Subex Limited Annual Report 2011

FY2011 Annual Report · Subex Limited

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About Subex

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 such as Revenue Assurance, Fraud Management, Credit Risk Management, Cost Management, Route
Optimisation, Data Integrity Management and Interconnect / Inter-party Settlement.

Subex also offers a scalable Managed Services program and has been the market leader in Revenue Assurance and Fraud
Management according to Gartner (2010 & 2011). Subex has also been enjoying market leadership in Business Optimisation for
five consecutive years according to Analysys Mason (2007, 2008, 2009, 2010 & 2011). Business Optimisation includes fraud,
revenue assurance, analytics, cost management and credit risk management. Subex has been awarded the Global Telecoms
Business Innovation Award for 2012 along with Idea Cellular and 2011 along with Swisscom for Fraud Management.

Subex's customers include 28 of top 50 operators* and 33 of the world’s 50 biggest# Telecommunications Service Providers
worldwide. The company has more than 300 installations across 70 countries.

*GTB Carrier Guide, 2011
#Forbes’ Global 2000 list, 2011

powerin g the ROC

Annual Report
2011-2012

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Nurturing a
Strong Foundation

www.subex.com

Subex Limited

Adarsh Tech Park,
Devarabisanahalli,
Outer Ring Road,
Bangalore - 560037
India

Subex Inc.

Subex (UK) Limited

Subex (Asia Pacific) Pte. Ltd

12101 Airport Way,
Suite 300 Broomfi eld,
Colorado 80021
USA

3rd Floor, Finsbury Tower,
103-105 Bunhill Row,
London, EC1Y 8LZ
UK

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: +65 6338 1218
Fax: +65 6338 1216

Other Offices:

Dubai

Ipswich

Sydney

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Contents

Financial Highlights

CEO’s Letter to Shareholders

Transforming through Customer Experience Management - Sudeesh Yezhuvath

We Are Prepared - Vinod Kumar

Fostering the Future The ‘Subex’ Way! - Sekharan Menon

The 4 C’s of Subex’s Strong Foundation - Paul Skillen

Subex Stars

Subex Charitable Trust

Board of Directors

Directors’ Report

Corporate Governance

Management Discussion & Analysis

Financial Review - Standalone

Financial Review - Consolidated

109

Shareholders’ Information

About Subex Limited

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 such as Revenue Assurance, Fraud Management, Credit
Risk Management, Cost Management, Route Optimisation, Data Integrity Management and Interconnect /
Inter-party Settlement.

More than a decade of Industry Leadership

Global Market Leader for Revenue
Assurance and Fraud Management
Solutions, 2010 & 2011

Market Leader in Business
Optimisation, 2007, 2008, 2009,
2010 & 2011

Winner of Global Telecoms
Business Innovation Award,
2011 & 2012

Best Supplier Award for Innovation,
2010

Awarded for Rocware 2.0

Financial Highlights

Particulars (Consolidated)
Total Income

Amount in ` Million
4,887.90

Operating Profit (EBITDA) Before Exceptional Items

Depreciation and Amortization

Profit Before Tax and Exceptional Items

Profit After Tax and Exceptional Items

Share Capital

Reserves and Surplus

Networth

Gross Fixed Assets

Net Fixed Assets

Total Assets

Key Indicators
Earnings Per Share (`)

Cash Earning Per share(`)

Book Value Per Share (`)

Debt (Including Working Capital Debt) Equity Ratio

EBITDA/ Sales (%)

Net Profit Margin(%)

Return on Year End Net Worth (%)

Return on Year End Capital Employed (%)

1,406.33

77.96

899.85

318.41

693.11

752.94

1,446.05

1,044.72

77.28

10,996.65

Amount in ` Million
4.59

7.50

20.86

4.16

29.43

6.66

22.02

2.90

www.subex.com

To Our Shareholders

Dear Shareholder,

Your company has come through a very difficult period. A period marked by a failed

acquisition, losses, dropping revenue, negative cash flow and above all, tarnished reputation.

A torturous period for all stakeholders during which the world expected us to declare

bankruptcy. A period during which our customers worried about our very existence in the

Subash Menon
Founder, Managing Director & CEO

years to come – and rightly so. I take this opportunity to thank each one of you for standing

by the company and for extending unflinching support. We could not have come through

this period without such support and I thank you once again for the same.

Undoubtedly, a period that we would like to put behind us and forget. But doing so without extracting and learning a

lesson, will be foolish and an opportunity lost. I am glad to report that your company has not only learnt the appropriate

lesson thereby taking advantage of the misfortune, but has also applied that lesson effectively. Our financial results for the

financial year which ended on March 31, 2012 proves that beyond any shadow of doubt. Product Revenue, representing the

core of our business, grew from ` 4,181.2 million to ` 4,398.7 million i.e. by 5% while total revenue increased from ` 4,827.5

million to ` 4,882.0 million. EBITDA increased from ` 1,279.3 million to ` 1,400.4 million. Operational Profit After Tax, arrived

at by excluding Exceptional Items from PAT, recorded a steep increase of 20.5% growing from ` 805 million to ` 970 million.

Above all, Order Intake, a key measure of the expected performance in the future, grew at a healthy pace to US$ 90 million

during the year.

However, the most important event during the year was the potential default of Foreign Currency Convertible Bonds

(FCCBs) that were due on the of March 9, 2012. With the support of the bondholders and the shareholders, we successfully

restructured the FCCBs thereby averting any catastrophe. Let me deal with that event in detail.

FCCB Restructuring
Your company had contracted US$ 180 million of FCCBs in March 2007 with a tenor of 5 years. With the high level of erosion

in share price, conversion of these FCCBs to equity did not seem a possibility thereby converting them into pure debt

repayable in March 2012. Once this eventuality was quite certain, the company proactively restructured the bonds in

November 2009. US$ 141 million worth of bonds were restructured by applying a discount of 30% to the face value and

reducing the conversion price from ` 656.20 to ` 80.31 while the balance (US$ 39 million worth of bonds) continued as

originally issued and were termed as FCCB I. The restructured bonds were termed as FCCB II. Consequent to this

restructuring in 2009, US$ 43.9 million worth of FCCB II bonds were converted into equity thereby reducing the liability to

US$ 54.8 million. Thus, we were left with US$ 39 million of FCCB I and US$ 54.8 million of FCCB II in face value. These bonds

matured in March 2012 taking the total liability to US$ 131 million including redemption premium. Given the low share

price of the company during the past couple of years, further conversion from bonds to equity was not possible and we

were faced with the onerous task of repaying this large sum of US$ 131 million in March 2012. Further given the financial

www.subex.com

state that the company was in, it was not in a position to either use internal generation or external debt to repay the

bondholders.

Quite naturally, the only option was to once again restructure the bonds to avoid default. The company launched an

Exchange Offer wherein existing holders of both FCCB I and FCCB II could exchange their holdings for a combination of new

bonds and new equity in return, with 72:28 as the ratio applied. This ratio meant that while the face value of the existing

bonds will be replaced by new bonds, the redemption premium will be converted into equity thereby improving the

debt-equity ratio of the company and ensuring that the interest burden did not increase further. A little over 97% of the

bonds were exchange in the process which was successfully completed in the 1st week of July 2012. The final result of the

Exchange Offer is given below:

US$ 127.721 million worth of new bonds valid for 5 years with a conversion price of ` 22.79

US$ 36.321 million worth of new bonds converted now to equity at ` 22.79 per share resulting in 89,335,462 new

US$ 2.4 million worth of old bonds (as only 97% opted for the exchange) valid for 5 years with the old conversion

prices (some at ` 80.31 and some at ` 656.20)

A New Chapter
With this restructuring, the company has started a new chapter in its life. The troubles and travails of the past 5 years are

behind us and we can now, once again, focus on our business without having to fight off competitors highlighting financial

distress at the company and without having to drain our resources in placating worried customers. Further, the uncertainty

that had hung over the company has lifted and Subexians can once again concentrate on re-building the organization

without being concerned about their future.

All of us at Subex thank each and every one of you for the support extended till date and for your continuing support. I

assure you that we will do our best to profitably grow the company.

The only limit to our realization of tomorrow will be our doubts of
today; Let us move forward with strong and active faith.
Franklin D. Roosevelt

www.subex.com

Transforming through Customer
Transforming through Customer
Transforming through Customer
Experience Management
Experience Management
Experience Management

A business, of any kind, exists only because it has an audience to consume its products or
A business, of any kind, exists only because it has an audience to consume its products or

services - CUSTOMERS! Understanding them helps grow your business while not valuing
services - CUSTOMERS! Understanding them helps grow your business while not valuing

the role they play is a clear recipe for failure. It is time to get closer to your customers.
the role they play is a clear recipe for failure. It is time to get closer to your customers.

Sudeesh Yezhuvath
Chief Operating Officer & Wholetime
Director

The world’s leading IT research firm, Gartner, suggests that, to remain relevant, CSPs must

choose at least one of three possible paths that diverge from the traditional CSP business

plan. The first option is to become diversified service providers by moving into adjacent

industries. The second option is to focus on providing platforms that can enable delivery of

third-party content and applications. The third option is for CSPs to leverage their existing

network capabilities and become wholesale providers of smart utilities, allowing them to optimize their operational costs.

The first option (diversified service provider) and second option (platform provider and enabler) require a deep

understanding of the customer experience and capabilities that can manage it. Gartner calls this “customer intimacy.”

Changing market forces are compelling CSPs to reinvent the wheel when it comes to their existing business approach. And

Customer Experience Management - the new buzzword in telecom - forms the core of that business wheel.

Why do we see this change?
It is an understatement to say that telecom is a fast changing business – the speed of change is what we have never seen in

any other business. It is also a very young industry, compared to other utilities. There are, however, some interesting aspects

to telecom that make it much more than any utility like power or water supply. The phone has become an integrated part

of our existence and we feel lost without a connection.

The telecoms market, still relatively young in comparison to other sectors, has seen disruptive but positive changes over the

last decade. Mobile telephony itself has seen great growth in the past and it is now estimated that there are more than five

billion mobile phones in a world that has about six billion people. Interestingly, this is also a clear indicator that we are

approaching saturation in most markets. Average revenue and margin per user have decreased. Competition has emerged

from unexpected quarters and eating into business. As close as ten years back, nobody expected that the tribe called ‘Over

the Top’ (OTT) players would even exist but that is exactly what companies such as Skype, Google and Apple are.

And during this phase, technologies and delivery platforms have changed leaving telecom operators struggling to manage

growth. But with all challenges, there is the proverbial silver lining; an emerging potential because of the ever-present

nature of telecom services itself. The opportunity to focus on your customers! To increase one’s share of wallet through

enhanced customer experience.

www.subex.com

Telecom operators are now looking to meet more needs of their consumers, be it entertainment, security, home and energy

management etc. The potential is immense. To put things in perspective for instance, in a recent survey in the US, it was

found that about 28% of all those surveyed were happy to watch TV programs on a computer. Today, there is technology

available that will help telecom operators provide TV over their connections and this will, naturally, help expand their

market. Selling more to your customers is clearly the name of the game today.

Now what does that entail?
Clearly, knowing your customer well and keeping them satisfied is the key. A happy customer will always buy more and will

act as your unofficial brand ambassador that helps you realize returns that your marketing campaigns struggle to achieve.

Customer Experience Management is about understanding what the customer is actually experiencing and using that

information to ensure that the experience is positive. Initially, CEM was all about measuring network quality but soon, it

became evident that customer experience cannot be measured with a uni-dimensional approach as you can still have a

very disgruntled customer who will move out over a wrong bill even when the network quality is brilliant. However, a

multi-dimensional, holistic representation of customer experience is very complex and expensive to measure. So, the

question is, does a telecom operator want to ensure the best experience to all its customers or do they want to have a

segmentation done to provide appropriate levels of customer experiences?

This is where Subex plays an important role
Subex has pioneered a unique approach by first segmenting customers based on high margins and then measuring

customer experience to differing levels based on each segment. This is a very pragmatic approach as the problem is now

broken down into manageable proportions. A telecom operator is a business, first and foremost and bottom-line

orientation should drive the business and its processes. Our approach helps the CSPs to meet these new challenges while
ensuring that profitability is not negatively impacted.

