual life (considering vesting and exercise period)]

ESOP – II At March 31, 2010 : 3.02 Years ESOP – III At March 31, 2010 : 3.53 Years ESOP – IV At March 31, 2010 : 5.79 Years

At March 31, 2011 : 2.07 Years

At March 31, 2011 : 2.98 Years

At March 31, 2011 : 4.88 Years

WWW.SUBEXWORLD.COM

Fair Value Methodology

The fair value of options used to compute proforma net income
and earnings per equity share have been estimated on the date
of grant using Black-Scholes model.

expected volatility of share: 48.39% (Previous Year: 34.267%)
and expected dividend yield: 0% (Previous Year: 0.71%).
The variables detailed herein represent the average of the
assumptions during the pendency of the grant dates.

The key assumptions used in Black-Scholes model for calculating
fair value is: risk-free interest rate of 8%, expected life: 3 years,

The impact on the EPS of the Company if fair value method is
adopted is given below:

Particulars

March 31, 2011 March 31, 2010

Amount in Rs. Million except as otherwise indicated

Net Proﬁt for the year (as reported)

Add : Stock-based employee compensation (net of recoveries)

Less : Stock-based compensation expenses determined under fair value based method

715.09

1,368.61

2.62

4.57

37.39

680.32

30.07

1,343.11

11.32

35.30

10.77

34.64

7.88

7.53

8.44

8.08

Enterprises Over Which Some of the Directors Exercise
Signiﬁcant Inﬂuence

Kivar Holdings Private Limited (formerly Subex Holdings Private
Limited) and its subsidiaries

Key Management Personnel

Subash Menon, Founder Chairman, Managing Director & CEO
Sudeesh Yezhuvath, Chief Operating Ofﬁcer & Wholetime
Director.

Note – Related parties are as identiﬁed by the Company based
on information available and relied upon by auditors.

Net Proﬁt (Proforma)

Basic earnings per share (as reported) - Rs

Basic earnings per share (proforma) - Rs

Diluted earnings per share (as reported) - Rs

Diluted earnings per share (proforma) - Rs

II.6. Related Party Information

(a) Related Parties

Wholly Owned Subsidiaries

Subex Americas Inc
Subex (UK) Ltd
Subex Technologies Limited
Syndesis Development India Private Ltd
Subex Azure Holdings Inc
Subex (Asia Paciﬁc) Pte Ltd
Subex Inc
Subex Technologies Inc

62 WWW.SUBEXWORLD.COM

(b) Details of the Transactions With the Related Parties:

Particulars

Subsidiaries

Enterprises Over Which
Some of the Directors
Exercise Signiﬁcant Inﬂuence

Amount in Rs Million
Key Management Personnel

2010-11

2009-10

2010-11

2009-10

2010-11

2009-10

a) Marketing and allied Service
Charges and reimbursement *

i) Subex (UK) Limited
ii) Subex Inc
iii) Subex Americas Inc
iv) Subex (Asia Paciﬁc) Pte Ltd

b) Income from Software Development
and Services:

i) Subex (UK) Limited
ii) Subex Inc
iii) Subex (Asia Paciﬁc) Pte Ltd
iv) Subex Americas Inc

c) Reimbursement of expenses incurred
on behalf of

i) Subex Technologies Inc

d) Salary, Perquisites & Commission
(Refer Note: II.8, Schedule P)

e) Amount due as at year end from/(to)

445.21
601.90
36.15
66.28

648.05
307.41
332.91
428.63

-
-

705.18
590.64
560.82
81.71

540.63
572.40
188.35
567.71

16.71
-

i) Subex UK Limited
ii) Subex Inc
iii) Subex (Asia Paciﬁc) Pte Ltd
iv) Subex Americas Inc

f) Loans outstanding as at year end
from/(to)

i) Subex UK Limited
ii) Subex (Asia Paciﬁc) Pte Ltd
iii) Subex Americas Inc
iv) Subex Inc

v) Subex Technologies Limited
vi) Key Management Personnel

(Refer Note: II.8.A, Schedule P)

g) Interest received on Inter
Company Loans

i) Subex UK Limited
ii) Subex Americas Inc
iii) Subex Inc
iv) Subex (Asia Paciﬁc) Pte Ltd

h) Expenses allocated to/(from):

i) Subex (UK) Limited
ii) Subex Inc
iii) Subex (Asia Paciﬁc) Pte Ltd
iv) Subex Americas Inc

i) Corporate Guarantee provided by
Company to ﬁnancial institutions
in respect of ﬁnances availed by

Subsidiaries
j) Preferential allotment of
Equity Shares to M/s Woodbridge
Consultants (Subsidiary of Kivar
Holdings) (4,000,000 shares at a
premium of Rs. 70 per share)

(226.66)
368.99
429.83
837.39

(157.57)
688.58
253.16
149.04

-
-
400.88
-
169.47
-

0.03
28.25
-
1.84

1.43
1.18
0.07
0.91
-

0.50
45.98
312.89
(0.04)
168.47
-

0.57
18.19
1.14
1.94

2.62
1.10
0.27
2.34
155.26

-
-
-
-

-
-

-
-
-
-

-
-
-
-
-
-

-
-
-
-

-
-
-
-
-

-
-
-
-

-
-

-
-
-
-

-
-
-
-
-
-

-
-
-
-

-
-
-
-
-

320.00

-
-
-
-

-
40.78

-
47.93

-
-
-
-

-
-
-
-
-
-

-
-
-
-

-
-
-
-
-

-
-
-
-

-
-
-
-
-
56.26

-
-
-
-

-
-
-
-
-

* Amount paid/payable in Foreign Currency.
# Advances to Subex Technologies Limited provided for during the year 2010-11 for Rs. 169.47 Million (Previous Year: Rs. Nil) out

of utilisation of BRR.

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II.7. Earning per Share (EPS):

Amount in Rs. Million Except as Otherwise Indicated

Proﬁt after Tax attributable to shareholders (A)
Add : Interest on FCCBs
Add/(Less) : Exchange Fluctuation on FCCB
Adjusted Proﬁts after Tax for Diluted EPS (B)

Weighted Average Number of Shares for Basic EPS (C)
Effect of Existence of Dilutive Instruments (FCCBs and ESOPs)
Weighted Average Number of Shares for Diluted EPS (D)

Earning per Share – Basic [(A)/(C)] - Rs.
Earning per Share - Diluted [(B)/(D)] - Rs.

2010-11
715.09
54.83
8.91
778.83

2009-10
1,368.61
155.88
(918.81)
605.68

63.18
35.65
98.83

38.77
32.99
71.76

11.32
7.88

35.30
8.44

Face value of shares: Rs. 10/- each.
Note: Certain FCCBs that were outstanding during 2010-11 are anti-dilutive and the effects of the same have been ignored in the
computation of diluted earnings per share for the year 2010-11.

II.8. A) Managerial Remuneration to Managing Director and Wholetime Director

ii)

Remuneration to Wholetime Directors
Salary and Allowances (including perquisites)
Contribution to Provident Fund
Total (i)
Remuneration to Non-Executive directors
Sitting fees paid to Non-Executive directors
Commission paid to Non-Executive Directors
Total [(i)+(ii)]

Amount in Rs. Million

2010-11

2009-10

38.20
2.58
40.78

-
-
40.78

45.35
2.58
47.93

-
-
47.93

Note : a) Contribution to PF represents the amounts paid by the Company to the PF Authorities.

b) Remuneration to wholetime directors relating to earlier years which were subject to approval of Central Government at
the beginning of the year was Rs. 56.26 Million. During the year company has received the approval for a portion of the
above and has accordingly charged Rs. 33.27 Million to the Proﬁt and Loss account and the balance has been recovered
from the whole time Directors

B) Computation of Net Proﬁt in Accordance with Section 349 of the Companies Act, 1956 as per Legal Advice Received by the Company

Amount in Rs. Million

Particulars
Proﬁt / (Loss) before tax as per the Proﬁt & Loss Account
Remuneration to Directors (Including Commission & Sitting Fees) charged to Proﬁt & Loss Account
Remuneration to Wholetime Directors relating to earlier years charged to Proﬁt & Loss
Account on account of receipt of approval from Central Government
Exchange Fluctuation on FCCB
(Surplus)/Loss on sale of Fixed Assets (Net)
Net Proﬁt / (Loss) U/s 349 of the Companies Act, 1956
Maximum Remuneration of Wholetime Directors under provisions of the Companies Act.
Remuneration paid to Wholetime Directors (including Commission Rs. Nil, Previous Year : Nil)
Maximum Commission to Non-Executive Directors under the Companies Act
Commission Paid

2010-11
725.71
40.78
33.27

(2.98)
(0.41)
796.37
79.64
40.78
7.96
Nil

2009-10
1,380.79
47.93
-

(918.81)
(0.38)
509.53
50.95
47.93
5.09
Nil

II.9. Auditors Remuneration

Audit Fees (including fees for audit of certain subsidiaries consolidated accounts & issuance of
report on the corporate governance) – excluding Service tax as applicable
For Tax Audit (excluding Service tax as applicable)
Other Matters (excluding Service Tax as applicable)
Reimbursement of Expenses (excluding Service Tax as applicable)

64 WWW.SUBEXWORLD.COM

Amount in Rs. Million

2010-11
6.50

2009-10
6.50

0.15
1.00
0.21

0.15
1.00
0.18

II.10. Details of Warranty

Year
2010-11

Opening Balance Additions During the Year Utilisation / Reversal During the Year Closing Balance

4.23

Amount in Rs. Million

Probable period of outﬂow in case of warranty is 3 months

II.11. Other Information Pursuant to Schedule VI of the Companies Act, 1956.

Year Ended
March 31, 2011

Amount in Rs. Million
Year Ended
March 31, 2010

CIF Value of Imports :
Import of systems and solutions
Capital goods
Expenditure in Foreign Currency (on payment basis)
Travelling expenses
Interest expense
Product marketing expense and other expenditure incurred overseas for software development
Earnings in Foreign Exchange (on accrual basis)
Income from software development services and products
Miscellaneous Income

7.83
13.99

47.29
161.78
2.04

2,882.13
11.36

5.63
14.45

50.41
178.53
19.15

2,910.89
-

II.12. Deferred Tax

The deferred tax asset recognised, comprises of the tax impact arising from timing differences on account of the following:

Amount in Rs. Million

Particulars
Depreciation & other items (Claimable in Indian Tax Jurisdiction)

March 31, 2011 March 31, 2010
12.18

12.18

II.13. Others
1.

Estimated amount of contracts, remaining to be executed
on capital account and not provided for (net of advances
paid) Rs. 3.41 Million (Previous year - Rs 6.05 Million)

2. Unclaimed Dividend of Rs. 0.59 Million as at March 31,
2011 (Previous Year - Rs. 0.64 Million) represent dividends
not claimed for earlier years. During the current year, the
Company has transferred Rs. 0.05 Million (Previous Year
Rs. 0.10 Million) to Investor Education and Protection
Fund. As on March 31, 2011, no portion of the unclaimed
dividends are outstanding for a period of seven years from
the due date of payment, requiring a transfer to Investor
Education and Protection Fund.

3. Cash & Cash Equivalents include balance with Scheduled
Banks on Dividend Account of Rs. 0.59 Million (Previous
Year - Rs. 0.64 Million), Fixed Deposit of Rs. 5.97
Million (Previous Year - Rs. 25.97 Million) which are not
available for use by the Company. The breakup of Cash
and Cash Equivalents are given in Schedule I of ﬁnancial
statements.