How is Subex able to do this?
We are in a unique position with telecom operators where our solutions capture all revenue generating transactions of their

customers in the network. Over the years, we have built up abilities to handle billions of these transactions everyday and

use pattern matching and other advanced techniques to achieve the results that our customers want. Our solutions have

the ability to connect to other systems and collect data from those in order to enrich the transaction data. This treasure

trove of data is then ‘sliced and diced’ to provide valuable information on segmentation and customer experience. We are

firmly convinced that this is the best approach to help telecom operators navigate through these difficult times; to enable

them to understand their customers.

www.subex.com

We Are Prepared

Volatility has become a way of life. While most economies are making slow economic

recovery, disruptions in countries like Egypt and Greece are posing threats to global markets.

Amid these challenges, telecom companies have performed relatively well by tight capex

management and operational cost reduction. The entry of new players such as internet

companies and over the top (OTT) players into the fray has made life very difficult for

traditional telecoms players and has forced them to shift from an active to pro-active

strategy. As a part of this proactive strategy we are seeing three key themes being pursued

by operators:

Vinod Kumar
Group President

New Stream of Revenues have become a focus for operators. With a constant reduction in the conventional
streams of revenues like voice, SMS and fixed data, alternate streams like mobile payment, location based advanced

services; smart grid, eHealth etc. are considered critical to compensate for loss of traditional revenue.

Improving Customer Experience has been at the top of all operators’ agenda for some time. But it is never
got the investment that it has deserved so far. Massive competitions from existing players and emergence of new players

have made retaining existing customers and increasing the revenue from them very critical.

Increasing Efficiency and reducing operational cost have brought about some stability to the
operators during these tough market conditions. Further progress can come only by transformation thereby reducing the

number or legacy systems and removing complexities from existing processes. Network, systems and processes, product

portfolios and business models are being transformed to address the new reality forced upon by the users in the digitally

connected world.

These present several challenges and plenty of opportunities to everyone connected with the telecom world. Despite

having good answers for tactical needs, it is difficult to predict the disruptive forces of digitization that lie ahead of us.

iPhone and then iPad have completely changed the telecom landscape in such a short time frame. The industry is changing

so fast that every 18 to 25 months one needs to adapt or die. So how is Subex prepared to face these challenges?

Subex have been providing solutions that empowers telecom operators to achieve competitive advantage through

Business Optimisation and thereby enabling them to improve their operational efficiency to deliver enhanced service

experiences to subscribers. We have positioned the company to capitalize on some of the biggest external themes of the

day, such as analytics and managed services. Internally, we treat growth as a process by focusing on innovation, customer

needs and best practice service delivery. We are executing three growth imperatives.

www.subex.com

Analytics
Operators are sitting on a gold mine of data regarding their customers, but have not figured out how to make the best use

of it. This frontier needs to be traversed if they have to face and beat the competition. Learning from other verticals like

retail and financial services, analytics could be an answer. Subex’s innovation in this area with our award-winning ROCware

analytics platform is adding phenomenal capabilities to operators. ROCware harnesses the wealth of operational data,

transforms it into actionable information, and then lets business act on it - all in near-real-time. It is being used to solve

business problems as diverse as customer experience management, product performance management, and capacity

management, call center cost reduction and churn reduction. Our continued investment in this area is bearing fruits and

will continue to bring out more solutions that solve big customer problems.

Managed Services
Simplifying operations, reducing cost and shortening time to market for new services have become a rapidly growing need

for telecom operators. Past experiences have taught operators that simply buying and installing technology does not

deliver results. To achieve desirable outcome, it needs to be carefully directed and delivered in conjunction with

coordinated changes to policy, process and organization. It is not that easy for operators to achieve it when there is

pressure on them to reduce budgets and increase cost efficiency. During the past two years, we have evolved our Managed

Services practice and have had several engagements. These have unlocked substantial value for our customers from our

software solutions. We are building on the initial successes and will continue to grow rapidly in this area.

Grow the core and expand
Investing and winning in adjacent segments is a core competency of Subex. We have continuously looked at areas around

our core and came up with solutions such as Revenue Assurance, Credit Management and Cost Management that went on

to become market leading solutions. With constant improvement in user experience and embedding more analytics, our

new versions have taken significant leap and immensely helped customers to improve productivity. This has helped us to

increase win rates and improve market share. Further, we simplified the portfolio by disinvesting our activation business

and launched new solutions packages to address adjacent areas like Mobile Money and Content Partner Management.

These have served us well and we will continue to focus on our core solutions areas.

There are certain values at Subex that never change: fairness, commitment and innovation. Beyond this as the world

change, Subex must evolve as well. The last couple of years have been extremely tough for us. Our team rolled up their

sleeves, competed hard, increased productivity and we emerged as a much stronger organization. It takes deep domain

knowledge to deliver results and this has been an undisputed strength at Subex. We have invested more than ever to train

our team around domain competency. We are doing more planning and our teams are encouraged to take disciplined risks.

Today we must execute in the face of change. Our markets are less predictable, but our teams must still be accountable and

outperform the competition. It’s all about constantly re-evaluating the position in the market and industry value chain and

making suitable changes to the plan. Thus while plans continue to evolve, being prepared will be essential for addressing

these challenges and getting the most out of the opportunities that arise. We, at Subex, are definitely prepared and Subex’s

best days are ahead.

www.subex.com

Fostering the Future
The ‘Subex’ Way!

Laying a strong foundation is building the base for a secure future; a bedrock that will
Laying a strong foundation is building the base for a secure future; a bedrock that will

stand the test of time. A foundation that will not just make you aware of the subtleties but
stand the test of time. A foundation that will not just make you aware of the subtleties but

also strengthen your core values and beliefs in the system. A future for the better!
also strengthen your core values and beliefs in the system. A future for the better!

Sekharan Y Menon
President - APAC

The last financial year will no longer be known for the hardships and troubled times we went

through but will stand testimony as the year we completed our rise of phoenix proportions;

the year we bid goodbye to our challenges and paved the way for a stronger future - A future

that holds promise and immense potential.

Laying the foundation for the future
What creates a strong organization? Is it the value system that is imbibed as a key part of our cultural ethos; the people that

drives this organization so passionately or is it our core principles that align ourselves to that common objective? The

answer is all of the above and much more.

The founders and early members of Subex family built the foundation of the organization with values of fairness,

commitment and innovation; ethos that continue to resonate across the global walls of this organization. Alignment and

always keeping in mind the big picture, they walked the talk to ensure these pristine principles were safeguarded. Today,

we call it the ‘Subex’ way.

Business-house or Organization?
Companies across the world have grappled with this argument for ages immemorial. What is the primary objective of a

business organization? I strongly believe that the fundamental objective of a business house is to make money, putting it

crudely. To refine the thought, it is about value creation; for employees and other stakeholders. The key here is the approach

adopted that defines the essence and basic difference between a business-house and an organization. While a

business-house might just strive towards achieving the end objective, an organization such as Subex lays equal focus on

the way it is achieved. And that focus is what we know as the ‘Subex’way.

A part-OWNER’s Organization
Today, organizations globally understand the key role played by employees in their growth story. Some organizations even

go to the extent of stating that employees come first even before their customers, when most of the organization follow

the traditional belief of “customer first” approach. We at Subex have achieved that rare distinction of making certain that

our employee-first approach pays rich dividends in ensuring that our customer needs never take a backseat. Employees
our employee-first approach pays rich dividends in ensuring that our customer needs never take a backseat. Employees

(Subexians) have been and will always be part-OWNERs of this company. This is
(Subexians) have been and will always be part-OWNERs of this company. This is the ‘Subex’ way.

www.subex.com

In tune with customers
Being customer-oriented is not just about making first impressions or about ensuring smooth delivery and deployment. It

is also about exhibiting this behavior consistently. It is about building trust and credibility every single day of our

engagement with them. And that is what has made us long-distance runners; every time, all the time. This has always been

known as the ‘Subex’way.

My own journey with Subex
I have been part of this company for 16 years. In today’s world, people would have moved eight jobs or more. I have been

in this organization because of the way we built this company with these strong pillars of foundation that I have outlined

above. It is relatively easier to manage a company when the going is easy. It is obviously difficult to manage the same

company when the chips are seemingly down. But Subex has successfully bent down to pick those chips up and roll in the

dice for a better and stronger future. This will go down in history books as the ‘Subex’ way.

The worst is behind us. The future holds promise and potential of a brighter day. It is heartening to see this kind of sense of

belonging and camaraderie among Subexians, our part-OWNERs. Subexians have shown passion to create the best

through their unwavering belief in this value-system, shown unending support to the organization’s growth. We will work

and strive harder to go all out and claim what is rightfully ours – THE FUTURE!

www.subex.com

The 4 C’s of Subex’s
Strong Foundation

Lord knows, when it comes to strong foundations, we have endless reference points that range

across history from biblical parables to modern earthquakes, all littered with tales of disasters of

cataclysmic and nuclear proportions. So let me begin by accepting, without question, the need

for nurturing strong foundations onto which we want to build anything of value that will

endure. This is important to us at Subex.

Paul Skillen
President - EMEA

´tis always a temptation when discussing strong foundations to embrace the hackneyed clichés and draw the obvious

parallels with constructing buildings, which, while helpful, do not give the builders of a modern global organization

sufficient answers. Among the key elements that we must master in order to nurture the strong foundations on which

Subex will endure are Culture, Change, Commerce and Creativity. Each element expecting constant tending and testing to

ensure we will survive, nay, thrive on anything we encounter.

A colorful collection of “C” words. What does that mean to us at Subex?
Culture. We believe in and strive to ensure our culture is the product of core values and ethics that we can be proud of. A

culture that is strong enough to bind our team, which is drawn from every continent and all major ethnic and religious

backgrounds. In practical terms, we all share a belief in the value of hard work, the value of treating others with respect and

the value of integrity in everything we do. It is when things go wrong, which is the nature of life, that this culture provides

a compass that allows us to navigate all challenges, be they internal or external to Subex.

Commerce. Everyday the vanguard of Subex find ourselves signing business everywhere from the BRICs to the PIGs

navigating everything from political revolution to economic boom and bust. Our flexibility and durability has enabled us

to secure good contracts with great Customers and turn a profit in every environment.

Creativity. Building on our success is a great thing but not nearly enough. Times are changing. Our choice is simple, by

how much do we want to be driving that change. I am delighted to report that we continue to reinvent ourselves, our

business and how we engage with our customers. We have been market leaders in Business Optimisation for the past five

years. But that is not enough, Subex is setting the standards and leading the industry in the innovative areas of the ROC®,

Data Integrity Management and Capacity Management. Creativity does not stop with product innovation at Subex. Our

creativity overflows into how we deliver our services making significant progress in efficiency and customer satisfaction.

Change. “If ever you want to make your God laugh just tell him your plans.” Paradoxically, the one thing that I can predict

with confidence in my life is that predictions are unreliable. The good news is that, the teams at Subex have demonstrated,

time and again, the strength, experience, knowledge and confidence to meet change head-on and turn it into an

opportunity. This does not mean that we do not plan, quite the contrary, we take great care in reading our environment

and in plotting a course, setting and achieving financial goals along the way. We never ever give up. We get up and fight.

In summary, Culture, Change, Commerce and Creativity are key elements that we nurture at Subex which gives us the

strong foundations that will continue to ensure our success as a great business.

www.subex.com

stars

Above & Beyond
Subexian Name

Function

Long Service Award
Function

Yrs Subexian Name

Tarique Saleem

Arindam Sen

Girish D Desai

GirisAjeet S Patil

Sanjay Murlidhar Dharmani

Suresh Gnanasekar

Vishal Arhatia

Promit Sanyal

Vinay Vishal

Srikanth Kallakuri

Fong Thao

Prashanth M

Sandeep Naganur

Ankur Singh

Rakesh M S

Engineering(P)

Marketing(P)

Engineering(P)

PSO(P)

PSaO(P)

Engineering(P)

Paras Prakashchandra Dattani

Engineering(P)

George P T

Neville Collins

Will Richards

Ian Thornton

Jeeson Thekkekara

George Ellis

Ed Broom

Guy Ryder

Arun R

Santosh V

Sankara Rao Ballari

Megha Nidhi Dahal

Ramesh S

Engineering(P)

PSO(P)

Engineering(P)

PSO(P)

Engineering(P)

10 Yrs Ajmal Yusuf

10 Yrs George Desilva

10 Yrs Lihui Wang

10 Yrs Troy Rowe

PSO(P)

Engineering(P)

10 Yrs Salvatore Torrente

Product Management(P)

10 Yrs Tom Melluish

10 Yrs Hari Kumar V

10 Yrs Prasad Savadi

10 Yrs Wendy Hayden

15 Yrs Sekharan Y Menon

15 Yrs Luka Jankovic

PSO(P)

Engineering(P)

Sales(P)

Corporate(P)

Engineering(P)

15 Yrs Prema Menon

Facilities & Administration

15 Yrs Srikanth Nayak

Finance(P)

25 Yrs Pat Brown

25 Yrs Steve Astell

25 Yrs Noel Martin

25 Yrs

Jean Budz

25 Yrs Steve Turner

Engineering(P)

www.subex.com

Subex
Charitable Trust

Christmas celebration at Swanthanam
SCT had organised Christmas event "Become Santa for special children" where Subexians played carols and distributed

gifts for the inmates of this orphanange. Swanthanam is an orphanage for mentally challenged girls.