Direct Taxes paid and Others in the Cash Flow Statement
includes outﬂows on account of permitted utilisations
from the BRR of Rs. 20.91 Million (Previous Year -
Rs. 43.56 Million) and Direct Taxes of Rs. 36.10 Million
(Previous Year - Rs. 44.14 Million).

4. Other Provisions comprises of -

Provision for Redemption - Rs. 1,140.35 Million
Premium on FCCBs

(Previous Year Rs. 612.71 Million)

Provision for Other Long - Rs. 79.20 Million
Term Employee Beneﬁts (Previous Year: Rs. 628.60 Million)

Differential Interest on
Restructured FCCBs

- Rs. 80.79 Million
(Previous Year: Rs. 203.06 Million)

MTM Losses on Option - Rs. Nil
Contracts

(Previous Year: Rs. 0.95 Million)

Personnel Cost for the year includes expenditure on
Research and Development of Rs. 107.42 Million
(Previous year - Rs. 85.14 Million). This is as certiﬁed by
the management and relied upon by the auditors.

A director of the Company has provided a personal
guarantee in respect of short term loans from Banks/
in Schedule D and
included
Financial
Schedule E of the ﬁnancial statements. Further, portion
of promoters’ shares have also been pledged towards
portion of these loans.

Institutions

As per the guidelines on accounting for Derivatives issued
by the Institute of Chartered Accountants of India, the
Company has provided for Mark to Market losses of
Rs. Nil (Previous Year - Rs. 0.95 Million) on outstanding
option contracts.

The Company has entered into the following derivative
instruments for the purposes of hedging the risks
associated with foreign exchange exposures.

WWW.SUBEXWORLD.COM

(a) Forward contracts to hedge foreign currency risk on export receivables:

Amount in Million

Particulars

March 31, 2011

March 31, 2010

Foreign Currency

Buy/Sell

Amount (INR) Foreign Currency

Buy/Sell

Amount (INR)

Forward contracts
- USD contracts
- GBP contracts

$ 31.50
-

Sell
Sell

1,444.30
-

$ 25.40
£ 4.00

Sell
Sell

1,231.49
318.40

(b) Option contracts outstanding

Amount in Million

Particulars

March 31, 2011

March 31, 2010

Option Contracts

Foreign Currency
-

Buy/Sell

Amount (INR) Foreign Currency
$ 0.20

Buy/Sell

Sell

Amount (INR)
8.54

(c) The year end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below:

Particulars

March 31, 2011

March 31, 2010

Amount in Million

Receivable towards Export of Goods & Services
(including receivables from wholly owned subsidiaries - net)

Loans to wholly owned subsidiaries

Other amounts payable in foreign currency on account of:

Amount
(INR)
920.43
1,039.42
559.32
5.09
12.95
8.75
-
-
-
1.38

-
44.48
-
356.40

Foreign
Currency
USD 20.64
GBP 14.48
SGD 15.81
AUD 0.11
EUR 0.20
AED 0.72
-
-
-
QAR 0.11

-
CAD 0.97
-
USD 7.99

Amount
(INR)
1,896.70
473.11
211.61
20.37
34.78
15.74
5.29
3.65
0.20

Foreign
Currency
USD 44.27
GBP 7.65
SGD 6.60
AUD 0.49
EUR 0.58
AED 1.29
CHF 0.13
CAD 0.08
CNY 0.03

0.50
42.73
45.98
270.13

AED 0.04
CAD 0.97
SGD 1.43
USD 6.01

Amount in Million

March 31, 2011

March 31, 2010

Import of goods and services

Capital Imports [including intangibles]
Towards Interest on Foreign Currency loans
Differential Interest on restructured FCCBs
Towards Foreign Currency Convertible Bonds
Redemption Premium accrued on FCCBs
Marketing and Allied Service Charges payable to wholly
owned subsidiaries (net)

66 WWW.SUBEXWORLD.COM

Amount
(INR)
5.12
2.44

Foreign
Currency
USD 0.11
EUR 0.03

3.80
9.59
80.79
4,183.01
1,140.35
0.80
-
0.95
-
129.47
963.32
13.07
52.14
1,229.98
6.26

USD 0.09
USD 0.22
USD 1.81
USD 93.80
USD 25.57
AED 0.07
-
CAD 0.02
-
EUR 2.04
GBP 13.42
MYR 0.89
SGD 1.47
USD 27.58
THB 4.25

Amount
(INR)
47.92
2.36
0.06
1.09

Foreign
Currency
USD 1.07
EUR 0.04
THB 0.05
GBP 0.02

0.46
11.31
203.06
4,750.42
612.71
0.88
2.37
4.55
0.21
0.12
953.20
0.01
87.84
1,746.41

GBP 0.01
USD 0.25
USD 4.52
USD 105.80
USD 13.65
AED 0.07
AUD 0.06
CAD 0.10
CNY 0.03
EUR -
GBP 14.03
MYR -
SGD 2.74
USD 38.90

9. The following table sets out the funded status of the deﬁned Beneﬁt Schemes and the amount recognized in the ﬁnancial Statements.

Components of Employer Expense

Current Service cost

Interest cost

Expected return on plan assets

Curtailment cost/(credit)

Settlement cost/(credit)

Past Service Cost

Actuarial Losses/(Gains)

Total expense recognized in the Statement of Proﬁt & Loss Account

II Actual Contribution and Beneﬁt Payments for Year Ended March 31, 2011

Actual beneﬁt payments

Actual Contributions

III Net Asset/(Liability) Recognized in Balance Sheet as at March 31, 2011

Present value of Deﬁned Beneﬁt Obligation (DBO)

Fair value of plan assets

Funded status [Surplus/(Deﬁcit)]

Unrecognized Past Service Costs

Net asset/(liability) recognized in Balance Sheet

IV Change in Deﬁned Beneﬁt Obligations During the Year Ended March 31, 2011

Present Value of DBO at beginning of year

Current Service cost

Interest cost

Curtailment cost/(credit)

Settlement cost/(credit)

Plan amendments

Acquisitions

Actuarial (gains)/ losses

Beneﬁts paid

Present Value of DBO at the end of year

V Change in Fair Value of Assets During the Year Ended March 31, 2011

Plan assets at beginning of year

Acquisition Adjustment

Actual return on plan assets(estimated)

Actuarial Gain/(Loss)

Actual Company contributions(less risk premium, ST)

Beneﬁts paid

Plan assets at the end of period

VI Actuarial Assumptions

Discount Rate

Expected Return on plan assets

Salary escalation

Attrition Rate

Amount in Rs Million Except Assumptions

Gratuity

March 31, 2011 March 31, 2010

6.32

1.89

(0.34)

5.36

1.17

(0.28)

4.08 -

0.44

12.39

2.16

29.93

3.30

(26.63)

19.32

6.32

1.89

4.08

0.48

(2.16)

29.93

5.08

0.34

0.04

(2.16)

3.30

8.30%

8.50%

6.00%

5.00%

(1.07)

5.18

1.46

4.76

19.32

5.08

(14.24)

15.33

5.36

1.17

(1.07)

(1.46)

19.32

1.50

0.28

4.76

(1.46)

5.08

8.30%

8.60%

6.00%

5.00%

WWW.SUBEXWORLD.COM

Amount in Rs. Million

Experience History

Period Ending

March 31, 2008 March 31, 2009 March 31, 2010 March 31, 2011

Deﬁned Beneﬁt Obligation at end of the period

(10.30)

(15.33)

(19.32)

(29.94)

Plan Assets at end of the period

1.09

1.50

5.08

3.30

Funded Status

(9.21)

(13.83)

(14.24)

(26.64)

Experience Gain/(Loss)adjustments on Plan Liabilities

(1.13)

0.81

0.39

(0.48)

Experience Gain/(Loss)adjustments on Plan Assets

0.03

0.04

Actuarial Gain/(Loss) due to change on assumptions

(0.13)

(1.22)

0.68

(cid:4)(cid:3) The composition of the plan assets held under the
funds managed by the Insurer is not provided, since the
information is not available.

(cid:4)(cid:3) Payments to Provident fund, a deﬁned contribution plan
Rs. 29.18 Million (Previous Year Rs. 26.15 Million)

10. The dues to Micro and Small enterprises as deﬁned in
The Micro, Small & Medium Enterprises Development
Act, 2006, are identiﬁed by the Company based on
inquiries with the parties and information available with
the Company. This has been relied upon by the auditors.

11. Revenue is net of Rs. 20.62 Million (Previous Year:
Rs. 23.87 Million) being reversal of Unbilled Revenues.

12. Since the Company prepares consolidated ﬁnancial
statements, no segment information is disclosed in these
ﬁnancial statements.

There were no inventory of such hardware/software
at the beginning and end of the year. No quantitative
information of purchases of hardware/software items
have been disclosed since none of the individual items
of such purchases constitute more than 10% of the total
value of Purchases of hardware and / software.

14. The Company has

‘International transactions’ with
‘Associated Enterprises which are subject to Transfer
Pricing regulations in India. The Management of the
company is of the opinion that such transactions with
Associated Enterprises are at arm’s length and hence in
compliance with the aforesaid legislation and consequently
that, these transactions do not have any impact on the
ﬁnancials statements, particularly on account of tax
expense and that of provision for taxation.

13. The Company purchases hardware and software to fulﬁll
its obligations under contracts for sale of its Products.

15. Previous year’s ﬁgures have been regrouped to conform

to the classiﬁcations for the current year.

68 WWW.SUBEXWORLD.COM

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

Registration Details

Registration No.

Balance Sheet Date

II Capital Raised during the Year (Amount in Rs. Thousands)

Public issue

Bonus issue

- N I

Preferential offer of shares under Employee Stock Option Plan scheme* - Equity

III Position of Mobilisation and Deployment of Funds (Amount in Rs.Thousands)

Total liabilities

Paid up capital

Secured Loans

Advance for share capital

- N I

Application of Funds

Net ﬁxed assets

Net current assets

Miscellaneous expenditure

- N I

IV Performance of Company (Amount in Rs. Thousands)

Turnover

Proﬁt before tax

Earnings per share from
ordinary activities (basic) (Rs.)

YEAR : 2010-2011

State Code

Right issue

- N I

Private placement

Total assets

Unsecured loans

Deferred tax liability

- N I

Reserve & Surplus

Investments

Deferred tax assets

Accumulate losses

Total expenditure

Proﬁt after tax

- N I

Earnings per share
0
from ordinary activities (diluted) Rs.

V Generic name of three principal Products / Services of Company (As per monetary terms)

Item code

Product Description

C O M P U T E R

S O F T W A R E

* Issue of shares arising out of exercise of stock options granted to employees under the Company’s ESOP II and ESOP III scheme

Subash Menon
Founder Chairman, Managing Director & CEO

Sudeesh Yezhuvath
Chief Operating Ofﬁcer
& Wholetime Director

V Balaji Bhat
Independent Director &
Chairman of Audit Committee

Bangalore
April 27, 2011

Ramanathan J
Vice President- Finance & Company Secretary

WWW.SUBEXWORLD.COM

ﬁnancial review
subex limited (consolidated)

70 WWW.SUBEXWORLD.COM

AUDITORS’ REPORT TO THE BOARD DIRECTORS OF SUBEX LIMITED

1. We have audited the attached Consolidated Balance Sheet
of Subex Limited (“the Company”), its subsidiaries (the
Company and its subsidiaries constitute “the Group”) as at
March 31, 2011, the Consolidated Proﬁt and Loss Account
and the Consolidated Cash Flow Statement of the Group
for the year ended on that date, both annexed thereto.
These ﬁnancial statements are the responsibility of the
Company’s Management and have been prepared on the
basis of the separate ﬁnancial statements and other ﬁnancial
information regarding components. Our responsibility
is to express an opinion on these Consolidated Financial
Statements based on our audit.