SCT Mentorship program
SCT had organized mentoring seminar on the subjects - Communication Skills, Personality Development & Career Path. The

Subexian Name Function
Subexian Name Function

participants were beneficiaries of Nurture Merit program. The experience program was extremely beneficial to the students

who were eager to know more on various career aspects.

Magic Bus Visit
Subexians paid a visit to the Magic Bus program conducted in slums. Magic bus is a non-profit organization which conducts

life skills development program through sports-based curriculum. Sports activities and games are structured into each

session to make them fun and appealing to the children. Sessions are designed to represent real-life situations and

challenges so children are able to relate these back to their daily lives.

Clothes collection
SCT collected clothes, books & toys from fellow Subexians. The proceedings were donated to Prerana and Goonj.

Sale of items on occasion of Diwali
SCT with the support of Prerana had organized a Diwali Mela. The amount collected from the sale was shared with Prerana

to meet their day to day needs.

Nurture Merit Program
This is an annual program run by SCT. We provided educational support to 60 students through the Nurture Merit Program

www.subex.com

Since you get more joy out of giving joy to others, you should put a
good deal of thought into the happiness that you are able to give.
Eleanor Roosevelt

www.subex.com

Board Of Directors

Subash Menon
Founder, Managing Director & CEO

Sudeesh Yezhuvath
Chief Operating Officer & Wholetime Director

Anil Singhvi
Independent Director

Sanjeev Aga
Independent Director

Surjeet Singh
Nominee Director

Karthikeyan Muthuswamy
Nominee Director

www.subex.com

Management Team

Subash Menon
Founder, Managing Director & CEO

Sudeesh Yezhuvath
Chief Operating Officer & Wholetime Director

Vinod Kumar
Group President

Anuradha
Senior Vice President - Engineering

Ramanathan J
Vice President - Finance

David Halvorson
General Counsel

Sekharan Y Menon
President - APAC

Paul Skillen
President - EMEA

Greg Leneveu
President - Americas

www.subex.com

This page is intentionally left blank

www.subex.com

general review &

accountability

www.subex.com

17 17

DIRECTORS’ REPORT TO THE MEMBERS OF SUBEX LIMITED

Your Directors have pleasure in presenting the 18th Annual
Report of the Company on the business and operations
together with the audited results for the year ended March
31, 2012.

FINANCIAL RESULTS

Amount in (cid:2) Million

Consolidated

Standalone

2011-12 2010-11 2011-12 2010-11

Total Revenue

4,778.26 4,827.50 3,290.11

4,827.50 3,290.11 3,135.53

Profit/(Loss) Before
Interest, Depreciation, Tax,
Amortization & Exceptional
Items

Interest, Depreciation &
Amortization

Profit/(Loss) Before
Exceptional Items & Tax

1,406.33 1,379.77
1,379.77

970.02
970.02 1,186.77

506.48

530.71

440.41

467.38

899.95

849.06

529.61

719.39

Exceptional Items

(547.94)

(17.21)

(509.24)

6.19

Profit/(Loss) Before Tax

351.91

831.85

Provision for Taxes

Profit/(Loss) After Tax

APPROPRIATIONS

Interim Dividend

Preference Dividend

Dividend Proposed on
Equity Shares

Provision for Tax on Dividends

Transfer to General Reserve

Surplus/(Deficit) Carried to
Balance Sheet

33.50

44.06

318.41

787.79

20.37

(3.60)

23.97

725.58

10.49

715.09

318.41

787.79

23.97

715.09

RESULTS OF OPERATIONS

During the financial year ended March 31, 2012, the total
revenue on a consolidated basis was (cid:2) 4,778.26 million.
The Company has made a profit of (cid:2) 318.41 million for the
financial year 2011-12 as against profit of (cid:2) 787.79 million in
the previous year.

On standalone basis, the total revenue stood at (cid:2) 3,290.11
million. The net profit for the financial year 2011-12 was
(cid:2) 23.97 million.

The Directors have not proposed any dividend to be paid for
the financial year 2011-12.

BUSINESS

Your Company is a leading global provider of Business Support
Systems (BSS) that empowers Communications Service
Providers (CSPs) to achieve competitive advantage through
Business Optimization, thereby enabling them to improve
their operational efficiency to deliver enhanced service
experiences to subscribers. The Company pioneered the

www.subex.com

concept of 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 it has best-in-class solutions
such as revenue assurance, fraud management, credit
risk management, cost management, route optimization,
data
interconnect/inter-party
settlement.

integrity management and

The Company has been declared global leader in Business
Optimization for CSPs for five years in a row by analyst
firm Analysys Mason. Business Optimization improve the
revenues and profits of the CSPs through identification and
elimination of leakages in their revenue chain and includes
fraud, revenue assurance, analytics, cost management and
credit risk management. 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, UK, UAE, India, Singapore
and Australia.

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. The
Company’s pioneering platform, the Revenue Operations
Centre
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, Subex offers Managed
Services around its products which enable the operators to
take advantage of our deep domain expertise to improve
their operational efficiency.

together business

(ROC®) brings

CHANGES IN SHARE CAPITAL

As at March 31, 2012, the authorised share capital of the
Company was (cid:2) 247,00,00,000 (Rupees Two Hundred and
Forty Seven Crores only) divided into 24,50,40,000 (Twenty
Four Crores Fifty Lakhs and Forty Thousand only) equity shares
of (cid:2) 10 (Rupees Ten only) each and 2,00,000 (Two Lakhs only)
preference shares of (cid:2) 98 (Rupees Ninety Eight only) each.

At the Extraordinary General Meeting held on June 28, 2012,
the authorised share capital of the Company was increased
to (cid:2) 497,00,00,000 (Rupees Four Hundred and Ninety Seven
Crores only) divided into 49,50,40,000 (Forty Nine Crores Fifty
Lakhs and Forty Thousand only) equity shares of (cid:2) 10 (Rupees
Ten only) each and 2,00,000 (Two Lakhs only) preference
shares of (cid:2) 98 (Rupees Ninety Eight only) each.

During the year ended March 31, 2012, your Company allotted
747 equity shares consequent to exercise of stock options
under the ESOP 2005 scheme. As at March 31, 2012, the paid-

up share capital of the Company stood at (cid:2) 69,31,07,720/-
consisting of 6,93,10,772 equity shares of (cid:2) 10/- each.

On July 17, 2012, the Company allotted 8,93,35,462 equity
shares pursuant to mandatory conversion of a principal
amount of US$ 36.321 million out of the Company’s
US$ 127.721 million 5.70% Secured Convertible Bonds.
As at the date of this report, the paid-up equity share
capital of the Company stood at (cid:2) 1,58,64,62,340/- consisting
of 15,86,46,234 equity shares of (cid:2) 10/- each.

SUBSIDIARIES

SUBEX TECHNOLOGIES LIMITED

For the year ended March 31, 2012, Subex Technologies
income of (cid:2) 483.34 million, on a
Limited earned an
consolidated basis, as against (cid:2) 646.31 million last year and
a net profit of (cid:2) 4.93 million as against a net profit of (cid:2) 7.50
million last year.

Pursuant to the demerger in 2007-08, Subex Technologies Inc
became a direct subsidiary of Subex Technologies Limited.

SUBEX (UK) LIMITED

For the year ended March 31, 2012, the consolidated income
of Subex (UK) Limited was (cid:2) 3,809.53 million as against
(cid:2) 3,217.74 million last year, and the net profit was (cid:2) 335.71
million as against a net profit is (cid:2) 115.99 million last year.

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

SUBEX AMERICAS INC.

For the year ended March 31, 2012, the consolidated income
of Subex Americas Inc was (cid:2) 911.90 million as against
(cid:2) 1,205.44 million last year, and net loss was (cid:2) 46.20 million as
against (cid:2) 50.80 million last year.

service

fulfilment

In September 2011, the Company sold its activation business
comprising
to Netcracker
Technology Corporation, a company operating in the US.
The decision to sell the activation business was an outcome
of a change in the Company’s strategy to focus on its core
products, i.e. ROC and Managed Services.

solution

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 May 23, 2012,
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 37 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, 2012, the Company had outstanding FCCBs
aggregating to US$ 39 million under its US$ 180,000,000
2% Convertible Unsecured Bonds (“FCCBs I”) and US$ 54.80
million under its US$ 98,700,000 5% Convertible Unsecured
Bonds (“FCCBs II”). Both the FCCBs were originally due for
redemption on March 9, 2012. In order to have adequate time
to complete the restructuring activity, the Company had,
pursuant to the approval of the Reserve Bank of India (RBI),
extended the maturity period to July 9, 2012.

In July 2012, pursuant to the exchange of US$ 38 million
out of FCCBs I and US$ 53.40 million out of FCCBs II under a
cashless exchange offer, the Company issued US$127,721,000
5.70% Secured Convertible Bonds (“FCCBs III”) with a maturity
period due July 2017 with a conversion price of (cid:2) 22.79 per
equity share. As a part of the terms and conditions of FCCBs III,
principal amount of US$ 36.321 million out of FCCBs III were
mandatorily converted into equity shares at the aforesaid
conversion price. Pursuant to the mandatory conversion,
US$ 91.40 million is currently outstanding under FCCBs III.
Also, the maturity period of the un-exchanged FCCBs I worth
US$ 1 million and the un-exchanged FCCBs II worth US$ 1.40
million now stands extended to March 2017.

EMPLOYEE STOCK OPTIONS SCHEMES

Your Company has introduced various Stock Option plans
for its employees. Details of these, including grants to 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

www.subex.com

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.

During the year 2011-2012, the employees voluntarily
surrendered 964,969 stock options under ESOP 2005 scheme.
Also, the Company issued equivalent stock options to the
aforesaid eligible employees under ESOP 2005 scheme.

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.

During the year 2011-2012, the employees voluntarily
surrendered 241,012 stock options under ESOP 2000 scheme.
Also, the Company issued equivalent stock options to the
aforesaid eligible employees under ESOP 2005 and ESOP 2008
scheme.

The tenure for grant of stock options under ESOP 2000
scheme has expired and the Company is only administering
the outstanding stock options issued under the scheme.

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 (cid:2) 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
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.

www.subex.com

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. 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 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.

During the year 2011-2012, the employees voluntarily
surrendered 1,019,583 stock options under ESOP 2008
scheme. Also, the Company issued equivalent stock options
to the aforesaid eligible employees under ESOP 2008 scheme.

Additional information as at March 31, 2012 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.

CORPORATE GOVERNANCE

Your Company strongly believes that the spirit of Corporate
form. Sound
Governance goes beyond the statutory
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.

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.
Sudeesh Yezhuvath retires by rotation and being eligible, has
offered to be re-appointed at the ensuing Annual General
Meeting.

The present tenure of Mr. Subash Menon, Founder, Managing
Director & CEO will expire on September 30, 2012. The Board of
Directors has at its meeting held on August 9, 2012 approved
the proposal for re-appointment of Mr. Subash Menon as
Managing Director & CEO for the period from October 1, 2012
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 July
6, 2012, appointed Mr. Surjeet Singh and Mr. Karthikeyan
Muthuswamy as Additional Directors of the Company to hold
office until the next Annual General Meeting of the Company.
Separate notices under Section 257 of the Companies Act,
1956 have been received from Members signifying their
intention to propose Mr. Surjeet Singh and Mr. Karthikeyan
Muthuswamy as candidates for the office of Director and
accordingly resolutions for their appointment are being
placed before the Members at the ensuing Annual General
Meeting.

AUDIT COMMITTEE

On May 18, 2012, the Board of Directors approved the
resignation of Mr. V Balaji Bhat consequent to which he
vacated the office as the Chairman and member of the Audit
committee. With immediate effect, Mr. Anil Singhvi was
appointed as the Chairman of the Committee and Mr. Subash
Menon was appointed as a member of the Committee. At the
Board Meeting held on August 9, 2012, Mr. Subash Menon
stepped down as a member of the Audit Committee and
Mr. Surjeet Singh was inducted as a member of the Audit
Committee. The Audit Committee presently has 3 Directors
as its members viz. Mr. Anil Singhvi, Mr. Sanjeev Aga and
Mr. Surjeet Singh. The role, terms of reference, the authority
and power of the 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 eligible 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, 2012.
With regard to point 7(a) of the annexure to the standalone
auditor’s report, the management has taken note of the
same and will put in place adequate measures to monitor
the same.