3. We did not audit the ﬁnancial statements of the subsidiaries,
whose ﬁnancial statements reﬂect
total assets of
Rs. 221.67 Million as at March 31, 2011, total revenues
of Rs 646.41 Million and net cash outﬂows amounting to
Rs. 0.07 Million for the year ended on that date as
considered in the Consolidated Financial Statements. These
ﬁnancial statements have been audited by other auditors
whose reports have been furnished to us, and our opinion,
in so far as it relates to the amounts included in respect
of these subsidiaries is based solely on the reports of the
other auditors.

4. Without qualifying our opinion, we draw attention to Note
II.3.A and II.3.B of Schedule O regarding the existence
of certain liabilities and commitments which are due for
payment during the ﬁnancial year ending March 31, 2012 and
the management’s plans for meeting the same as detailed in
Note I.1 of Schedule O. The Company’s ability to continue
as a going concern is dependent on the successful outcome
of the management plans.

5. Without qualifying our opinion, we draw attention to Note
II.1 of Schedule O. As more fully explained therein, during
the year the Company has, in accordance with the Proposal
approved by the Hon’ble High Court of Karnataka,
debited expenses of Rs. 1,830.37 Million to the Business
Restructuring Reserve, instead of recording such expenses
in the Proﬁt and Loss Account as required by Accounting
Standard 5 ‘Net Proﬁt or Loss for the Period, Prior Period
Items’.

6. We report that the Consolidated Financial Statements have
been prepared by the Company in accordance with the
requirements of Accounting Standard 21 (‘Consolidated
Financial Statements’), as notiﬁed under the Companies
(Accounting Standards) Rules, 2006.

7. Based on our audit and on consideration of the reports of
other auditors on separate ﬁnancial statements and on the
other ﬁnancial information of the components, to the best
of our information and according to the explanations given
to us, we are of the opinion that the attached Consolidated
Financial Statements, read with the notes thereon and
our comments in paragraph 5 above, give a true and fair
view in conformity with the accounting principles generally
accepted in India:

(i) in the case of the Consolidated Balance Sheet, of the
state of affairs of the Group as at March 31, 2011;

(ii) in the case of the Consolidated Proﬁt and Loss Account,
of the proﬁt of the Group for the year ended on that
date; and

(iii) in the case of the Consolidated Cash Flow Statement,
of the cash ﬂows of the Group for the year ended on
that date.

For DELOITTE HASKINS & SELLS
Chartered Accountants
(Registration No. 008072S)

Place : Mumbai
Date : April 27, 2011

V. Balaji
Partner
(Membership No.203685)

WWW.SUBEXWORLD.COM

CONSOLIDATED BALANCE SHEET AS AT

Schedule

March 31, 2011

March 31, 2010

Amount in Rs. Million

SOURCES OF FUNDS :

SHAREHOLDERS’ FUNDS

Share Capital

Employees Stock Options Outstanding account

Reserves and Surplus

LOAN FUNDS

Secured Loans

Unsecured Loans

DEFERRED TAX LIABILITY

Total

APPLICATION OF FUNDS

FIXED ASSETS & INTANGIBLES :

Gross Block

Less : Depreciation

Net Block

GOODWILL ON CONSOLIDATION

DEFERRED TAX ASSET

CURRENT ASSETS, LOANS & ADVANCES

Sundry Debtors

Cash & Bank balances

Loans & Advances

Unbilled Revenue

Less: Current liabilities & Provisions

Current liabilities

Provisions

Net Current Assets

PROFIT AND LOSS ACCOUNT

Less : Transfer from General Reserve as per Contra

Total

Signiﬁcant Accounting Policies & Notes to the Accounts

The Schedules referred to above form an integral part of the Balance Sheet

In terms of our report attached

For Deloitte Haskins & Sells For and on behalf of the Board
Chartered Accountants

693.10

63.17

579.83

57.12

1,337.93

2,094.20

2,238.46

2,875.41

979.98

4,477.14

5,457.12

1,588.88

4,752.67

0.89

7,552.21

1,638.65

1,508.27

1,605.11

1,409.36

130.38

8,656.89

12.18

6,341.55

1.00

9,217.96

195.75

10,366.36

12.18

605.42

41.07

477.59

817.16

1,941.24

1,344.58

1,843.90

3,188.48

479.21

72.39

538.95

438.07

1,528.62

1,334.49

1,695.87

3,030.36

(1,247.24)

(1,501.74)

7,552.21

323.39

177.98

145.41

9,217.96

V.Balaji
Partner

Subash Menon
Founder Chairman, Managing Director & CEO

Sudeesh Yezhuvath
Chief Operating Ofﬁcer
& Wholetime Director

V Balaji Bhat
Independent Director &
Chairman of Audit Committee

Mumbai
April 27, 2011

Ramanathan J
Vice President- Finance & Company Secretary

Bangalore
April 27, 2011

72 WWW.SUBEXWORLD.COM

CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED

Schedule

March 31, 2011

March 31, 2010

Amount in Rs. Million

Proﬁt Before Taxation and Exceptional Items
Exceptional Items
Managerial Remuneration of earlier years
(Refer Note II.10.13 of Schedule O)

Exchange Gain/(Loss) on Restatement of FCCBs
Exchange Gain/(Loss) on intra group
foreign currency loans and advances

Proﬁt Before Tax

Provision for taxation

- Current tax (including Wealth Tax)
- Fringe Beneﬁt Tax
- Deferred tax

Proﬁt After Taxation
Balance brought forward from Previous year
Surplus/(Deﬁcit) carried to Balance Sheet
Earnings Per Share (Face value of Rs.10/- each)
(Refer Note II.8, Schedule O)

- Basic
- Diluted

L
M
N

4,827.50
98.42
4,925.92

79.66
2,615.24
819.85
424.21
-
104.50
4,043.46

882.46

(33.27)

2.98

(20.19)
(50.48)

831.98

44.19
787.79
(323.39)
464.40

12.47
8.62

4,630.78
117.03
4,747.81

118.06
2,968.34
714.18
474.16
15.35
148.23
4,438.32

309.49

918.81

(124.09)
794.72

1,104.21

101.25
1,002.96
(1,326.35)
(323.39)

25.87
3.34

69.89
0.05
31.31

44.19
-
-

Signiﬁcant Accounting Policies & Notes to the Accounts

The Schedules referred to above form an integral part of the proﬁt and loss account

In terms of our report attached

For Deloitte Haskins & Sells For and on behalf of the Board
Chartered Accountants

V.Balaji
Partner

Subash Menon
Founder Chairman, Managing Director & CEO

Sudeesh Yezhuvath
Chief Operating Ofﬁcer
& Wholetime Director

V Balaji Bhat
Independent Director &
Chairman of Audit Committee

Mumbai
April 27, 2011

Ramanathan J
Vice President- Finance & Company Secretary

Bangalore
April 27, 2011

WWW.SUBEXWORLD.COM

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED

March 31, 2011

March 31, 2010

Amount in Rs. Million

Cash ﬂow from Operating Activities
Net Proﬁt/(Loss) before Tax
Adjustments for :

a) Depreciation and amortization
b) Interest / Dividend Income
c) Interest and bank charges
d) (Proﬁt)/Loss on sale of assets
e) Employee stock compensation expenses
f) Provision for doubtful debts written off/(back)
g) Unrealised exchange ﬂuctuations

Operating Proﬁt before Working Capital Changes
Adjustments for :

a) Sundry Debtors
b) Loans and advances
c) Trade and other payables
Cash generated from operations

a) Direct Taxes paid and Others [Refer Note II.10.3 Schedule O]

Net Cash provided by operating activities
Cash Flow from Investing activities

a) Purchase of Fixed Assets
b) Sale / disposal of ﬁxed assets
c) Interest received

Net Cash from Investing Activities
Cash Flow from Financing Activities

a) Proceeds from issue of Share Capital/Options/Warrants
b) Proceeds from/(repayment) of short term borrowings - Net
c) Repayment of Long term borrowings
d) Dividends paid
e) Interest and bank charges
f) Expenditure incurred on restructuring of FCCBs
g) Expenditure incurred on issue of Shares

Net Cash from Financing Activities
Net increase in Cash or Cash equivalents [A + B + C]
Effect of Exchange Differences on restatement of foreign
currency cash and cash equivalents
Cash or Cash equivalents at the start of the year
Cash or Cash equivalents at the close of the year *
* Refer Note II.10.3, Schedule O
Signiﬁcant Accounting policies & Notes to the accounts

831.98

104.50
(2.00)
426.21
0.54
6.05
-
(0.52)
1,366.76

(181.63)
(314.17)
(251.05)
619.91
(87.72)

532.19

(40.15)
2.76
2.00

(35.39)

334.55
558.00
(875.02)
(0.05)
(512.56)
-
(31.22)

(526.30)
(29.50)
(1.82)

72.39
41.07

1,104.21

162.83
(2.21)
476.36
(0.38)
10.82
(107.19)
(752.54)
891.90

191.35
46.55
10.09
1,139.89
(683.36)

456.53

(49.47)
1.45
0.62

(47.40)

320.24
(90.15)
(51.04)
(0.11)
(522.81)
(153.49)

(497.36)
(88.23)
(26.79)

187.41
72.39

The Schedule referred to above forms an integral part of the Cash ﬂow statement

In terms of our report attached

For Deloitte Haskins & Sells For and on behalf of the Board
Chartered Accountants

V.Balaji
Partner

Subash Menon
Founder Chairman, Managing Director & CEO

Sudeesh Yezhuvath
Chief Operating Ofﬁcer
& Wholetime Director

V Balaji Bhat
Independent Director &
Chairman of Audit Committee

Mumbai
April 27, 2011

Ramanathan J
Vice President- Finance & Company Secretary

Bangalore
April 27, 2011

74 WWW.SUBEXWORLD.COM

SCHEDULES TO CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED

SCHEDULE - A :
SHARE CAPITAL :
AUTHORISED :
128,040,000 Equity Shares of Rs. 10/- each (Previous
Year: 128,040,000 Equity Shares of Rs. 10/- each)
200,000 Redeemable Optionally Convertible Cumulative
Preference Shares (ROCCPS) of Rs.98/- each
Total
ISSUED, SUBSCRIBED AND PAID UP:
EQUITY :
69,310,025 Equity Shares of Rs. 10/- each
(Previous Year : 57,983,139 Equity Shares of Rs. 10/- each)
Of the above:

a) 115,000 shares of Rs.10/- each were allotted for
consideration other than for cash;
b) 4,626,940 shares of Rs.10/- each are allotted as

Bonus shares by capitalisation of General Reserve;

c) 12,840 shares of Rs.10/- each are allotted in part
settlement of cost of acquisition of Subsidiary
d) 10,878,784 shares of Rs.10/- each are allotted
as Bonus shares by capitalisation of Securities premium;
e) 11,728,728 shares (GDRs) of Rs.10/- each are allotted in full
settlement of cost of acquisition of Azure Solutions Ltd

Total
SCHEDULE - B :
Employees Stock Options Outstanding
Less: Deferred Employees Compensation Expenses
Total
SCHEDULE - C :
RESERVES AND SURPLUS :
Capital Reserve
Opening Balance
Additions due to:
- restructuring of FCCBs net of expenses [Refer Note II.1, Schedule O]
- reversal of accrued interest on conversion of FCCBs into Equity shares
Transferred to Business Restructuring Reserve [Refer Note II.1, Schedule O]
General Reserve
Transfer from Proﬁt & Loss Account as per contra
Securities Premium Account
Opening Balance
Additions due to conversion of FCCBs, ESOP and preferential placement
of equity shares
Expenses on issue of shares
Write back from/(accrual for) redemption premium on FCCBs (Net)
[Refer Note II.3, Schedule O]
Transferred to Business Restructuring Reserve [Refer Note II.1, Schedule O]
Business Restructuring Reserve [Refer Note II.1, Schedule O]
Opening Balance
Transferred from Securities Premium/Capital Reserve
Amounts utilised for Permitted Utilisations
Exchange Reserve on Consolidation
Proﬁt & Loss Account
Total

March 31, 2011

March 31, 2010

Amount in Rs. Million

1,280.40

19.60

1,280.40

19.60

1,300.00

693.10

579.83

74.40
17.28
57.12

37.05

693.10

71.88
8.71
63.17

34.67

177.98

153.56

1,583.49
-
(1,700.00)
177.98
(177.98)

4,894.70
1,562.63

-
749.20

37.05

-
37.62
(40.00)
177.98
-

2,206.53
785.71

(31.22)
(527.63)

(1,700.00)

733.39

(5,000.00)

2,206.53

200.21
1,740.00
(1,830.37)

-
6,700.00
(6,499.79)

109.84
(182.35)
464.40
1,337.93

200.21
(205.33)
-
2,238.46

WWW.SUBEXWORLD.COM

SCHEDULES TO CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED

March 31, 2011

March 31, 2010

Amount in Rs. Million

SCHEDULE - D :
SECURED LOANS :
Short Term:
Working Capital Loans from Banks
(Secured by charge on Fixed and Current Assets)
Loans from Banks [Refer Note II.10.12 of Schedule O]
(Secured by charge on current assets and pledge of por-
tion of shares of Promoter Group)
Long Term:
Loans from Banks
[Amount repayable within one year: Rs. Nil,
Previous Year: Rs. 864.19 Million]
Hire Purchase Loans from Banks
[Amount repayable within one year: Rs. 5.43 Million,
Previous Year: Rs. 6.95 Million]
Total
SCHEDULE - E :
UNSECURED LOANS :
Short Term:
Working Capital Loans from Banks and Financial Institutions
[Refer Note II.10.12 of Schedule O]
Long Term:
Loans from Banks
[Amount repayable within one year: Rs. Nil,
Previous Year: Rs. 2.25 Million]
Foreign Currency Convertible Bonds [Refer Note II.3, Schedule O]
Total

770.82

200.00

9.16

706.95

864.19

17.74

979.98

1,588.88

294.13

2.25

4,183.01
4,477.14

4,750.42
4,752.67

76 WWW.SUBEXWORLD.COM

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WWW.SUBEXWORLD.COM

SCHEDULES TO CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED

SCHEDULE - G :
SUNDRY DEBTORS :
(Unsecured)
Outstanding for more than six months

- Considered Good
- Considered Doubtful

Others

- Considered Good

Less: Provision for Doubtful Debts
Total (considered good)
SCHEDULE - H :
CASH & BANK BALANCES :
Cash on hand
Balance with Scheduled Banks

- in Current Account in Indian Rupees
- in Deposit Account in Indian Rupees
- in Exchange Earner’s Foreign Currency account

Balance with Non Scheduled Banks
Total
SCHEDULE - I :
LOANS & ADVANCES (Unsecured)
(Considered good)
Loans and advances recoverable in cash
or in kind or for value to be received
Advance Income Tax including TDS
Other Deposits
Total
SCHEDULE - J :
CURRENT LIABILITIES & PROVISIONS :
SUNDRY CREDITORS :
Sundry Creditors

March 31, 2011

March 31, 2010

Amount in Rs. Million

43.44
84.09

32.37
105.99

127.53

138.36

561.98

446.84

561.98
689.51
84.09
605.42

0.07

2.03
16.72
0.16
22.09
41.07

178.80
219.71
79.08
477.59

446.84
585.20
105.99
479.21

0.06

2.78
37.46
0.23
31.86
72.39

266.43
192.75
79.77
538.95

- Due to Micro & Small Enterprises [Refer Note II.10.9 of Schedule O]
- Due to Others

Advance received from Customers
Deferred Income
Duties & Taxes
Interest Accrued but not due
Unclaimed Dividends
PROVISIONS :
Taxation
Employee Beneﬁts
Warranty
Others [Refer Note II.10.4, Schedule O]
Total

78 WWW.SUBEXWORLD.COM

-
555.83
45.42
616.35
116.80
9.59
0.59

141.15
118.19
4.23
1,580.33

1,344.58

1,843.90
3,188.48

-
694.06
203.78
287.19
137.51
11.31
0.64

136.70
109.62
4.23
1,445.32

1,334.49

1,695.87
3,030.36

SCHEDULES TO CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED

March 31, 2011

March 31, 2010

Amount in Rs. Million

SCHEDULE - K :
OTHER INCOME :

Provision for Doubtful Debts written back/Bad Debts recovered

Other income

Proﬁt on sale of Fixed Assets (Net)

Exchange Fluctuation gain (Net)

Total

SCHEDULE - L :

PERSONNEL COSTS :

Salaries, Wages & Allowances

Contribution to Provident Fund and Other Funds

Other staff related costs

Sub Contract Charges

Total

SCHEDULE - M :

OTHER OPERATING, SELLING AND ADMINISTRATIVE EXPENSES:

Software Purchases

Rent

Power, Fuel and Water Charges

Repairs & Maintenance

Insurance

Communication Costs

Printing & Stationery

Travelling & Conveyance

Directors sitting fees

Rates & Taxes Including Filing Fees

Advertisement & Business Promotion (including Consul-
tancy charges)

Commission on Sales

Loss on sale of Assets & Assets Written Off (Net)

Exchange Fluctuation Loss (Net)

Miscellaneous Expenses

Total

SCHEDULE - N :

FINANCIAL COSTS (NET):

Interest on FCCBs and other term loans

Interest & Bank Charges

Less : Interest Income

Total

15.34

39.75

43.33

98.42

2,228.29

114.70

127.63

144.62

2,615.24

8.71

160.59

31.61

87.14

19.25

68.40

8.90

276.16

13.16

107.38

28.09

0.54

9.92

819.85

426.21

(2.00)

424.21

107.20

9.45

0.38

117.03

2,544.82

104.69

128.60

190.23

2,968.34

13.06

192.09

37.15

81.78

17.84

71.13

7.04

215.90

0.01

14.74

5.20

18.75

29.66

9.83

714.18

476.36

(2.20)

474.16

247.03

229.33

WWW.SUBEXWORLD.COM

173.62

252.59

SCHEDULE - O :

Signiﬁcant Accounting Policies and Notes to the Accounts

I. SIGNIFICANT ACCOUNTING POLICIES

I.1. Basis for Preparation of Consolidated Financial Statements

I.2. Use of Estimates

The preparation of the ﬁnancial statements in conformity with
Indian GAAP requires that management makes estimates and
assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent liabilities as at the date of the
ﬁnancial statements and the reported amounts of revenue and
expenses during the reported period. Actual results could differ
from those estimates.

I.3. Principles of Consolidation

The ﬁnancial statements of the Company and it’s wholly owned
subsidiaries have been combined on a line by line basis by adding
together like items of assets, liabilities, income and expense. The
intra-group balances and intra-group transactions are eliminated.

The excess of cost to the Company of its investments in the
subsidiary over it’s share of the equity of the subsidiary, at the
date on which the investments in the subsidiary Company was
made, is recognized as ‘Goodwill on Consolidation’ being an
asset in the consolidated ﬁnancial statements.

The following entities are considered in the consolidated ﬁnancial
statements.

Sl.
No.

1
2

Name of Entity

Country of
Incorporation

Subex Technologies Limited India
Subex Technologies Inc.
(Wholly owned subsidiary
of Subex Technologies
Limited, India)

United States of
America

%age of
Ownership
Held at
March 31,
2011
100
100

%age of
Ownership
Held at
March 31,
2010
100
100

80 WWW.SUBEXWORLD.COM

Sl.
No.

Name of Entity

Country of
Incorporation

%age of
Ownership
Held at
March 31,
2011
100
100

%age of
Ownership
Held at
March 31,
2010
100
100

United Kingdom
United States
of America

Singapore

100

Canada
United States
of America

100
100

India

100

3
4

6
7

Subex (UK) Limited
Subex Inc.
(wholly owned subsidiary
of Subex (UK) Limited)
Subex (Asia Paciﬁc)
Pte. Ltd,
(wholly owned subsidiary
of Subex (UK) Limited)
Subex Americas Inc
Subex Azure Holdings Inc
(wholly owned subsidiary
of Subex Americas Inc)
Syndesis Development
India Private Limited
(wholly owned subsidiary
of Subex Americas Inc)

The ﬁnancial statements of the Company and its subsidiaries are
prepared under uniform accounting policies.

I.4. Revenue Recognition

Revenue from Contracts for software product licences includes
fees for transfer of licences, installation and commissioning. This
revenue is recognized under the percentage completion method
based on the extent of work determined to have been completed
as compared to the work involved in the overall scope of the
contract. In the event of any expected losses on a contract, the
entire amount is provided for in the accounting period in which
such losses are ﬁrst anticipated.

Revenue from sale of additional software licences are recognized
on transfer of such licenses.

Revenue from Software development is recognized on the basis
of chargeable time or achievement of prescribed milestones as
relevant to each contract.

Maintenance and service income is recognised on accrual basis.

Interest on investments and deposits are booked on a time
proportion basis taking into account the amount invested and
the rate of interest.

I.5. Fixed Assets and Intangibles

Acquired intangibles are stated at cost inclusive of duties and
taxes. Cost incurred on self – generated intangibles are expensed
as incurred.

I.6. Depreciation

Fixed assets are depreciated using the straight-line method over
the useful lives of assets. Depreciation is charged on pro-rata
basis for assets purchased/sold during the year.

The rates of depreciation/amortization adopted are as under;

Particulars

Depreciation/
Amortization Rates (%)

Leasehold Improvements

Over the lease term

Computers
(including Software)

Furniture & Fixtures

Vehicles

Ofﬁce equipments

Intellectual Property Rights

Goodwill

Individual assets costing less than Rs. 5,000 are depreciated in full,
in the year of purchase.

I.7. Employee Stock Option

Employee Stock Options are accounted in accordance with the
guidelines stipulated by SEBI. The difference between the market
price of the shares underlying the options granted on the date of
grant of option and the option price is expensed as “Employees
Compensation” over the period of vesting.

I.8. Employee Beneﬁts

The Company’s contribution to provident fund, a deﬁned
contribution scheme, is charged to the proﬁt and loss account
on accrual basis.

Gratuity expense for the year has been accounted based on
actuarial valuation carried out at the end of the ﬁnancial year.
The retirement beneﬁt obligation recognized in the balance sheet
represents the present value of the deﬁned beneﬁt obligations
adjusted for unrecognized past service cost and as reduced by
the fair value of scheme assets. Any asset resulting form this
calculation is limited to past service cost plus the present value
of available refunds and reduction in future contributions to the
scheme.

Liability for encashment of leave considered to be long term
liability is accounted for on the basis of an actuarial valuation.
Provision for outstanding leave credits considered are short term
liability is as estimated by the management and accrued for based
on last month’s salary. Other short term employee beneﬁts
like medical, leave travel etc are accrued based on the terms of
employment on a time proportion basis.