FIXED DEPOSITS

Your Company has not accepted any deposits from the public.

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 Company Secretary &
Compliance Officer at
the
Company.

the Registered Office of

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

A. CONSERVATION OF ENERGY

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.

B. TECHNOLOGY ABSORPTION, ADOPTION AND

INNOVATION

Your Company has a strong R&D Division responsible for
developing technologies for its products in the telecom

www.subex.com

innovations. The

domain. The Company holds several patents for its
technological
telecommunications
domain, in which your Company operates, is subject
to 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. During the year 2011-12 total foreign
exchange inflow and outflow is as follows:

i) Foreign Exchange earnings (cid:2) 2,972.07 million (Previous

Year (cid:2) 2,893.49 million)

ii) Foreign Exchange outgo is as below (cid:2) 1,666.05 million

(Previous Year (cid:2) 1,384.46 million)

CORPORATE
CHARITABLE TRUST

SOCIAL

RESPONSIBILITY

SUBEX

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.

HUMAN RESOURCE MANAGEMENT

The Human Resource function is committed to make real
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, 2012, 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 focused
on further developing its own online Learning Management
System called the Subex Academy that was launched last
year. This automated platform added signiﬁcant value to
training
identiﬁcation, design, delivery and evaluation.
Communication within the Company was stepped up.
Attraction, alignment, motivation and learning were the other
critical focus areas.

www.subex.com

DIRECTORS’ RESPONSIBILITY STATEMENT

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, 2012, 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, 2012 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, 2012 have

been prepared on a going concern basis.

APPRECIATION / ACKNOWLEDGEMENTS

We thank our clients, vendors, investors and bankers for
the year. We place
their continued support during
on record our appreciation for the co-operation and
assistance provided by the Central and State Government
authorities particularly 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.

For Subex Limited

Sudeesh Yezhuvath
Chief Operating Officer &
Wholetime Director

Subash Menon
Founder,
Managing Director & CEO

Place : Bangalore
Date : August 9, 2012

ANNEXURE I
Additional Information as at March 31, 2012 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, 2012

Options granted during the year

Pricing formula

249,725

1,368,525

1,461,441

1,019,289

1,019,583

As mentioned earlier
in the report

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

9,397

2012

4. Options exercised as on March 31, 2012

237,703

Options exercised during the year

5. Money realized by exercise of options during the

year

The total number of shares arising as a result of
exercise of options during the year ended March 31,
2012

98,823

12,439

747

30,154

747

9,191

7. Options lapsed/cancelled/ surrendered as on March

986,847

4,346,293

1,314,248

31, 2012

Options lapsed/cancelled/ surrendered during the
year

Variation of terms of options

9. No. of employees covered

10. Employee wise details of options granted during

the year under review to:

(i) Senior managerial personnel

Mr. Vinod Kumar P

Ms. Anuradha

Mr. Ramanathan J

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. Paul Skillen

Mr. Greg Leneveu

(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

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’

266,237

1,728,690

1,187,913

None

623

None

2088

39,895

32,306

12,000

6,000

54,400

70,500

None

273

1,00,000

75,000

65,000

4,000

92,000

132,000

(cid:2) 0.35

www.subex.com

Sl.
No.

Particulars

ESOP 2000

ESOP 2005

ESOP 2008

12. Where the Company has calculated the employee
compensation 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 recognized
if it had used the fair value of the options.

Profits would have been lower by (cid:2) 36.03 million

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

Basic EPS would have been lower by 0.52. There is no impact on the
Diluted EPS.

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.

Weighted-average
exercise price is

(cid:2) 85.22

Weighted-average
exercise price is (cid:2)
39.30

Weighted-average
exercise price is (cid:2)
28.95

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

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

33.73%

(cid:2) 43.30

For Subex Limited

Place : Bangalore
Date

: August 9, 2012

Sudeesh Yezhuvath
Chief Operating Officer &
Wholetime Director

Subash Menon
Founder,
Managing Director & CEO

www.subex.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.

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

the Company is run internally.

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

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 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 6 Directors out of which 2 are Executive
Directors, 2 are Independent Directors and 2 are Nominee
Directors.

As a part of the Company’s recently concluded FCCBs
restructuring and in order to ensure compliance of listing
agreement, Mr. Subash Menon has resigned from the position
of Chairman of the Board of the Company with effect from July
6, 2012. He continues to hold the position of the Managing
Director & CEO of the Company.

Mr. Surjeet Singh and Mr. Karthikeyan Muthuswamy,
nominees of the holders of the Company’s US$ 127,721,000
5.70% secured convertible bonds, were appointed as
additional directors on July 6, 2012.

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, 2012 and as such do
not include details of additional directors appointed after the
end of the financial year.

A. Composition and Category of Directors as on March 31,
2012

Category

Independent Directors
Promoter and Executive Directors
Other Executive Directors
Total

No. of
Directors
3
1
1
5

60
20
20
100

B. Attendance of Directors at the Board Meetings and the Last AGM and Details About Directorships and Membership in
Committees as on March 31, 2012

Director

Position

No. of
Board
Meetings
Held

No. of
Board
Meetings
Attended

Last AGM
Attendance

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

Mr. Subash Menon

Mr. Sudeesh Yezhuvath

Founder, Chairman
Managing Director & CEO

Chief Operating Officer &
Wholetime Director

Mr. V Balaji Bhat^

Independent Director

Mr. Vinod R Sethi*

Independent Director

Mr. Andrew Garman#

Independent Director

Mr. Harry Berry#

Independent Director

Mr. Anil Singhvi

Independent Director

Mr. Sanjeev Aga

Independent Director

Yes

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

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

www.subex.com

(cid:2) Excluding private

limited companies & overseas

companies.

of this report, Mr. Subash Menon holds 2,580,601 equity
shares of the Company.

(cid:2) Includes only Audit Committee and Shareholder’s
Grievance Committee. Memberships in Committees of
Subex Limited are included.

^ Mr. V Balaji Bhat resigned as a Director of the Company

with effect from May 18, 2012

* Mr. Vinod R Sethi resigned as a Director of the Company

with effect from October 31, 2011.

# Mr. Andrew Garman and Mr. Harry Berry resigned as
Directors of the Company with effect from January 31,
2012.

C. Number and Dates of Board Meetings

7 (Seven) Board Meetings were held during the financial
year 2011-12. The dates on which meetings were held are as
follows:

April 27, 2011
July 27, 2011
October 31, 2011
November 25, 2011
December 20, 2011
January 31, 2012
February 6, 2012

D. Brief Details of Directors Seeking Appointment/
Re-appointment

Mr. Subash Menon

Mr. Subash Menon founded the Company in 1992 and has
been its Chief Executive Officer since inception. Under his
stewardship, Subex has transformed from a systems integrator
in the telecom hardware space to a major player in the
telecom software space with a focus in revenue maximisation.
Mr. Subash Menon has charted the Company’s growth to
a global thought leader in the telecom software space with
the successful launch of several products and with over 180
customers across more than 70 countries across 6 continents.
Mr. Subash Menon has also guided the Company through a
successful initial public offering in 1999 and through seven
acquisitions. Leading the internationalisation of the Company,
Mr. Subash Menon has played a key role in establishing offices
in the US, Canada, UK, Dubai, India, Singapore and Australia.
Mr. Subash Menon has over 22 years of experience in the
areas of general management, sales and marketing. He has
presented numerous papers on technology and business in
various countries. Mr. Subash Menon has resigned from the
position of Chairman of the Board of the Company with effect
from July 6, 2012 and continues to be the Managing Director
and CEO.

Mr. Subash Menon has led the Nasscom Product Forum (part
of Nasscom, the premier software association in India) as
its Chairman. Mr. Subash Menon is a graduate in Electrical
Engineering from the National Institute of Technology,
Durgapur.

Mr. Subash Menon is the brother of Mr. Sudeesh Yezhuvath,
Chief Operating Officer & Wholetime Director. As on the date

www.subex.com

Mr. Sudeesh Yezhuvath

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 brother of Mr. Subash Menon,
Founder, Managing Director & CEO. As on the date of this
report, he holds 372,243 equity shares of the Company.

Mr. Surjeet Singh

record of building organizations and

Mr. Surjeet Singh is a seasoned management professional
leader with over two decades of multi-
and business
industry global experience in leading Finance, Corporate
Development, Business Planning and Global operations
functions. He has a successful corporate and entrepreneurial
fostering
track
collaboration in large and culturally diverse cross functional
teams. He was till recently the Global Chief Financial Officer of
Patni Computer Systems where he played key role in shaping
business transformation including significant improvements
in operating metrics and processes, structuring large platform
deals with fortune 500 customers, seamless management
transitions, upholding highest standards of financial and
corporate governance. He was
in helping
realize maximum shareholder value with successful exit
of majority shareholders at Patni. Prior to this, Mr. Surjeet
Singh was part of founding team of Cymbal Corporation, a
mid-sized telecom BSS systems integration boutique out
of silicon valley which was acquired by Patni in 2004 for
$68M, which at the time was one of the largest cross border
services transaction by an Indian company. In early part of his
career, Mr. Surjeet Singh held various finance and operations
roles at Ranbaxy - a global multinational pharmaceutical
company during its internationalization phase in the 90’s.
Mr. Surjeet Singh is a fellow of the Institute of Costs and Works
Accountants, India, Certified Public Accountant from AICPA,
USA. He holds a B.S. in Finance from the University of Pune
and is a graduate of Advanced Management Program from
Harvard Business School.

instrumental

As on the date of this report, Mr. Surjeet Singh does not hold
any equity shares of the Company.

Mr. Karthikeyan Muthuswamy

Mr. Karthikeyan Muthuswamy is the Managing Director
of Trident Advisors Private Limited, a Mumbai based
to Trident Advisors,
investment advisory firm. Prior

Mr. Karthikeyan Muthuswamy has worked as a fund manager
with M3 Investments and Director with Jeetay Investments,
both of which are Mumbai based investment management
firms. Mr. Karthikeyan Muthuswamy is a BBA from the
University of Madras and a Chartered Financial Analyst.

As on the date of this report, Mr. Karthikeyan Muthuswamy
does not hold any equity shares of the Company.

III. AUDIT COMMITTEE

A. Terms of Reference

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

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

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

(cid:2) Review of annual financial statements before submission

to the Board;

(cid:2) Review of adequacy of internal control systems;

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

C. Meetings and Attendance During the Year

During the financial year 2011-12, four Audit Committee
meetings were held on April 27, 2011, July 27, 2011, October
31, 2011, and January 31, 2012. The audited financial results
for the financial year ended March 31, 2012 were taken on
record at the meeting held on May 22, 2012. The quarterly
results for the quarters April-June 2011, July-September 2011
and October-December 2011 were taken on record on July 27,
2011, October 31, 2011, and January 31, 2012 respectively.

the Audit
D. Attendance of Committee Members at
Committee Meetings Held During the Financial Year 2011-12

Member

Mr. V Balaji Bhat
Mr. Vinod R Sethi*
Mr. Andrew Garman#
Mr. Harry Berry#
Mr. Subash Menon
Mr. Anil Singhvi@
Mr. Sanjeev Aga+

No. of Audit
Committee
Meetings Held
4
3
4
4
1
3
2

No. of Audit
Committee Meetings
Attended
3
2
1
-
1
2
2

* Mr. Vinod R Sethi resigned as Director of the Company

with effect from October 31, 2011.

# Mr. Andrew Garman and Mr. Harry Berry resigned as
Directors of the Company with effect from January 31,
2012.

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

@ Mr. Anil Singhvi was appointed as a member of Audit

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 at March 31, 2012

Composition

Category

Mr. V Balaji Bhat, Chairman
Mr. Anil Singhvi
Mr. Sanjeev Aga

Independent Director
Independent Director
Independent Director

Mr. V Balaji Bhat, Independent Director resigned as Director of
the Company with effect from May 18, 2012 and vacated the
office as the Chairman and member of the Audit committee.
Pursuant to the aforesaid resignation, Mr. Anil Singhvi was
appointed as the Chairman of the Audit Committee and
Mr. Subash Menon was appointed as a member of the
Committee. At the Board Meeting held on August 9, 2012,
Mr. Subash Menon stepped down as member of the
Committee and Mr. Surjeet Singh was inducted as a member
of the Audit Committee.