Other companies in the group run deﬁned contribution schemes,
the cost of which is fully provided for and charged to expenditure.

Accrued leave is accounted for fully and charged to the proﬁt &
loss account.

The Company has introduced long term employee compensation
plans under which certain employees are eligible for retention
and performance linked payouts. These payouts are accrued as
the services are rendered and/or when the speciﬁc criteria are
met.

I.9. Research and Development

Expenses incurred on research and development is charged to
revenue in the same year. Fixed asset purchased for research
and development are capitalized and depreciated as per the
Company’s policy.

I.10. Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded
at the exchange rates prevailing on the date of the transaction.
Monetary items denominated in foreign currencies at year end
are translated at the exchange rate on the date of the Balance
Sheet. Non-monetary items denominated in foreign currencies
are carried at cost. Exchange differences on settlement or
restatement are adjusted in the proﬁt & loss account. Premium
or discount on forward contracts is amortized over the life of
such contract and is recognized as income or expense to the
Proﬁt and Loss account. Any proﬁt or loss arising on cancellation
or renewal or retirement of forward contract is recognized in
proﬁt and loss account as appropriate.

On Consolidation,

(cid:2)(cid:2)

In the case of non-integral operations, assets and liabilities
are translated at the exchange rate prevailing on the balance
sheet date. Revenue and expenses are translated at yearly
average exchange rates prevailing during the year. Exchange
differences arising out of these translations are included in
‘Exchange Reserve on consolidation’ under Reserves &
Surplus.

In the case of integral operations, assets and liabilities (other
than non-monetary items), are translated at the exchange
rate prevailing on the balance sheet date. Non-monetary
items are carried at historical cost. Revenue and expenses
are translated at yearly average exchange rates prevailing
during the year. Exchange differences arising out of these
translations have been charged to the Proﬁt and Loss account.

I.11. Income Taxes

Income tax comprises the current tax provision under the tax
payable method and the net change in the deferred tax asset
or liability in the year. Deferred tax assets and liabilities are
recognized for the future tax consequences of temporary
differences between the carrying values of the assets and
liabilities and their respective tax bases. Deferred tax assets
are recognized and carried forward to the extent that there is a
reasonable / virtual certainty, as applicable, that sufﬁcient future
taxable income will be available against which such deferred tax
assets can be realized.

WWW.SUBEXWORLD.COM

or have decreased. However, the increase in carrying amount
of an asset due to reversal of an impairment loss is
recognized to the extent it does not exceed the carrying
amount that would have been determined (net of depreciation)
had no impairment loss been recognized for the asset in prior
years.

Minimum alternative tax (MAT) paid in accordance to the tax
laws, which gives rise to future economic beneﬁts in the form
of adjustment of future income tax liability, is considered as an
asset if there is convincing evidence that the Company will pay
normal income tax after the tax holiday period. Accordingly,
MAT is recognized as an asset in the balance sheet when it
is probable that the future economic beneﬁt associated with
it will ﬂow to the Company and the asset can be measured
reliably.

I.12. Cash Flow Statement

Cash ﬂow statement has been prepared in accordance with the
indirect method prescribed in Accounting Standard 3, issued
under the Companies (Accounting Standard) Rules 2006.

I.13. Preliminary and Share Issue Expenses

Expenses incurred during the Initial Public Offer, follow on offer
and issue of Bonus Shares are amortised over 5 years. Other
issue expenses are charged to the securities premium account.

I.14. Provisions & Contingencies

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

I.15 Impairment of Fixed Assets

Reversal of impairment losses recognized in prior years,
if any, is recorded when there is an indication that the
impairment losses recognized for the asset no longer exist

82 WWW.SUBEXWORLD.COM

II. NOTES TO ACCOUNTS

II.1. Accounting Under the Proposal Approved by the Hon’ble
High court

Adjustments in the BRR in the previous year ended March 31,
2010

In accordance with the Proposal, the Board of Directors of
the Company had thus approved the following for ﬁnancial year
ended March 31, 2010

(cid:2)(cid:2)

(cid:2)(cid:2) utilization of the BRR for certain Permitted utilisations for

the amounts aggregating to Rs. 6,499.79 Million.

Adjustments in the BRR during the current year ended
March 31, 2011

In accordance with the Proposal, the Board of Directors of the
Company have approved the following for ﬁnancial year ended
March 31, 2011

(cid:2)(cid:2)

transfer of Rs. 1,740 Million during the year from the balances
in Securities Premium Account and Capital Reserve to the
BRR.

(cid:2)(cid:2) utilization of the BRR for permitted utilisations to the extent

of Rs. 1,830.37 Million.

Had the Proposal not provided for the above, the effect of
accounting under the Accounting Standards referred to in
Section 211(3C) of the Companies Act, 1956 would have been as
under:

Amount in Rs. Million except as otherwise indicated

Year ended
March 31,
2011

Year ended
March 31,
2010

1,709.47

5,000.00

20.90

871.19

value of US$ 141 Million were exchanged for new FCCBs with
a face value of US$ 98.7 Million. The remaining bondholders
holding US$ 39 Million worth of Old FCCBs (out of the original
bondholders holding US$ 180 Million) didn’t chose the option
for restructuring and are thus outstanding at March 31, 2011
(were outstanding at March 31, 2010 also). Liability in respect
of the US$ 39 Million FCCBs at March 31, 2011 amounts to
Rs. 1,739.21 Million (Previous Year: 1,751.10 Million) (included
in Long Term Unsecured loans in Schedule E, under the head
Foreign Currency Convertible Bonds).

The terms and conditions governing the US$ 39 Million FCCBs
outstanding are as follows:

628.60

a) Conversion of the bonds into equity shares at the option of

the bond holders at any time after April 18, 2007

1,730.37

6,499.79

b) Conversion Price – Rs.656.20 per share

100.00

d) Interest of 2% per annum payable semi-annually in arrears

c) Exchange Rate for purpose of conversion - 1 US$ = Rs.44.08

In The Proﬁt & Loss
Account

The Loss under Exceptional Items
would have been higher as follows:
- Diminution in carrying value of

Goodwill on consolidation

- One time non-recurring expenses
fees,
specialised
and

including
advisory
marketing
expenses
unrealizable advances, etc

restructuring
fees,

- One time non-recurring Long
term Retention beneﬁt plan
accrued
Sub-Total
Provision for doubtful debts and
unrealizable advances would have
been higher by:
One time non-recurring Proﬁt on
account of restructuring of FCCBs
under Exceptional items would have
been higher by
Proﬁt after Tax would have
been lower by
Basic and Diluted Earnings/
(Loss) per share would have
been- Rs

II.2. Deferred Income Taxes

(1,583.49)

1,830.37

4,916.30

(16.50)

(100.93)

a) The deferred tax asset/(liability) as at March 31, 2011
comprises the tax impact arising from timing differences on
account of:

Particulars

- Depreciation
- Business Loss
Deferred Tax Asset
Deferred tax liability on
depreciation

Amount in Rs. Million

March 31,
2011
12.18*
-
12.18*
(0.89)

March 31,
2010
12.18*
-
12.18*
(1.00)

* These differences are on account of depreciation, which are
claimable in the India tax jurisdiction.

II.3. A. Foreign Currency Convertible Bonds (FCCBs)

During the year 2006-07, the Company issued Foreign
Currency Convertible Bonds (the Old FCCBs) aggregating to
US$ 180 Million to Institutional Investors. The bonds carry an
initial interest rate of 2% per annum and are redeemable by
March 9, 2012, if not converted into equity shares as per terms
of issue.

During the year 2009-10, the Company restructured the Old
FCCBs by offering in exchange new FCCBs having a face value
of US$ 126 Million. Pursuant to the offer, Old FCCBs with a face

e) Redemption with yield to maturity guaranteed return of 8%

per annum, calculated on semi-annual basis

g) Listing on the Professional Securities Market of London

Stock Exchange

h) Redeemable on March 9, 2012, if not converted into Equity

shares earlier.

B. New Foreign Currency Convertible Bonds (New
FCCBs)

During the ﬁnancial year 2009-10, in terms of the Company’s
offer to exchange and restructure its outstanding Old FCCBs,
the Company received Old FCCBs with a face value of US$ 141
Million for issue of New FCCBs with a face value of US$ 98.7
Million. The new bonds carry an initial interest rate of 5% per
annum and are redeemable by March 9, 2012, if not converted
into equity shares as per terms of issue.

Other terms and conditions governing the new FCCBs are as
follows:

a) Conversion of the bonds into equity shares at the option of
the bond holders at any time after November 2, 2009

b) Conversion Price – Rs. 80.31 per share

c) Exchange Rate for purpose of conversion-1 US$ = Rs. 48.17

d) Compensating the bond holders for the reduction in
principal amount by providing an increased interest element
in the New FCCBs of 5% per annum payable semi-annually
in arrears

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e) Redemption with yield to maturity guaranteed return of

20% per annum, calculated on semi-annual basis

g) Listing on the Singapore Exchange Securities Trading

Limited.

h) Redeemable on March 9, 2012, if not converted into Equity

shares earlier.

Out of the US$ 98.7 Million new FCCBs, bonds having a face
value of US$ 31.9 Million were converted into equity shares
as of March 31, 2010 and bonds with a face value of US$ 12
Million were converted during the year ending March 31,
2011. Consequently new FCCBs outstanding at March 31, 2011
amount to US$ 54.8 Million (Rs. 2,443.80 Million) (Previous
Year: US$ 66.8 Million, Rs. 2,999.32 Million) and is included
in Long Term Unsecured loans in Schedule E, under the head
Foreign Currency Convertible Bonds.

II.4. Contingent Liabilities

Receivables factored: Current Year – Rs. 1,082.01 Million
(Previous year - Rs. 957.87 Million)

Claims against the Company not acknowledged as debts:
Current Year : Rs. 64.52 Million (Previous year : Rs. 69.06 Million).
These claims relate to Indian Income Tax demands which are
being contested by the Company.

II.5. Operating Leases

The Group has entered into operating lease arrangements for
its ofﬁce facilities. These leases are for periods ranging from 1
to 5 years with an option to the Group for renewing at the end
of the initial term. Rental expenses for operating leases included
in the Proﬁt and Loss account for the year is Rs. 160.59 Million
(Previous year Rs. 192.09 Million)

The future minimum lease payments for non-cancelable
operating leases were:

Particulars

Within one year
Due in a period between one
year and ﬁve years

Amount in Rs. Million

March 31,
2011
142.20
121.92

March
31, 2010
141.94
286.65

Due after ﬁve years

II.6. Employees Stock Option Plan (ESOP)

ESOP – II

During 1999-2000, the Company established the Employee Stock
Option Scheme 2000 (“ESOP 2000”) under which options have

84 WWW.SUBEXWORLD.COM

been allocated for grant to the employees of the Company and its
subsidiaries. The Company has obtained in-principle approval for
listing upto a maximum of 883,750 shares to be allotted pursuant
to exercise of options granted under the scheme. Each option
comprises one underlying equity share of Rs.10/- each and carries
an entitlement of bonus shares if and when declared. This scheme
has been formulated in accordance with the Securities and
Exchange Board of India (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines, 1999. As per the
scheme, the Compensation Committee grants the options to the
employees deemed eligible by the Advisory Board constituted
for the purpose. The options are granted at a price, which is
not less than 85% of the average market price of the underlying
shares based on the quotation on the Stock Exchange where the
highest volume of shares are traded for 15 days prior to the date
of grant. The shares granted vest over a period of 1 to 4 years
and can be exercised over a maximum period of 3 years from the
date of vesting.

ESOP – III

The difference between the market price of the share
underlying the options granted on the date of grant of option
and the exercise price of the option are expensed over the
vesting period as per the SEBI guidelines. The net impact of
the movement in option grants during the period resulted in
a charge of Rs. 2.43 Million (Previous Year: credit of Rs. 8.24
Million) to the Proﬁt & Loss Account during the year.

ESOP – IV

days prior to the date of grant. The shares granted vest over a
period of 1 to 4 years can be exercised over a maximum period
of 3 years from the date of vesting.

The difference between the market price of the share
underlying the options granted on the date of grant of option
and the exercise price of the option are expensed over the
vesting period as per the SEBI guidelines. The net impact of
the movement in option grants during the period resulted in a
charge of Rs. 3.75 Million (Previous Year: Rs. 0.54 Million) to the
Proﬁt & Loss Account during the year.

Method Used for Accounting for Share Based Payment Plan:

Employees’ Stock Options Details as on the Balance Sheet Date are:

Particulars

Options outstanding at the beginning of the year
ESOP – II
ESOP – III
ESOP – IV

Granted during the year
ESOP – II
ESOP – III
ESOP – IV

Exercised during the year
ESOP – II
ESOP – III
ESOP – IV

Cancelled, Surrendered or Lapsed during the year
ESOP – II
ESOP – III
ESOP – IV

Options outstanding at the end of the year
ESOP – II
ESOP – III
ESOP – IV

Options exercisable at the end of the year
ESOP – II
ESOP – III
ESOP – IV

Options available for Grant at the end of the year
ESOP - II
ESOP - III
ESOP - IV

2010-11

2009-10

Options
(Nos)

Weighted Average
Exercise Price Per
Stock Option (Rs.)

Options
(Nos)

Weighted Average
Exercise Price Per
Stock Option (Rs.)

300,848
1,582,488
598,954

-
232,800
715,000

1,260
3,765
-

21,329
196,290
126,335

278,259
1,615,233
1,187,619

195,189

820,819
82,464

-
373,075
812,381

74.04
113.72
53.34

-
51.77
54.83

-
-
-

358,117
1,794,382
-

-
131,300
598,954

1,210
1,203
-

56,059
341,991
-

75.47
127.49
-

-
48.45
53.34

-
-
-

71.71
104.11
54.17

300.848
1,582,488
598,954

74.04
113.72
53.34

-
-
-

161,663
468,088
N.A

-
-
-

-
409,585
1,401,046

-
-
-

[Weighted average remaining contractual life (considering vesting and exercise period)]

ESOP – II At March 31 2010: 3.02 Years
At March 31 2011: 2.07 Years

ESOP – III At March 31, 2010: 3.53 Years
At March 31, 2011: 2.98 Years

ESOP – IV At March 31, 2010: 5.79 Years
At March 31, 2011: 4.88 Years

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Fair Value Methodology

The fair value of options used to compute pro forma net
income and earnings per equity share have been estimated on
the date of grant using Black-Scholes model.

The key assumptions used in Black-Scholes model for calculating
fair value is: risk-free interest rate of 8%, expected life: 3 years,

The impact on the EPS of the Company if fair value method is
adopted is given below:

Amount in Rs. Million except as otherwise indicated

Particulars
Net Proﬁt for the year (as reported)
Add: Stock-based employee compensation
Less : Stock-based compensation expenses determined under fair value based method
Net Proﬁt (proforma)
Basic earnings per share (as reported)-Rs
Basic earnings per share (proforma)-Rs
Diluted earnings per share (as reported)-Rs
Diluted earnings per share (proforma)-Rs

31-March-2011

31-March-2010

787.79
6.21
37.39
756.61
12.47
11.97
8.62
8.30

1,002.96
10.89
30.07
983.78
25.87
25.37
3.34
3.08

II.7. Related Party Information

a) Related Parties

Enterprises Over Which Some of the Directors Exercise
Signiﬁcant Inﬂuence

Key Management Personnel

Subash Menon, Founder Chairman, Managing Director & CEO
Sudeesh Yezhuvath Chief Operating Ofﬁcer & Wholetime
Director.

Kivar Holdings Private Limited (formerly Subex Holdings Private
Limited) and its subsidiaries

Note: Related parties are as identiﬁed by the Company and
relied upon by the auditors.

b) Details of the Transactions With the Related Parties are as under:

Particulars

a) Salary, Perquisites & Commission
b) Loans outstanding as at year end from Key Management

Personnel (Refer Note II.10.13 of Schedule O)

c) Preferential allotment of Equity Shares to M/s
Woodbridge Consultants (Subsidiary of Kivar Holdings)
(4,000,000 shares at a premium of Rs 70/- per share)

Amount in Rs Million

Enterprises Over Which
Some of the Directors
Exercise Signiﬁcant Inﬂuence
2009-10
-

2010-11
-

320.00

Key Management Personnel

2010-11
40.78

2009-10
47.93

56.26

II.8. Earnings per Share (EPS):

Proﬁt after Tax attributable to shareholders (A)
Add : FCCB Interest
Add/(Less) : Exchange Fluctuation on FCCB
Adjusted Proﬁts after Tax for diluted EPS (B)
Weighted Average Number of Shares for Basic EPS (C)
Effect of Existence of Dilutive Instruments (FCCBs and ESOPs)
Weighted Average Number of Shares for Diluted EPS (D)
Earnings per Share – Basic [(A)/(C)] - Rs
Earnings per Share - Diluted [(B)/(D)] - Rs

Face value of shares: Rs. 10/- each

Amount in Rs. Million Except as Otherwise Indicated

2010-11
787.79
54.83
8.91
851.53
63.18
35.65
98.83
12.47
8.62

2009-10
1,002.96
155.88
(918.81)
240.03
38.77
32.99
71.76
25.87
3.34

Note: Certain FCCBs that were outstanding during 2010-11 are anti-dilutive and the effects of the same have been ignored in the
computation of diluted earnings per share for the year 2010-11

86 WWW.SUBEXWORLD.COM

II.9. Segmental Reporting

The Group’s operation comprises of software development and
services. Primary segmental reporting comprises of products
and services segment. Secondary segments are identiﬁed

based on geographical location of customers. The accounting
principles consistently used in the preparation of the ﬁnancial
statements are also consistently applied to record income and
expenditure in individual segments. These are as set out in the
notes on signiﬁcant accounting policies.

Information about Primary Business Segment:

Amount in Rs. Million

Products

Services

Consolidated

Revenues
Segment results before interest & taxes
Unallocable Income, net of unallocable expense
Interest expense
Proﬁt/(Loss) Before Tax
Provision for taxation:
Current
Fringe beneﬁt tax
Deferred
Proﬁt/(Loss) After Tax

Particulars of Segment Assets & Liabilities

Segment Assets

Segment Liabilities

Unallocable Assets Exclude

Advance Income Taxes

Deferred tax assets (Net)

Total

Unallocable Liabilities Exclude

Loans

Provisions for Tax

Others

Total

Additions to Assets:

AMERICAS

EMEA

APAC etc

2010-11
4,181.18
1,296.29

2009-10
3,829.43
780.20

2010-11
646.32
10.38

2009-10
801.35
3.45

2010-11
4,827.50
1,306.67
(50.48)
(424.21)
831.98
-
44.19
-
-
787.79

2009-10
4,630.78
783.65
794.72
(474.16)
1,104.21
-
69.89
0.05
31.31
1,002.96

Amount in Rs. Million

Products

Services

Consolidated

2010-11

2009-10

2010-11

2009-10

2010-11

2009-10

10,353.30

11,551.37

1,779.80

2,019.23

155.51

36.22

346.61

10,508.81

11,897.98

46.71

1,816.02

2,065.94

219.71

11.29

192.75

11.18

231.00

203.93

5,457.12

6,341.55

141.15

1,231.33

136.70

827.71

6,829.60

7,305.96

Amount in Rs. Million

2010-11

2009-10

Products

Services Products

Services

8.69

5.84

25.60

30.47

12.58

23.41

0.14

Information About Secondary Business Segment

Revenue attributable to location of customers is –

Amount in Rs .Million

Region

AMERICAS

EMEA

APAC Etc

Total

Products

Services

Consolidated

2010-11

2009-10

2010-11

2009-10

2010-11

2009-10

1,493.96

1,521.86

646.32

801.35

2,140.28

2,323.21

922.60

797.29

1,764.62

1,510.28

922.60

797.29

1,764.62

1,510.28

4,181.18

3,829.43

646.32

801.35

4,827.50

4,630.78

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Segment Assets Based on Their Location

Region
AMERICAS
EMEA
APAC etc
Total

II.10. Others

Amount in Rs. Million

2010-11
590.65
7,612.60
2,305.56

2009-10
4,051.33
6,861.89
984.76
10,508.81 11,897.98

1. Estimated amount of contracts, remaining to be executed on
capital account and not provided for (net of advances paid)
Rs. 5.35 Million (Previous year: Rs 6.05 Million).

2. Unclaimed Dividend of Rs. 0.59 Million as at March 31,
2011 (Previous Year - Rs. 0.64 Million) represent dividends
not claimed for earlier years. During the current year,
the Company has transferred Rs. 0.05 Million (Previous
Year Rs. 0.10 Million) to Investor Education Protection
Fund. As on March 31, 2011, no portion of the unclaimed
dividends are outstanding for a period of seven years from
the due date of payment, requiring a transfer to Investor
Education Protection Fund.

3. Cash & Cash Equivalents include balance with Scheduled
Banks on Dividend Account of Rs. 0.59 Million (Previous Year:
Rs. 0.64 Million), ﬁxed deposit of Rs. 5.97 Million (Previous

Year: Rs. 25.97 Million) which are not available for use by the
Company. The breakup of Cash and Cash Equivalents are
given in Schedule H of ﬁnancial statements.

Direct Taxes paid and Others in the Cash Flow Statement
includes outﬂows on account of permitted utilisations from
the BRR of Rs. 20.91 Million (Previous Year: Rs. 557.72
Million) which were accrued and paid off in the respective
years and Direct Taxes of Rs. 66.81 Million (Previous Year:
Rs. 125.64 Million).

4. Other Provisions comprises -

Provision for Redemption Premium on FCCBs - Rs. 1,140.35
Million (Previous Year: 612.71 Million)

Provision for Other Long Term Employee Beneﬁts - Rs.
359.20 Million (Previous Year: Rs.628.60 Million)

Differential Interest on Restructured FCCBs - Rs. 80.79

Million (Previous Year: Rs. 203.06 Million)

MTM Losses on Option Contracts - Rs. Nil (Previous Year:

Rs. 0.95 Million)

5. Personnel Cost for the year includes expenditure on Research
and Development of Rs. 132.92 Million (Previous year,
Rs. 122.18 Million). This is as certiﬁed by the management
and relied upon by the auditors.

6. The following table sets out the funded status of the deﬁned Beneﬁt Schemes and the amount recognized in the ﬁnancial

statements.