Mr. Vinay M A, Company Secretary & Compliance Officer is the
Secretary of the Audit Committee with effect from August 9,
2012.

Committee on April 27, 2011.

+ Mr. Sanjeev Aga was appointed as a member of Audit

Committee on October 31, 2011.

IV. REMUNERATION COMMITTEE

A. Composition of the Committee

Composition

Category

Mr. Anil Singhvi, Chairman
Mr. V Balaji Bhat
Mr. Sanjeev Aga

Independent Director
Independent Director
Independent Director

Mr. V Balaji Bhat, Independent Director resigned as Director
of the Company with effect from May 18, 2012 and vacated
the office as the member of the Remuneration committee. At
the Board Meeting held on August 9, 2012, Mr. Surjeet Singh
and Mr. Karthikeyan Muthuswamy were inducted as the
members of the Committee.

The Committee considers the performance of the Company as
well as general industry trends while fixing the remuneration
of Executive Directors. At its meeting held on August 9, 2012,
the Committee approved the re-appointment of Mr. Subash
Menon as the Managing Director & CEO for a period of 5 years
from October 1, 2012 to September 30, 2017, based on the
terms and conditions including remuneration which are being
placed before the Members for their approval at the ensuing
Annual General Meeting.

www.subex.com

Amount in (cid:2) Million
Commission
-

Total
21.65

Salary
21.65

Director in a financial year and in the aggregate, as may be
decided by the Board of Directors (including a committee
thereof). The issuance of stock options is subject to the terms
of the stock option schemes of the Company.

V. SHARE TRANSFER COMMITTEE

19.74

A. Composition of the Committee

B. Details of Remuneration of Directors

Name
Mr. Subash
Menon

Mr. Sudeesh
Yezhuvath

Mr. Anil
Singhvi
Mr. Sanjeev
Aga

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

2.5

During the financial year under review, 50,000 stock options
were granted to Mr. Sanjeev Aga, Independent Director.

C. Details of Shareholding of Non- Executive Directors

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

Name

Mr. V Balaji Bhat
Mr. Anil Singhvi
Mr. Sanjeev Aga

No. of Shares Held
as at March 31, 2012
31,000
60,000
NIL

The Non-Executive Independent Directors are paid sitting
fees of (cid:2) 20,000 per meeting for attendance at the Audit
Committee Meetings and (cid:2) 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.
Mr. Subash Menon has to provide 6 months notice period
if he decides to terminate the contract. If the termination is
from the Company, the notice period shall also be 6 months.
Mr. Sudeesh Yezhuvath has to provide 3 months notice period
if he decides 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 a separation pay amount equal to 24
(twenty four) months of remuneration (being the sum of
salary and house rent allowance payable to him). In case of
severance from the Company, Mr. Sudeesh Yezhuvath is
eligible for a notice period amount equal to 24 (twenty four)
months of remuneration. 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

www.subex.com

Composition

y
Category

Mr. Sudeesh Yezhuvath, Chairman Chief Operating Officer &

Mr. Subash Menon

Wholetime Director

Founder, Managing
Director & CEO

At the Board Meeting held on August 9, 2012, Mr. Surjeet
Singh and Mr. Karthikeyan Muthuswamy were inducted as
the members of the Committee.

B. Meetings During the Year

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 2011-12:

Date of Approval

No. of
Transfer
Requests
Received

Shares
Pursuant to
the Deeds

Remateria-
lisation
Requests
Received

Equity
Shares
Involved

September 22, 2011

1200

With a view to expedite the transfer process in the interest of
investors, SEBI vide its Circular No. CIR/MIRSD/8/2012 dated
July 5, 2012 has reduced the time-line for registering the
transfer of shares to 15 days with effect from October 1, 2012.
In line with the aforesaid circular, the Company will ensure
that the share transfers are effected within 15 days 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. V Balaji Bhat resigned as Director of the Company with
effect from May 18, 2012 and vacated the office as the
Chairman and member of the Investor Grievance Committee.
At the Board Meeting held on May 23, 2012, Mr. Sanjeev
Aga, Independent Director was appointed as the Chairman
and member of the Investor Grievance Committee. At the
Board Meeting held on August 9, 2012, Mr. Surjeet Singh and

Mr. Karthikeyan Muthuswamy were inducted as the members
of the Committee.

The following special resolutions were passed at the AGM
held on July 27, 2011:

Mr. Vinay M A, is the Company Secretary & Compliance Officer
of the Company with effect from August 9, 2012.

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. Subash Menon

Mr. Sanjeev Aga

Independent Director
Founder Chairman,
Managing Director & CEO
Independent Director

Mr. V Balaji Bhat resigned as Director of the Company with
effect from May 18, 2012 and vacated the office as the
Chairman and member of the ESOP Committee. At the Board
Meeting held on May 23, 2012, Mr. Anil Singhvi, Independent
Director was appointed as a member of the committee and
Mr. Sanjeev Aga, Independent Director was appointed as the
Chairman of the ESOP Committee. At the Board Meeting held
on August 9, 2012, Mr. Subash Menon stepped down as a
member of the Committee and Mr. Karthikeyan Muthuswamy
was inducted as a member of the Committee.

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

Year

Date of AGM

Venue

Time

2008-09 July 29, 2009

Registered Office

3.00 P M

2009-10 September 13, 2010

Registered Office

3.00 P M

2010-11 July 27, 2011

Registered Office

12.00 Noon

B. Location and Time of the Last Three EGMs

Year

Date of EGM

Venue

Time

2009-10 March 4, 2010

Registered Office

3.00 P M

2010-11

February 9, 2011

Registered Office

3.00 P M

2010-11 December 28, 2011

Registered Office

11.30 A M

(cid:2) Re-appointment of Mr. Sudeesh Yezhuvath as the Chief
Operating Officer & Wholetime Director of the Company,
for the period from April 1, 2011 to hold office until
September 30, 2017

(cid:2) Payment of commission

the
provisions of Section 198, 349 and 350 of the Companies
Act, 1956, and
issuance of stock options to the
Non-Executive Directors of the Company

in accordance with

IX. DISCLOSURES

A. There are no significant related party transactions of the
Company of material nature, 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 30.ii to the standalone financial statements and
Note 29 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 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 Note 24 to
the accounts in Standalone financial statements and Note 23
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.

X. MEANS OF COMMUNICATION

A. Annual/Half Yearly and Quarterly Results

The annual/half yearly/quarterly audited/un-audited results
are generally published in all editions of Financial Express
(English) and Vijay Karnataka (Kannada). The complete

www.subex.com

financial statements are posted on the Company’s website
www.subex.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
legal validity under the
its
Information Technology Act, 2000. Being a Company with
strong focus on green initiatives, Subex has been sending all
shareholder communications such as the notice of General
Meetings, Audited Financial Statements, Directors’ Report,
Auditors’ Report, etc., 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@subex.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.

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

Presently the Company does not have a 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.

B. Remuneration Committee

C. Shareholders’ Rights

investors

The Company communicates with
regularly
through E-mails, telephone and face to face meetings 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 initiate electronic dissemination of financial results
to the members.

D. Audit Qualifications

The auditors have expressed an unqualified opinion on the
accounts for the year under review. The Company always
endeavours to have unqualified accounts. With regard to
point 7(a) of the annexure to the standalone auditor’s report,
the management has taken note of the same and will put in
place adequate measures to monitor the same.

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.

G. Whistle Blower Policy

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

Sudeesh Yezhuvath
Chief Operating Officer &
Wholetime Director

Subash Menon
Founder,
Managing Director & CEO

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

Place : Bangalore
Date : August 9, 2012

www.subex.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,
2012.

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 : August 9, 2012

For Subex Limited

Subash Menon
Founder,
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, 2012 as stipulated under
Clause 49 of the Listing Agreement of the said 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 : August 9, 2012

www.subex.com

MANAGEMENT DISCUSSION AND ANALYSIS

Overview

Subex Limited (“Subex” or “the Company”) has its Equity
Shares listed on the National Stock Exchange of India Limited
(NSE) and the BSE Limited (BSE). The Global Depositary
Receipts (GDRs) of the Company are listed on the Professional
Securities Market of the London Stock Exchange (LSE). The
Company’s outstanding US$ 180,000,000 2% Convertible
Unsecured Bonds are listed on the London Stock Exchange
(LSE). The Company’s outstanding US$ 98,700,000 5%
Convertible Unsecured Bonds and US$ 127,721,000 5.70%
Secured Convertible 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 Proposal 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.

include forward

In addition to the historical information contained herein,
the following discussions may
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

Subex Limited is a leading global provider of Business Support
Systems (BSS) that empowers Communications Service
Providers (CSPs) to achieve competitive advantage through
Business Optimization - 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

www.subex.com

such as revenue assurance, fraud management, credit
risk management, cost management, route optimization,
data
interconnect/inter-party
settlement.

integrity management and

The Company has been declared global leader in Business
Optimization for CSPs for five years in a row by analyst firm
Analysys Mason. Business Optimization improve the revenues
and profits of the CSPs through identification and elimination
of leakages in their revenue chain and includes fraud, revenue
assurance, analytics, cost management and credit risk
management. 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, UK, UAE, India, Singapore and
Australia.

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 (ROC®)
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, Subex offers Managed Services around its products
which enable the operators to take advantage of our deep
domain expertise to improve their operational efficiency.

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.

3.2 Telecom Software Products

Solutions for Business Optimization

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

Revenue Operations Centre (ROC®)

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

(cid:2) delivering real-time and actionable insights to effectively
tactical

the operational and

monitor and control
response

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

Subex BSS products or third party systems

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

health

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.

ROC Fraud Management

ROC Fraud Management is built to drive fraud prevention by
eliminating known frauds, uncovering new fraud patterns,
minimizing fraud run time, augmenting internal controls,
and supporting continuous fraud management process
improvement. ROC Fraud Management 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.

Subex ROC® Portfolio
BUSINESS OPTIMIZATION SOLUTIONS

ASSURED OPERATIONS

ware

Vision 360

Product Performance
Management

Capacity Management

PROTECTED REVENUES

MANAGED COSTS

ROC Revenue Assurance

ROC Fraud Management

ROC Partner Settlement

ROC Route Optimization

ROC Cost Management

ROC Credit Risk Management

ROC Data Integrity Management

MANAGED SERVICES

SaaS
(SOFTWARE AS A SERVICE)

CONSULTING SERVICES

www.subex.com

The solution is characterized 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 potent case
management tools. These tools provide relevant case data
that are made easily accessible through a single window in a
fast web-based GUI.

ROC Fraud Management’s high flexibility allows operators of
different sizes to customize rules to suit unique network and
business requirements. A configurable workflow management
tool integrates the investigation process with detection.

ROC Fraud Management 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,
Payment, VAS, MMS and M-commerce.

ROC Revenue Assurance

is the telecom

industry’s first
ROC Revenue Assurance
revenue assurance solution that simplifies RA. It tackles critical
challenges across the entire revenue chain with ease. It offers
two path breaking concepts – RevenuePad and Zen which
simplifies and speeds up the process of revenue recovery.
It helps customers address revenue assurance challenges
inherent to
individual service verticals: Wireless, Fixed,
Cable MSPs, and MVNOs. It also helps them address revenue
assurance issues across multiple functional areas, such as
service fulfillment, usage integrity, retail billing, interconnect/
wholesale billing, and content settlement.

This helps customers dramatically reduce the time required to
implement or extend the coverage of their revenue assurance
practices. Moreover, customers can easily reconfigure or
remodel existing solution to accommodate changing business
requirements. ROC Revenue Assurance is designed not only
to detect potential revenue loss, but also to proactively assist
an operator with its investigation, diagnosis and recovery of
these revenues. ROC Revenue Assurance is highly effective in
both traditional circuit-switched and Next Generation packet-
switched service environment.

ROC Revenue Assurance detects the symptoms of leakage,
prevents incidents before they reach the customer bill,
accelerates resolution times, and enables Revenue Assurance
teams to align their successes with broader organizational
goals - such as higher margins and customer satisfaction.