Components of Employer Expense

Current Service cost

Interest cost

Expected return on plan assets

Curtailment cost/(credit)

Settlement cost/(credit)

Past Service Cost

Actuarial Losses/(Gains)

Total expense recognized in the Statement of Proﬁt & Loss Account

Actual Contribution and Beneﬁt Payments for Year Ended March 31, 2011

Actual beneﬁt payments

Actual Contributions

III Net Asset/(Liability) Recognized in Balance Sheet as at March 31, 2011

Present value of Deﬁned Beneﬁt Obligation (DBO)

Fair value of plan assets

Funded status [Surplus/(Deﬁcit)]

Unrecognized Past Service Costs

Net asset/(liability) recognized in Balance Sheet

88 WWW.SUBEXWORLD.COM

Amount in Rs Million Except Assumptions

Gratuity

March 31, 2011

March 31, 2010

6.32

1.89

(0.34)

5.36

1.17

(0.28)

4.08

0.44

12.39

2.16

29.93

3.30

(26.63)

(1.07)

5.18

1.46

4.76

19.32

5.08

(14.24)

Change in Deﬁned Beneﬁt Obligations During the Year Ended March 31, 2011

Amount in Rs Million Except Assumptions

Gratuity

March 31, 2011

March 31, 2010

Present Value of DBO at beginning of year

Current Service cost

Interest cost

Curtailment cost/(credit)

Settlement cost/(credit)

Plan amendments

Acquisitions

Actuarial (gains)/ losses

Beneﬁts paid

Present Value of DBO at the end of year

Change in Fair Value of Assets During the Year Ended March 31, 2011

Plan assets at beginning of year

Acquisition Adjustment

Actual return on plan assets(estimated)

Actuarial Gain/(Loss)

Actual Company contributions(less risk premium, ST)

Beneﬁts paid

Plan assets at the end of period

Actuarial Assumptions

Discount Rate

Expected Return on plan assets

Salary escalation

Attrition Rate

19.32

6.32

1.89

4.08

0.48

(2.16)

29.93

5.08

0.34

0.04

(2.16)

3.30

8.30%

8.50%

6.00%

5.00%

15.33

5.36

1.17

(1.07)

(1.46)

19.32

1.50

0.28

4.76

(1.46)

5.08

8.30%

8.60%

6.00%

5.00%

Amount Rs. Million

Experience History

Year Ending
March 31, 2008 March 31, 2009 March 31, 2010 March 31, 2011

Deﬁned Beneﬁt Obligation at end of the period

Plan Assets at end of the period

Funded Status

Experience Gain/(Loss)adjustments on Plan Liabilities

(10.30)

1.09

(9.21)

(1.13)

(15.33)

(19.32)

(29.94)

1.50

5.08

3.30

(13.83)

(14.24)

(26.64)

0.81

0.39

(0.48)

Experience Gain/(Loss)adjustments on Plan Assets
Actuarial Gain/(Loss) due to change on assumptions

-
(0.13)

0.03
(1.22)

-
0.68

0.04
-

Note: Contributions under Deﬁned Contribution Schemes Rs. 41.14 Million (Previous Year: Rs. 35.13 Million)

7. The Company has entered into the following derivative instruments for the purposes of hedging the risks associated with foreign

exchange exposures.

i. Forward contracts to hedge foreign currency risk on export receivables:

Amount in Million

Particulars

March 31, 2011

Foreign
Currency

Buy/
Sell

Amount
(INR)

Foreign
Currency

March 31, 2010
Buy/
Sell

Amount
(INR)

Forward contracts
- USD contracts
- GBP contracts

$ 31.50
-

Sell
-

1,444.30
-

$ 25.40
£ 4.00

Sell
Sell

1,231.49
318.40

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ii. Option contracts outstanding

Amount in Million

Particulars

March 31, 2011

March 31, 2010

Option Contracts

Foreign
Currency

Buy/
Sell

Amount(INR)

Foreign
Currency

$ 0.20

Buy/
Sell

Sell

Amount(INR)

8.54

As per the guidelines on accounting for Derivatives issued by the Institute of Chartered Accountants of India, the Company has provided
for Mark to Market losses of Rs. Nil (Previous Year Rs. 0.95 Million) on outstanding option contracts.

8. The year end foreign currency exposures that have not been hedged by derivative instruments or otherwise are given below.

Receivable at March 31, 2011 in

Receivable at March 31, 2010 in

Foreign Currency

Equivalent Rupees

Foreign Currency

Equivalent Rupees

Amount in Million

EUR 0.78

AUD 1.47

AED 0.40

THB 0.18

OMR 0.06

GBP 0.15

MYR 0.11

QAR 0.12

SAR 0.02

49.67

67.74

4.91

0.26

6.69

10.59

1.61

1.42

0.29

EUR 1.34

AUD 0.12

CAD 0.03

AED 0.94

USD 14.94

THB 4.25

CHF 0.13

OMR 0.04

SGD 0.15

GBP 0.08

81.09

4.96

1.37

11.52

670.77

5.90

5.29

5.17

4.82

5.76

Note : The above does not include exposure on intra-group balances, being eliminated on consolidation

9. The dues to Micro and Small enterprises as deﬁned in The Micro, Small & Medium Enterprises Development Act, 2006, are
identiﬁed by the Company based on inquiries with the parties and information available with the Company. This has been relied
upon by the auditors.

10. Revenue is net of Rs. 3.42 Million (Previous Year: Rs. 79.86 Million) being reversal of Unbilled Revenues.

11. The Company has ‘International transactions’ with ‘Associated Enterprises which are subject to Transfer Pricing regulations in
India. The Management of the Company, is of the opinion that such transactions with Associated Enterprises are at arm’s length
and hence in compliance with the aforesaid legislation and consequently that, these transactions do not have any impact on the
ﬁnancials statements, particularly on account of tax expense and that of provision for taxation.

12. A director of the Company has provided a personal guarantee in respect of short term loans from Banks/Financial Institutions
included in Schedule D and Schedule E of the ﬁnancial statements. Further, portion of promoters’ shares have also been pledged
towards portion of these loans.

13. Remuneration to whole time directors relating to earlier years which were subject to approval of Central Government at the
beginning of the year was Rs. 56.26 Million. During the year company has received the approval for a portion of the above and
has accordingly charged Rs. 33.27 Million to the Proﬁt and Loss account and the balance has been recovered from the whole time
Directors.

14. Previous year’s ﬁgures have been regrouped to conform to the classiﬁcations for the current year.

90 WWW.SUBEXWORLD.COM

II.11 Details of the Subsidiaries Consolidated for the Year Ended March 31, 2011

For the Year 2010-11

Subex
Technologies
Limited
(Note 1)

Subex
Technologies
Inc
(Note 1)

Subex (UK)
Limited

Subex Inc

(Note 2)

Amount in Rs. Million

Subex
(Asia Paciﬁc)
Pte Ltd
(Note 2)

Subex
Americas Inc

(Note 2 & 3)

Country of Incorporation

India

USA

Singapore

Canada

Capital

Reserves

Total Assets

Total Liabilities

Details of investment (other than Subsidiaries)

Turnover

Proﬁt before taxation

Provision for taxation

Proﬁt after taxation

Proposed Dividend

Exchange Rate

Base Currency

Balance Sheet

Proﬁt & Loss account

Note:

40.00

31.33

141.29

69.96

(1.17)

(0.10)

(1.07)

INR

1.0000

3,533.90

(259.40)

(214.72)

(5,074.19)

209.05

125.56

371.94

37.32

4.06

585.55

2,520.56

1,930.96

218.95

478.35

646.32

1,523.49

1,261.57

8.57

0.00

8.57

68.82

15.26

53.56

63.92

3.15

60.76

250.14

464.87

432.69

10.57

8.90

1.66

USD

44.5950

45.5705

GBP

71.7950

70.7300

USD

44.5950

45.5705

SGD

35.3850

34.0939

1,067.73

2,608.02

1,205.44

(44.44)

6.36

(50.80)

USD

44.5950

45.5705

1. These entities have been audited by the independent auditors of the respective subsidiaries. The details below are extracted from

such ﬁnancial statements.

2. The details in respect of these entities are extracted from the ﬁnancial statements of the respective subsidiaries which were
audited by the statutory auditors solely for purposes of being included in the consolidation ﬁnancial statements of the Company.

3. The details given in respect Subex Americas Inc is on a consolidated basis. The subsidiaries of Subex Americas Inc that have been

consolidated are as follows:

Subsidiary
Subex Azure Holdings Inc
Syndesis Development India Private Limited

Country of Incorporation
United States of America
India

WWW.SUBEXWORLD.COM

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SHAREHOLDERS’ INFORMATION

REGISTERED OFFICE

The Registered ofﬁce of the Company is at Adarsh Tech Park,
Outer Ring Road, Devarabisanahalli, Bangalore – 560 037.

DATE AND VENUE OF THE ANNUAL GENERAL MEETING (AGM)

Date

: July 27, 2011

Venue : Adarsh Tech Park, Outer Ring Road,

Devarabisanahalli, Bangalore – 560 037

Time

: 12 Noon

DATES OF BOOK CLOSURE

From July 25, 2011 to July 27, 2011 (both days inclusive)

BOARD MEETINGS & FINANCIAL CALENDAR

Financial year

: April 1 to March 31

Calendar of Board Meetings to adopt the accounts (tentative
and subject to change):

For quarter ending June 30, 2011

– on July 27, 2011

For quarter ending September 30, 2011 – on October 31, 2011

For quarter ending December 31, 2011 – on January 27, 2012

For the year ending March 31, 2012

– on April 27, 2012

DIVIDEND

The Company’s US$ 98.7 Million 5% Convertible Unsecured
Bonds, issued pursuant to the restructuring of US$ 180 Million
2% Coupon Convertible Unsecured Bonds, have been listed
on the Singapore Exchange Securities Trading Limited since
November 6, 2009.

The stock codes of the Company at the Stock Exchanges are
as follows:

Name and Address of the Stock Exchange

Stock Code

National Stock Exchange of India Limited,
Exchange Plaza,
Bandra Kurla Complex,
Bandra (East)
Mumbai- 400051

Bombay Stock Exchange Limited,
Phiroze Jeejeebhoy Towers
Dalal Street, Fort, Mumbai - 400001

London Stock Exchange
10 Paternoster Square
London
EC4M 7LS

Singapore Exchange Securities Trading Limited
2 Shenton Way #19-00
SGX Centre 1
Singapore 068804

SUBEX

532348

SUBX

4AFB

The Directors have not proposed any dividend to be paid for
the ﬁnancial year 2010-11.

The International Securities Identiﬁcation Number (ISIN) for
the Company’s Shares in dematerialized form is INE754A01014.

LISTING ON STOCK EXCHANGES

CUSTODIAL FEE

Equity Shares of the Company are quoted on the Bombay Stock
Exchange Limited (BSE) since July 31, 2000 and on the National
Stock Exchange of India Limited (NSE) since September 5,
2003. The Company has paid listing fees for the year 2011-12
in accordance with the provisions of the Listing Agreement
with BSE and NSE.

The Global Depositary Receipts (GDRs) and the US$ 180
Million 2% Coupon Convertible Unsecured Bonds of the
Company are listed on the London Stock Exchange since
March 9, 2007.

Pursuant to the Securities and Exchange Board of India (SEBI)
Circular No. MRD/DoP/SE/Dep/Cir-4/2005 dated January 28,
2005 issuer companies are required to pay custodial fees to the
depositories with effect from April 1, 2005. The said circular
has been partially modiﬁed vide SEBI’s Circular No MRD/DoP/
SE/Dep/Cir-2/2009 dated February 10, 2009. The Company has,
in accordance with the aforesaid circulars, paid custodial fees
for the year 2011-12 to National Securities Depository Limited
(NSDL) and Central Depository Services Limited (CDSL) on
the basis of the number of beneﬁcial accounts maintained by
them as on March 31, 2011.