ROC® Revenue Assurance’s Philosophy - ROC Revenue
Assurance philosophy is to simplify RA. It achieves this
industry-first capabilities: RevenuePad and
through two
Zen. RevenuePad is the command center for Enterprise-wide
RA that helps service providers to chart their RA roadmap,
provides guidance on which assurance areas and metrics to
cover, and offer Visual aides to isolate problem areas. Zen is
the industry’s first Virtual RA Analyst, which directly gives root
causes of leakages, improving analyst productivity by more
than 90%. Not only this, ROC Revenue Assurance is mobile
device enabled. So, executives can gauge RA health, analyze

www.subex.com

key metrics and make business critical decisions while on the
move.

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) Subscriber acquisitioning
(cid:2) Ongoing usage
(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

is a state-of-the-art

revenue
ROC Cost Management
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.

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

ROC Partner Settlement

The ROC Partner Settlement solution allows operators to
quickly and accurately settle charges with interconnect,
network and content partners on a single, modular platform.
In today’s fiercely competitive telecom landscape, dwindling
voice margins and heavy investments in next generation
service (NGN) enablers such as 3G, 4G have forced CSPs to
look at new revenue generation opportunities while driving
efficiencies to maintain margins from traditional services.

ROC Partner Settlement gives service providers the freedom
to experiment with new NGN service offerings without
having to worry about the scalability of its billing function. A
flexible solution ensures that different packaging and pricing
strategies around content can be easily modeled in the
system. Complicated multi-partner revenue share contracts
can be modeled and analyzed for profitability before the
actual contract is put into place. On the other hand, shrinking
margins from voice services have highlighted the need for
visibility of each deal’s impact on a service provider’s bottom
line. It’s no longer just about billing accurately and managing
agreements. Having an analytical view of the wholesale
business is the need of the hour. ROC Partner Settlement
helps you have a converged view of your wholesale business
by managing the entire order to cash & procure to pay
lifecycles.

ROC Route Optimization

Telecom operators need to respond quickly to the abrupt and
volatile changes in service provider rates in order to remain
competitive. Subex’s ROC Route Optimization solution
answers this need, allowing subscribers to benefit from
competitively priced high quality service.

ROC Route Optimization delivers value through the following
capabilities:

(cid:2) Analyses various service parameters such as cost, traffic

forecast, network capacity and quality

(cid:2) Uses analysis output to streamline service providers’

routing process

(cid:2) Establishes competitive sales rates for services

(cid:2) Executes the Automated Routing Management System to
establish automatic switch connection and generate

(cid:2) Man-Machine Language commands for switch update

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 300 installations spread across 70
countries. This includes 28 of the top 50 telcos globally. A
partial list of customers is given below:

APAC – Aircel, Airtel, Bakrie Telecom, BSNL, CAT, Celcom,
Dialog, Dtac, Hutchison Telecom, Idea, Indosat, Maxis, MTNL,
Reliance Communications, Starhub, Telkom, Telstra, TATA,
True, Vodafone, YTL Solutions

Americas -
Americatel, Bell Canada, Centenniel, Claro,
Comcast, Cricket, Etecsa, Frontier, Glo, Level 3, Porta, Rogers,
Sprint, Telesur, Telefonica, Telmex, Telus, T Mobile, Verizon,
Videotron

EMEA - Airtel, Atalntique Telecom, Avea, BT, Cable & Wireless,
Cell C, Colt, Coolwave, Cora, Cyta, Du, Eagle, Econet, ecoop,
8-el, emt, Goecell, Kcell, Mascom, Matrix, Mobinil, Moldcell,
Mcel, MTN, O2, Orange, Qicomm, Roshan, Starcomms, STC
Kuwait, Swisscom, Tcell, Telecom Egypt, Telenor, Telfort,
TeliaSonera, Totem, UPC, Vodafone, Warid, Wavecrest, Zain,
Zong, Zon

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.

These capabilities round up our comprehensive route
optimization solution, helping you derive the best breakouts
and cost routes. Our processes also enable communication
service providers to establish focused efficiency-increasing
task automation, thereby reducing data redundancies.

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.

ROC Data Integrity Management

Managed Services

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

imperative of outsourcing

Recognizing the strategic
in
today’s environment, Subex offers a flexible and scalable
Managed Services program that enables service providers to
successfully meet the ever changing business, technology and
customer requirements. Subex Managed Services offering is
designed to offer true competitive advantage by focusing on
strategic, operational and cost benefits that address service
providers’ current and future challenges and risks.

Subex Managed Services program is designed to add both
strategic and tactical value to service providers’ operations
and enable better customer experience while also enhancing

www.subex.com

minimal customization needed and no
implementation
services required. ROCcloud is currently available for fraud
management, addressing all common fraud threats.

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

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.

their operational efficiency, service agility and profitability.
With Subex at the helm of its operations, service providers
can redirect critical resources at core business functions
generating more revenue and saving costs.

Subex understands that no two service provider requirements
are alike and hence offers the flexibility to pick and choose
services based on:

(cid:2) Scope of Operations: Ranging from standard operations

to large scale transformational programs

(cid:2) BSS/OSS Domains: Drawing from Subex’s established

expertise on various BSS/OSS domains

(cid:2) On-Site Support: High caliber, experienced resources to
ensure functional continuity and high resource efficiency

On-demand, Software-as-a-Service (SaaS) – ROCcloud

Small and medium telcos have BSS needs that are very
different from those of larger telcos. In the same vein, most
BSS products are developed to address the needs of large
telcos. They are loaded with a host of standard features, not all
of which are relevant to smaller organizations, and necessitate
a substantial investment in licenses and resources. Quite
naturally, it is difficult to justify this investment in most small
and medium organizations.

ROCcloud brings Subex’s proven Revenue Operations Center
(ROC) to small and medium telcos. It is an on-demand
business support system ideally suited for small and medium
telcos. ROCcloud employs a monthly subscription based
usage model and is delivered over the web in a completely
secure environment. It utilizes shared infrastructure at various
locations across the globe. It is a pre-configured service with

www.subex.com

4. RISKS AND CONCERNS

counseling and constant learning opportunities in cutting
edge and challenging technologies.

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

4.3 Intellectual Property

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.
industry continues to experience
The communications
consolidation and an
formation of alliances
increased
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
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

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

www.subex.com

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 result in litigations which may lead to
incidence of higher tax.

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.

www.subex.com

4.12 Debt Obligations

the Company

As at March 31, 2012, the Company had outstanding
FCCBs aggregating to US$ 39 million under its US$ 180,000,000
2% Convertible Unsecured Bonds (“FCCBs I”) and US$ 54.80
million under its US$ 98,700,000 5% Convertible Unsecured
Bonds (“FCCBs II”). In July 2012, pursuant to the exchange
of US$ 38 million out of FCCBs
I and of US$ 53.40
II under a cashless exchange
million out of FCCBs
issued US$ 127,721,000 5.70%
offer,
Secured Convertible Bonds with a maturity period due
July 2017 (“FCCBs III”).
the terms and
conditions of FCCBs III, principal amount of US$ 36.321
into equity shares,
million were mandatorily converted
pursuant
is currently
outstanding under FCCBs
III. Also, the maturity period
of the un-exchanged FCCBs I worth US$ 1 million and the
un-exchanged FCCBs II worth US$ 1.40 million now stands
extended to March 2017.

to which US$ 91.40 million

As a part of

The ability of the Company to successfully meet the debt
obligations under the FCCBs depends on
internal
accruals, additional fund raising in the form of debt or equity
and possible conversion of FCCBs into equity shares prior to
redemption.

its

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
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.

information. The

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.

from

internal controls are
The adequacy of the Company’s
tested
time and control deficiencies,
time
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 & After Exceptional Items
Profit/(Loss) After Tax & Exceptional Items
Equity Dividend %
Share Capital
Reserves & Surplus
Net Worth
Gross Fixed Assets
Net Fixed Assets
Total Assets
Key Indicators
Earning Per Share (Year end)
Cash Earning Per Share (Year end)
Book Value Per Share
Debt (Including Working Capital) Equity Ratio
EBITDA/Sales - %
Net Profit Margin - %
Return on Year End Net Worth %
Return on Year End Capital Employed %

p y

Amount in (cid:2) Million except as otherwise indicated

2012

2011

2010

Consolidated

Standalone

Consolidated

Standalone

4,887.90
1,406.33
77.96
899.85
318.41
Nil
693.11
752.94
1,446.05
1,044.72
77.28
10,996.65

4.59
7.50
20.86
4.16
29.43%
6.66%
22.02%
4.27%

3,390.27
970.02
36.49
529.61
23.97
Nil
693.11
1,437.28
2,130.39
737.06
47.48
10,898.80

0.35
3.73
30.74
2.75
29.48%
0.73%
1.13%
0.30%

4,927.92
1,379.77
104.50
849.06
787.79
Nil
693.10
1,401.10
2,094.20
1,638.65
130.38
10,643.58

12.47
7.68
30.22
2.61
28.58%
16.32%
37.62%
10.43%

3,293.30
1,186.77
55.50
719.39
715.09
Nil
693.10
2,424.39
3,117.49
725.49
63.73
10,542.86

11.32
7.61
44.98
1.70
37.85%
22.81%
22.94%
8.50%

Consolidated
4,747.81
947.23
163.58
309.49
1,002.96
Nil
579.83
2,150.17
2,730.00
1,605.11
195.75
12,102.90

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

Standalone

3,239.50
999.19
88.15
489.14
1,368.61
Nil
579.83
2,989.15
3,568.98
708.83
97.53
11,730.59

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

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) 115,000 shares of (cid:2) 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) 4,626,940 Shares of (cid:2) 10/- each to all eligible shareholders
as on March 31, 1999 in the ratio of 1:1 by capitalizing the
General Reserves.

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

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

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

April 7, 2006 at (cid:2) 400/-.

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

7.1.2 During 2006-07 the Company issued 219,551 (including
Bonus shares, wherever options are eligible) shares of

(cid:2) 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
(cid:2) 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 (cid:2) 10/- each under its ESOP III scheme and 1,210 equity shares
of (cid:2) 10/- each under its ESOP II scheme to various Employees
on exercise of Stock Options.

7.1.5 During 2009-10, the Company
issued 4,000,000
equity shares of (cid:2) 10/- each, on a preferential basis, to M/s
Woodbridge Consultants, an entity belonging to Promoters/
Promoter group, at 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 (cid:2) 10/- each, on a preferential basis, to M/s KBC Aldini
Capital Mauritius Limited, at Rs 81/- per share.

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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 (cid:2) 10/- each under its ESOP III scheme and 1,260
equity shares of (cid:2) 10/- each under its ESOP II scheme, to
various Employees upon exercise of Stock Options.

7.1.10 During 2011-12, the Company issued 747 equity shares
of (cid:2) 10/- each under its ESOP III to various Employees upon
exercise of Stock Options.

7.1.11 There are no calls in arrears.

7.2 Reserves and Surplus

7.2.1 Capital Reserve of (cid:2) 13.00 million was created by credit
of the notional premium on 12,840 equity shares of (cid:2) 10/-
each valued at a price of (cid:2) 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 2010-11, additions to capital reserve due
to reversal of accrued interest on conversion of FCCBs into
equity shares amounted to (cid:2) 159.89 million, reductions due
to transfer to Business restructuring reserve amount to (cid:2) 40
million and deferred interest on restructured FCCBs amounted
to (cid:2) 122.27 million.

During the year 2011-12, the balance in capital reserve of 34.67
million was transferred to Business Restructuring Reserve.

7.2.2 Securities Premium Account represents the premium
collected on:

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

share through an Initial Public Offer in 1999-2000.

(cid:2) 330,800 equity shares issued at a premium of (cid:2) 740/-
per share to Mutual Funds and Bodies Corporate on a
preferential basis during 1999-2000.

(cid:2) 1,887,000 equity shares issued at a premium of (cid:2) 88/- per
share to holders of ROCCPS on conversion of preferential
shares at Rs 98/- each, namely Intel Capital, Toronto
Dominion Bank and UTI Venture Funds.

(cid:2) 1,538,459 equity shares issued at a premium of (cid:2) 290/- per
share to holders of FCCBs on conversion of the bonds at a
price of (cid:2) 300/- per share.

(cid:2) 1,109,878 equity shares issued at a premium of (cid:2) 390/- per

share to holders of GDR at a price of (cid:2) 400/-.

(cid:2) 11,728,728 equity shares issued at a premium of (cid:2) 522.24

per share to holders of GDR at price of (cid:2) 532.24

(cid:2) 258,353 (including Bonus shares, wherever options are
eligible) equity shares allotted to the employees under

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ESOP II & III Scheme as per the provisions of the Scheme at
various premiums.

(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) 4,000,000 equity shares 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 (cid:2) 70 per share

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

(cid:2) 747

shares of (cid:2) 10/- each were allotted

to
III Scheme as per

the employees under ESOP
the provisions of the Scheme at various premiums.

7.2.3 Business Restructuring Reserve

(cid:2) During the year 2009-10, (cid:2) 5,000 million and (cid:2) 1,700
million were transferred to Business Restructuring Reserve
from securities premium and capital reserve respectively.
Out of the said amount, (cid:2) 6,499.79 million were utilised
and consequently, the balance in Business Restructuring
Reserve as of March 31, 2010 is (cid:2) 200.21 million on
consolidated basis.

(cid:2) During the year 2010-11, (cid:2) 1,700 million and (cid:2) 40 million
were transferred to Business Restructuring Reserve from
securities premium and capital reserve respectively. Out
of the said amount, (cid:2) 1,830.37 million were utilised and
consequently, the balance
in Business Restructuring
Reserve as of March 31, 2011 is (cid:2) 109.84 million on
consolidated basis.

(cid:2)(cid:3)During the year 2011-12, (cid:2) 34.67 million were transferred
from Capital Reserve and (cid:2) 85.43 million un-utlised
provisions were transferred back to Business Restructuring
Reserve. Out of the said amount, (cid:2) 62.92 million were
utilised and consequently, the balance
in Business
Restructuring Reserve as of March 31, 2012 is (cid:2) 167.02
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, 2012 amounts to (cid:2) 11.35 million (Previous Year:
(cid:2) 63.17 million).

7.4 Deferred Tax

life thereof and has been fully written of during the year.

In accordance with the generally accepted accounting
principles in India on Accounting for Direct Taxes, Deferred
Tax assets has been restated to (cid:2) 13.39 million ( Previous Year
12.18 million) on a standalone and consolidated basis and
Net Deferred Tax Assets to (cid:2) 14.12 million ( Previous Year –
11.29 million) on consolidated basis.

7.5 Borrowings

On consolidated basis, the Short term borrowings of (cid:2) 1,243.65
million (Previous Year: (cid:2) 1,264.95 million) outstanding in the
books as at March 31, 2012 consists of (cid:2) 100 million pertaining
to the working capital loan from Financial Institutions, secured
by a Pledge of promoter shares and personal guarantee of
promoter, (cid:2) 1,132.02 million from Banks secured by the charge
on Fixed/Current Assets.

On standalone basis, the Short term borrowings of (cid:2) 1,089.39
million (Previous Year: (cid:2) 1,102.92 million) outstanding in the
books as at March 31, 2012 consists of (cid:2) 100 million pertaining
to the working capital loan from Financial Institutions, secured
by a Pledge of promoter shares and personal guarantee of
promoter, (cid:2) 989.39 million from Banks secured by the charge
on Fixed/Current Assets.

7.6 Current Maturities of Long term Borrowings - FCCBs
(Unsecured)

On a consolidated basis and standalone basis Current
maturities of long term debt as at March 31, 2012 consists of:

a. (cid:2) 1,984.13 million (Previous Year: (cid:2) 1,739.21 million)
relating to Foreign Currency Convertible Bonds issued in
fiscal 2006-07. The bonds carry interest of 2% per annum
and are redeemable by July 9, 2012. 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
Other Current Liabilities.

b. (cid:2) 2,787.95 million (Previous Year: (cid:2) 2,443.80 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 July 9, 2012. 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 Other Current
Liabilities.

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

7.7.2 During the year, the Company added (cid:2) 30.54 million on
consolidated basis and (cid:2) 22.33 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
(cid:2) 77.28 million (Previous year (cid:2) 130.38 million) on consolidated
basis and (cid:2) 47.48 million (Previous year (cid:2) 63.73 million) on
standalone basis.

7.8 Investments

investment

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
Inc.,) to Subex
in Subex Technologies
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
(cid:2) 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 (cid:2) 30 million in settlement of
the consideration with the balance (cid:2) 280 million being treated
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 (cid:2) 10/- at a premium of (cid:2) 522.24 per share
and cash of (cid:2) 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 (cid:2) 5,000 million as diminution in carrying value
of investments in Subex Americas Inc. Consequently, the
investment carrying value as of March 31, 2010 was (cid:2) 2,749.57
million.

7.8.5 During the year 2010-11, the Company recognized an
amount of (cid:2) 1,500 million as diminution in carrying value
of investments in Subex Americas Inc. Consequently, the
investment carrying value as of March 31, 2011 was (cid:2) 1,249.57
million.

www.subex.com

7.8.6 During the year 2010-11, the Company recognized
an amount of (cid:2) 40 million as diminution
in carrying
value of
in Subex Technologies Limited.
Consequently, the investment carrying value as of March 31,
2011 was Nil.

investments

currency accounts. The Margin Money deposit of (cid:2) 15.02
million (Previous Year: 5.97 million) on standalone basis and
(cid:2) 18.56 million (Previous Year: 16.72 million) on consolidated
basis with the bankers is for establishing bank guarantee/
issuing corporate credit cards.

7.9 Trade Receivables

7.11 Long-term Loans and Advances

7.9.1 During the year, on a standalone basis the Company
has securitized a portion of its receivables amounting to
266.11 million (Previous year: (cid:2) 368.01 million) and
(cid:2)
on consolidated basis (cid:2) 756.95 million (Previous Year:
(cid:2) 1,082.01 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.

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 Trade receivables as a percentage of total revenue
is 15.36% as against 11.22% in the previous year, on a
consolidated basis.

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

Period in days

March 31, 2012

Amount in (cid:2) Million
March 31, 2011

Less than 180 days
More than 180 days
Total

Value

682.48
51.46
733.94

%
92.99
7.01
100.00

Value

530.53
11.08
541.61

%
97.95
2.05
100.00

The age profile on standalone basis is as given below:

Period in days

March 31, 2012

Amount in (cid:2) Million
March 31, 2011

Less than 180 days
More than 180 days
Total

Value
2,200.37
43.55
2,243.92

%
98.06
1.94
100.00

Value
1,768.53
9.91
1,778.44

%
99.44
0.56
100.00

7.9.6 The management believes that the overall composition
and condition of sundry debtors is satisfactory. The provision
for doubtful debts stands at (cid:2) 152.33 million (Previous Year
(cid:2) 84.09 million) on consolidated basis and (cid:2) 139.29 million
(Previous Year (cid:2) 72.64 million) on standalone basis.

7.10 Cash and Cash Equivalents

The bank balances includes both rupee accounts and foreign

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

7.11.2 Advance Taxes comprise advance income taxes, net
of provision for taxation represents payments made towards
tax liability pending assessment and refunds due. MAT
credit entitlement represents the net available credit of the
Minimum Alternate tax for future years.

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 (cid:2) Million
2011-12
2010-11
-
-
-
-
160.88
400.88
-
-
169.97
169.47

Advances
to Subex Technologies Limited has been
provided during the financial year 2010-11 to an extent of
(cid:2) 169.47 million out of utilisation of Business Restructuring
Reserve.

7.12 Short term Loans and Advances

7.12.1 Loans and advances to employees represents advances
to employees which are recoverable.

7.12.2 Prepaid expenses represent amounts paid in advances
towards insurance, Interest and other expenses.

7.12.3 Service Tax credit receivables represent towards input
credit available for set off against payables/refund to be
received from the service tax department.

7.12.4 Advances to Suppliers represent amount paid to
vendors in advance.

7.13 Profit & Loss Account

7.13.1 Income

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

income

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

provided alone amounted to (cid:2) 104.54 million (Previous
Year : (cid:2) 94.33 million).

Amount in (cid:2) Million except percentages

7.18 Depreciation

Particulars

2011-12

2010-11

Software Products
Software Services
Total

Value
4,294.92
483.34
4,778.26

%
89.88
10.12
100.00

Value
4,181.18
646.32
4,827.50

%
86.61
13.39
100.00

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

7.14 Other Income

7.14.1 Other 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 insurance
claim received.

7.15 Expenditure

7.15.1 The employee benefits expenses decreased to
(cid:2) 2,535.80 million (Previous year: (cid:2) 2,648.51 million) on
consolidated basis and decreased to (cid:2) 789.25 million (Previous
year: (cid:2) 798.16 million) on standalone basis.

The Company incurred administration and other expenses
at 17.57% of its total Income during the year as compared
to 16.64% during the previous year on consolidated
basis and 45.56% of its total income during the year as
compared to 39.28% during the previous year on standalone
basis.

7.16 Operating Profits

During the year, on consolidated basis, the Company
earned
Interest,
an Operating Profit/(Loss) before
items of (cid:2) 1,406.33
depreciation, tax and exceptional
Million being 28.77% of
income as against
total
(cid:2) 1,379.77 million at 28.00% during the previous year. On a
standalone basis,
the Company earned Operating
Profit/(Loss) before Interest, depreciation, tax and exceptional
items of (cid:2) 970.02 million being 28.61% of total income
as against (cid:2) 1,186.77 million at 36.04% during the previous
year.

7.17 Interest and Bank Charges

The Company incurred an expenditure of (cid:2) 428.52 million
(Previous year: (cid:2) 426.21 million) on consolidated basis
and (cid:2) 403.92 million (Previous year: (cid:2) 411.88 million) on
standalone basis. The interest paid is related to temporary
overdrawls and securitized receivables. The interest on FCCBs

7.18.1 The provision for depreciation for the year amounted
to (cid:2) 77.96 million (Previous year: (cid:2) 104.50 million) on
consolidated basis and (cid:2) 36.49 million (Previous year:
(cid:2) 55.50 million) on standalone basis.

7.18.2 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
Nil (Previous year (cid:2) 18.50 million) has been charged towards
depreciation.

7.19 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.

7.20 Net Profit

On consolidated basis, the net profit of the Company
amounted to (cid:2) 318.41 million, as against (cid:2) 787.79 million
during the previous year. On standalone basis, the net profit
of the Company amounted to (cid:2) 23.97 million as against
(cid:2) 715.09 million during the previous year.

7.21 Earnings Per Share

Basic Earnings/(Loss) per share computed on the basis of
number of common stock outstanding, as on the Balance
Sheet date was (cid:2) 4.59 per share (Previous year: (cid:2) 12.47 per
share) on consolidated basis and (cid:2) 0.35 per share [Previous
year: (cid:2) 11.32 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,

www.subex.com

Singapore, Dubai and Denver. As of March 31, 2012, we had
868 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,
change
management,
learning and development, mergers and
acquisitions etc.

performance management,

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.

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

www.subex.com

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 3
months. In addition to the regular induction, they also went
through additional training programs tailored to their area of
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 Subex Academy - a global Learning and Development
Platform (supporting instructor led training, on the job
learning, as well as e-learning) that 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 added
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!

This year also saw 25 Subexians get certiﬁed in Fraud
Management through the TUFF certiﬁcation (an internationally
recognized Fraud Management certiﬁcation).

Performance Management System

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 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.

financial review
subex limited (standalone)

www.subex.com

AUDITORS’ REPORT

1. We have audited the attached Balance Sheet of Subex
Limited (the “Company”) as at March 31, 2012, the
Statement of Profit and Loss 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 2.I.b to the financial statements regarding Foreign
Currency Convertible Bonds having a face value of US$
93.8 million (equivalent (cid:2)(cid:3)(cid:3)4,772.08 million) which are
redeemable on 9th July 2012 along with premium of
US$ 37.28 million (equivalent (cid:2)(cid:3)(cid:3)1,896.62 million) and the
related costs that are determinable on redemption and
the management’s plans for meeting the redemption
obligations. 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 24 to the financial statements. 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 in prior years, debited amounts
aggregating to Rs 257.49 million (net of reversals) to the
Business Restructuring Reserve, instead of recording
such net expenses in the Statement of Profit and Loss, 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 enclose
in the Annexure a statement on the matters specified in
paragraphs 4 and 5 of the said Order.

6. Further to our comments in paragraphs 3 and 4 above
and in the Annexure referred to in paragraph 5 above, we
report as follows:
(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 Statement of Profit and Loss
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 Statement
of Profit and Loss 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, 2012;

(ii) in the case of the Statement of Profit and Loss, 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, 2012 taken on record by the
Board of Directors, none of the Directors is disqualified as
on March 31, 2012 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)

Place : Bangalore
Date : May 23, 2012

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
full particulars, including quantitative details and
situation of the fixed assets.

(b) 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.

www.subex.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. 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 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 dues, including Investor Education and
Protection Fund, Employees’ State Insurance, Sales
Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty,
Cess and other material statutory dues applicable to
it with the appropriate authorities during the year
except for (a) Provident Fund dues, where there were
delays ranging from 1 day to 38 days and (b) Income-
tax dues where there were delays ranging from 16 to
72 days.