WWW.SUBEXWORLD.COM

STOCK MARKET DATA RELATING TO EQUITY SHARES LISTED IN INDIA

Monthly high and low quotations during each month in the ﬁnancial year 2010-11 as well as the volume of Equity Shares traded on
NSE and BSE are as under:

Month

Apr-10

May-10

Jun-10

Jul-10

Aug-10

Sep-10

Oct-10

Nov-10

Dec-10

Jan-11

Feb-11

Mar-11

High
Rs.

68.00

62.05

56.00

57.65

58.25

53.75

77.15

91.05

81.90

84.90

64.10

58.00

NSE

Low
Rs.

62.00

46.70

51.00

50.70

50.00

51.30

52.10

70.65

68.25

64.50

50.15

49.45

Volume
Nos.

11,972,343

6,756,359

8,076,207

16,291,486

20,836,526

5,557,687

47,524,958

81,280,407

36,869,936

24,095,067

10,559,336

17,326,846

High
Rs.

69.80

63.50

56.80

60.75

61.00

57.00

80.25

94.90

83.05

85.75

67.20

59.40

BSE

Low
Rs.

60.60

45.85

49.40

50.10

49.25

50.50

52.00

66.00

66.50

60.95

48.00

48.95

Volume
Nos.

7,455,844

3,684,279

4,391,335

10,528,185

14,353,488

3,634,050

29,974,557

42,617,018

18,860,464

13,261,176

5,500,831

8,819,077

TOTAL

287,147,158

TOTAL

163,080,304

SUBEX LIMITED SHARE PRICE VERSUS NSE S&P CNX NIFTY AND SENSEX

SHAREHOLDING PATTERN

Distribution of Shareholding:

No. of Equity Shares
Held

–

5000

5001 – 10000

10001 – 20000

20001 – 30000

30001 – 40000

40001 – 50000

50001 – 100000

100001 and above

TOTAL

As on March 31, 2011

As on March 31, 2010

No. of Shareholders

47,720

4,267

1,989

608

335

316

444

383

% to Total
Shareholders

85.12

7.61

3.55

1.08

0.60

0.56

0.79

0.69

No. of Shareholders

% to Total
Shareholders

39,526

3,146

1,465

485

202

190

233

267

86.84

6.91

3.22

1.07

0.44

0.42

0.51

0.59

56,062

100.00

45,514

100.00

94 WWW.SUBEXWORLD.COM

Categories of Shareholders:

As on March 31, 2011

As on March 31, 2010

Category

No. of
Shareholders

Voting
Strength %

No. of
Shares Held

No. of
Shareholders

Voting
Strength %

No. of
Shares Held

Public & Others
Companies/Bodies Corporate
Core Promoters
Mutual Funds
ESOP- employee shareholders
FIIs
TOTAL

54,806
1,178
3
4
54
17
56,062

40.99
11.49
11.69
2.43
0.25
33.15
100.00

28,409,375
7,962,242
8,101,801
1,682,482
177,609
22,976,516
69,310,025

44,346
1,091
3
5
54
15
45,514

33.26
21.53
13.97
3.31
0.25
27.68
100.00

19,283,242
12,483,894
8,101,801
1,920,482
146,410
16,047,310
57,983,139

R & T AGENTS AND SHARE TRANSFER SYSTEM

Canbank Computers Services Limited,
J P Royale,
1st Floor, No. 218, 2nd Main, Sampige Road (Near 14th Cross),
Malleswaram, Bangalore - 560 003, were appointed as ‘Registrar
and Transfer Agent’ both in respect of shares held in physical
form and dematerialized form vide a tripartite agreement dated
December 5, 2001 in respect of shares held with NSDL and a
tripartite agreement dated November 27, 2001 in respect of
shares held with CDSL.

Process for Transfer of Shares

Share transfers would be registered and returned within a period
of one month from the date of receipt, if the documents are clear
in all respects. The Company holds Share Transfer Committee
meetings on a periodical basis, as may be required, for approving
the transfers/transmissions of equity shares.

Share transfers and other communication regarding Share
certiﬁcates, updation of records, e-mail ids, etc. may be
addressed to:

M/s Canbank Computer Services Limited,
J P Royale, 1st Floor,
No. 218, 2nd Main,
Sampige Road (Near 14th Cross),
Malleswaram,
Bangalore - 560 003

Tel Nos. +91 80-23469661/62, 23469664/65
Fax Nos. +91 80-23469667/68
E-mail: canbankrta@ccsl.co.in
Website: www.canbankrta.com

SHARES HELD IN PHYSICAL AND DEMATERIALISED
FORM

As on March 31, 2011, 99.93 % of the Company’s Equity Shares
were held in dematerialized form and the rest in physical form.

OUTSTANDING GDRs
CONVERTIBLE
IMPACT ON EQUITY

/ ADRs

/ WARRANTS/
INSTRUMENTS AND THEIR

As on March 31, 2011, 9,192,035 GDRs were outstanding. The
Company also has outstanding FCCBs aggregating to US$ 39
Million under its US$ 180 Million 2% Convertible Unsecured
Bonds and US$ 54.80 Million under its US$ 98.7 Million 5%
Convertible Unsecured Bonds. The details of impact of the
aforesaid instruments on the equity of the Company have been
provided under the shareholding pattern for the year ended
March 31, 2011 available on the Company’s website under the
Investors section.

LEGAL PROCEEDINGS

There are no legal proceedings against the Company which are
material in nature.

NOMINATION

Pursuant to the provisions of section 109A of the Companies
Act, 1956, members may ﬁle nomination in respect of their
shareholdings. Any member willing to avail this facility may
submit to the Company the prescribed Form 2B (in duplicate),
if not already ﬁled. Form 2B can be obtained with the help
of Canbank Computer Services Limited, the R&T Agents.
Members holding shares in electronic form are requested to
give the nomination request to their respective Depository
Participants directly.

UPDATION OF E-MAIL ADDRESS

WWW.SUBEXWORLD.COM

communications such as the notice of General Meetings,
Audited Financial Statements, Directors’ Report, Auditors’
Report, etc., henceforth to shareholders in electronic form
to the E-mail Id provided by them and made available to us
by the Depositories. Members are requested to register their
E-mail Id with their Depository Participant and inform them
of any changes to the same from time to time. However,
Members who prefer physical copy to be delivered may write
to the Company at its registered ofﬁce or send an E-mail to
investorrelations@subexworld.com by providing their DP Id
and Client Id as reference.

PROCEDURE FOR CLAIMING UNPAID DIVIDEND

In terms of section 205A(5) of the Companies Act, 1956,
monies transferred to the Unpaid Dividend Account of the
Company, which remain unpaid or unclaimed for a period of
seven years from the date of such transfer, shall be transferred
by the Company to the Investor Education and Protection Fund
established by the Central Government.

Brief particulars of dividend declared on the equity share capital
are given below:

Year to Which
Dividend Pertains

2002-03
2003-04
2004-05

2005-06

2006-07

Declared at the
AGM/Board Meeting
Held on
September 9, 2003
August 24, 2004
January 27, 2005
July 28, 2005
October 28, 2005
August 28, 2006
January 29, 2007
July 26, 2007

Nature of Dividend % of Dividend Due Date for Transfer to the Fund

Final
Final
Interim
Final
Interim
Final
Interim
Final

10
20
10
20
15
10
15
20

See note below*
Before September 23, 2011
Before February 26, 2012
Before August 27, 2012
Before November 27, 2012
Before September 27, 2013
Before February 28, 2014
Before September 25, 2014

The Company declared bonus at 1:1 in the years 2000-01 and 2005-06.

* The ﬁnal dividend declared for the ﬁnancial year 2002-03
which was unclaimed for 7 years from the date of payment
being due, was transferred to the Investor Education and
Protection Fund.

Members can claim the unpaid dividend from the Company
before transfer to the Investors Education and Protection Fund.
It may be noted that the unpaid dividend cannot be claimed
from the Company after it has been transferred to the Investors
Education and Protection Fund.

INVESTOR GRIEVANCES

Investor grievances received from April 1, 2010 to March 31, 2011:

Nature of Complaints
Non-receipt of share certiﬁcates/refund orders/call money notice/allotment advice/dividend warrant/transfer
Letters from NSDL, Banks etc.
Correction/change of bank mandate of refund order/Change of address
Postal returns of cancelled stock invests/refund orders/share certiﬁcates/dividend warrants
Other general query
Total

Received Cleared

2
-
-
-
-
2

During the year ended March 31, 2011, the Company has attended to all the investors’ grievances/correspondence within a period of
10 days from the date of receipt of the same, if the requisite documents, if any, were clear and complete in all respects.

ADDRESS FOR CORRESPONDENCE
For any queries, please write to:
Mr. Ramanathan J
Vice President- Finance & Company Secretary
Subex Limited, Adarsh Tech Park, Outer Ring Road,
Devarabisanahalli, Bangalore – 560 037, India.
Telephone: +91 80 6659 8700 Fax: +91 80 6696 3333
Email : ramanathan.j@subexworld.com

investorrelations@subexworld.com

96 WWW.SUBEXWORLD.COM

WEBSITE

website

www.subexworld.com

contains
Company’s
comprehensive information about the Company, products,
press releases and investor relations. It serves as a source of
information to the shareholders by providing key information
about Board of Directors and the committees, ﬁnancial
results, shareholding pattern, distribution of shareholding,
dividend etc.

About Subex

Subex Limited is a leading global provider of Operations and Business Support Systems (OSS/BSS) that empowers
communications service providers (CSPs) to achieve competitive advantage through Business Optimization and Service Agility
- thereby enabling them to improve their operational efﬁciency to deliver enhanced service experiences to subscribers.

The company pioneered the concept of a Revenue Operations Center (ROC™) – a centralized approach that sustains
proﬁtable growth and ﬁnancial health through coordinated operational control. Subex’s product portfolio powers the ROC and
its best-in-class solutions enable new service creation, operational transformation, subscriber-centric fulﬁlment, provisioning
automation, data integrity management, revenue assurance, cost management, fraud management and interconnect /inter-party
settlement. Subex also offers a scalable Managed Services program and has been the market leader in Business optimization for
three consecutive years. Subex has been awarded the Global Telecoms Business Innovation Award 2011 along with Swisscom
for the industry’s ﬁrst successful Risk Reward Share model for fraud management.

Subex’s customers include 16 of top 20 wireless operators worldwide* and 26 of the world’s 50 biggest telecommunications
service providers. The company has more than 300 installations across 70 countries.

*RCR Wireless list, 2010
*Forbes’ Global 2000 list, 2010

For more information please visit www.subexworld.com

www.subexworld.com

Subex Limited

Subex Inc.

Subex (UK) Limited

Subex Americas Inc.

Subex (Asia Pacific) Pte. Limited

Adarsh Tech Park,
Devarabisanahalli,
Outer Ring Road,
Bangalore - 560037
India

12101 Airport Way,
Suite 300 Broomfi eld,
Colorado 80021
USA

3rd Floor, Finsbury Tower,
103-105 Bunhill Row,
London, EC1Y 8LZ
UK

30 Fulton Way,
Richmond Hill, Ontario,
Canada L4B 1E6

175A, Bencoolen Street,
#08-03 Burlington Square,
Singapore 189650

Phone: +91 80 6659 8700
Fax: +91 80 6696 3333

Phone: +1 303 301 6200
Fax: +1 303 301 6201

Phone: +44 20 7826 5420
Fax: +44 20 7826 5437

Phone: +1 905 886 7818
Fax: +1 905 886 9076

Phone: +65 6338 1218
Fax: +65 6338 1216