(b) There were no undisputed amounts payable in respect
of Income-tax, Wealth Tax, Custom Duty, Excise Duty,
Cess and other material statutory dues in arrears as at
March 31, 2012 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, 2012 on account of disputes are given below:

Statute

Nature of Dues

Forum where Dispute is
pending

Income Tax Act, 1961

Income tax (Incl. Interest) Hon. High Court of Karnataka

Income Tax Act, 1961

Income tax (Incl. Interest) Hon. High Court of Karnataka

Income Tax Act, 1961

Income tax (Incl. Interest) Hon. High Court of Karnataka

Period to which the
amount relates
2005-06

2006-07

2008-09

Amount involved
((cid:2) Million)

1.90

17.87

0.12

8. The Company does not have accumulated losses as at
March 31, 2012. 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 the repayment of dues to banks, financial institutions
and debenture holders.

10. According to the information and explanations given to
us, the company has not given any guarantee for loans
taken by others from banks or financial institutions.

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.

term basis have not been used during the year for long-
term investment.

13. The Company has not made any preferential allotment of
shares to parties and companies covered in the Register
maintained under section 301 of the Act.

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

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

12. In our opinion and according to the information and
explanations given to us and on an overall examination
of the Balance Sheet, we report that funds raised on short-

Place : Bangalore
Date : May 23, 2012

V. Balaji
Partner
(Membership No. 203685)

www.subex.com

BALANCE SHEET AS AT

A EQUITY AND LIABILITIES

SHAREHOLDERS’ FUNDS
Share Capital
(a)

(b) Reserves and Surplus

Sub Total - SHAREHOLDERS’ FUNDS

NON - CURRENT LIABILITIES
Long-term Borrowings
(a)

(b) Long-term Provisions

Sub Total - NON - CURRENT LIABILITIES

CURRENT LIABILITIES
(a)

Short-term Borrowings

(b) Trade Payables - Other than acceptances

(d) Short-term Provisions

Sub Total - CURRENT LIABILITIES

TOTAL

B ASSETS

NON - CURRENT ASSETS
FIXED ASSETS
(a)
i) Tangible Assets

ii) Intangible Assets

(b) Non Current Investments

(d) Long-term Loans and Advances

(e) Other Non - Current Assets

Sub Total - NON - CURRENT ASSETS

CURRENT ASSETS
(a)

Trade Receivables

(b) Cash and Cash Equivalents

(c)

Short-term Loans and Advances

(d) Other Current Assets

Sub Total - CURRENT ASSETS

TOTAL

NOTE
NO.

AS AT
MARCH 31, 2012
((cid:2) in Million)

AS AT
MARCH 31, 2011
((cid:2) in Million)

693.11

1,437.28

2,130.39

53.17

1,089.39

642.16

6,977.38

6.31

8,715.24

10,898.80

47.48

7,723.44
7,723.44

13.39

233.94

0.50

693.10

2,424.39

3,117.49

3.73

77.65

81.38

1,102.92

573.28

4,441.45

1,226.34

7,343.99

10,542.86

63.73

7,723.44

12.18

191.38

8,018.75

7,990.73

2,243.92
2,243.92

15.59

242.69

377.85

2,880.05

10,898.80

1,778.44

8.68

497.48

267.53

2,552.13

10,542.86

Corporate Information and Significant Accounting Policies
See accompanying notes forming part of the financial statements

1 & 2

In terms of our report attached

For Deloitte Haskins & Sells
Chartered Accountants

V. Balaji
Partner

Bangalore
May 23, 2012

www.subex.com

For and on behalf of the Board of Directors

Subash Menon
Founder Chairman
Managing Director & CEO

Sudeesh Yezhuvath
Chief Operating Officer
& Wholetime Director

Ramanathan J
Vice President- Finance &
Company Secretary

STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED

1 Revenue from Operations

NOTE
NO.

For the year
ended
MARCH 31, 2012
((cid:2) in Million)

For the year
ended
MARCH 31, 2011
((cid:2) in Million)

3,290.11
3,290.11

3,135.53

Total revenue

3,290.11

3,135.53

Expenses
(a) Cost of Hardware, Software and Support Charges
(b) Employee Benefits Expense
(c) Other Expenses
Total Expenses

38.8
19
20

86.47
789.25
1,544.53
1,544.53
2,420.25

14.72
798.16
1,293.65
2,106.53

4 Profit before other Income, exceptional items, interest, tax, depreciation

869.86

1,029.00

and amortisation (2 - 3)

5 Other Income

6 Profit before exceptional items, interest, tax, depreciation and

amortisation (4 + 5)

Finance Costs

8 Depreciation and amortisation expense

9 Profit/(Loss) before exceptional Items and tax (6 - 7 - 8)

10 Exceptional Items

100.16

157.77

970.02

1,186.77

403.92

36.49

529.61

509.24

411.88

55.50

719.39

(6.19)

11 Profit/(Loss) before Tax (9 - 10)

20.37

725.58

12 Tax expense

(a) Current Tax Expense for current year (net of reversal of (cid:2) 2.4 million

(Previous year (cid:2) Nil) relating to earlier years)
(Less): MAT credit

(b)
(c) Deferred Tax
Total Tax expense

15.02

(17.41)
(1.21)
(3.60)

10.49

-
-
10.49

13 Profit/(Loss) for the year (11 - 12)

23.97

715.09

14 Earnings/(Loss) Per Share (Face value of (cid:2) 10/- each)

(a) Basic
(b) Diluted

Corporate Information and Significant Accounting Policies
See accompanying notes forming part of the financial statements

1 & 2

0.35
0.35

11.32
7.88

In terms of our report attached

For Deloitte Haskins & Sells
Chartered Accountants

V. Balaji
Partner

Bangalore
May 23, 2012

For and on behalf of the Board of Directors

Subash Menon
Founder Chairman
Managing Director & CEO

Sudeesh Yezhuvath
Chief Operating Officer
& Wholetime Director

Ramanathan J
Vice President- Finance &
Company Secretary

www.subex.com

CASH FLOW STATEMENT FOR THE YEAR ENDED

A Cash flow from Operating Activities

Net Profit/(Loss) before tax

20.37

725.58

For the year
ended
MARCH 31, 2012
((cid:2) in Million)

For the year
ended
MARCH 31, 2011
((cid:2) in Million)

Interest Income

Adjustments for
(a) Depreciation and amortization expense
(b)
(c) Finance costs
(d)
(e) Expense/(Gain) on employee stock option scheme
(f ) Provision for doubtful Trade and other receivables
(g) Unrealised exchange (Gain)/Loss- Forward contracts
(h) Unrealised exchange (Gain)/Loss- Others

(Profit)/Loss on sale/write off of assets

36.49
(16.15)
403.92
(0.76)
(32.73)
66.66
123.94
216.01

55.50
(32.14)
411.88
(0.41)
2.62
-
(63.81)
(66.23)

Operating profit/(loss) before working capital changes

817.75

1,032.99

Changes in working capital
Adjustments for (increase)/decrease in operating assets
(a) Trade receivables
(b) Short-term loans and advances
(c) Long-term loans and advances
(d) Other current assets
(e) Other Non-current assets

Adjustments for increase/(decrease) in operating liabilities
(a) Trade payables
(b) Other current liabilities
(c) Other Long-term liabilities

(d) Short-term provisions

(e) Long-term provisions

Cash generated from/(used in) operations

Net tax (paid)/refunds and others (Refer Note 38.3)

Net cash flow from/(used in) operating activities (A)

B Cash Flow from Investing activities

(a) Capital expenditure on fixed assets, including capital advances
(b) Proceeds from sale of fixed assets
(c)
(d)
(e) Loans given to Subsidiaries
(f ) Loans repaid by Subsidiaries

Interest received - Others
Interest received- Subsidiaries

(451.08)
14.78
(0.99)
(74.34)
(0.50)

22.25
(17.49)
-

0.97

(1.78)

309.57

(51.22)

258.35

(25.41)
2.85
0.16
15.72
-
258.93

(298.58)
98.22
-
(87.31)
-

(77.49)
(93.43)
-

9.93

584.33

(57.01)

527.32

(24.08)
2.79
2.02
30.12
(42.55)
-

Net cash flow from/(used in) investing activities (B)

252.25

(31.70)

www.subex.com

CASH FLOW STATEMENT FOR THE YEAR ENDED

C Cash Flow from Financing Activities

(a) Proceeds/(Utilisation) from issue of Equity shares

(b) Net increase/(decrease) in working capital borrowings

(d) Repayment of Short-term borrowings

(e) Dividends paid- Refer Note 38.2

(f ) Finance cost

(g) Expenditure incurred on issue of Shares

For the year
ended
MARCH31, 2012
((cid:2) in Million)

For the year
ended
MARCH 31, 2011
((cid:2) in Million)

0.04

186.46

(6.66)

(200.00)

(0.18)

(483.35)

334.55

395.97

(717.50)

(0.05)

(498.23)

(31.22)

Net cash flow from/(used in) financing activities (C)

(503.69)

(516.48)

Net increase/(decrease) in Cash and cash equivalents (A+B+C)
Effect of Exchange Differences on restatement of foreign currency cash and
cash equivalents

Cash or Cash equivalents at the beginning of the year

Cash or Cash equivalents at the end of the year (Refer Note 15)

* Cash and cash equivalents

Cash on hand

Balance with Banks

in Current Account

in Deposit Account

in EEFC accounts

In earmarked accounts

Unclaimed dividend accounts

Margin Money Deposits

Total

6.91
-

8.68

15.59

0.11

0.05

0.41

15.02

15.59

(20.86)
0.05

29.49

8.68

1.96

0.16

0.59

5.97

8.68

Corporate Information and Significant Accounting Policies

1 & 2

Notes:
(i) The earmarked account balances with banks can be utilised only for the specific identified purposes.
(ii) See accompanying notes forming part of the financial statements

In terms of our report attached

For Deloitte Haskins & Sells
Chartered Accountants

V. Balaji
Partner

Bangalore
May 23, 2012

For and on behalf of the Board of Directors

Subash Menon
Founder Chairman
Managing Director & CEO

Sudeesh Yezhuvath
Chief Operating Officer
& Wholetime Director

Ramanathan J
Vice President- Finance &
Company Secretary

www.subex.com

NOTES FORMING PART OF FINANCIAL STATEMENTS

SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE
FINANCIAL STATEMENTS

1. CORPORATE INFORMATION

Subex Limited, a public limited company incorporated in
1994, is a leading global provider of Operations and Business
Support Systems
(OSS/BSS) to Communication Service
Providers (CSPs) worldwide in the Telecom industry.

The Company pioneered the concept of a Revenue
(ROC) – a centralized approach
Operations Center
that sustains profitable growth and financial health
for the CSPs 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 fulfillment, provisioning
automation, data integrity management, revenue assurance,
cost management, fraud management and interconnect/
inter-party settlement. Subex also offers a scalable Managed
Services Program. The CSPs achieve competitive advantage
through Business Optimization and Service Agility and
improve their operational efficiency to deliver enhanced
service experiences to their subscribers. The Company has a
development center in India and sales offices in the form of
wholly owned subsidiaries/ branches in UK, USA, Singapore,
Australia, Dubai and Canada.

SIGNIFICANT ACCOUNTING POLICIES

The financial statements of the Company have been
prepared in accordance with the Generally Accepted
Accounting Principles in India (Indian GAAP) to comply
with the Accounting Standards notified under the
Companies (Accounting Standards) Rules, 2006 (as
amended) and the relevant provisions of the Companies
Act, 1956 except to the extent permitted under the
Proposal approved by the Hon’ble High Court of
Karnataka (Refer Note 24). The financial statements
have been prepared on accrual basis under the historical
cost convention. The accounting policies adopted in the
preparation of the financial statements are consistent
with those followed in the previous year except for the
adoption of the provisions of Para 46A of Accounting
Standard 11 “The Effects of Changes in Foreign Exchange
Rates” regarding the accounting for exchange differences
arising on long term foreign currency monetary items
that was notified during the year ended March 31, 2012.
(Refer Note 27).

The Company has outstanding
foreign Currency
Convertible Bonds (FCCBs) having face value of US$

www.subex.com

93.8 million (equivalent (cid:2)(cid:3) 4,772.08 million) which are
redeemable on 9th July 2012 along with premium of
(equivalent (cid:2)(cid:3)(cid:3)1,896.62 million),
US$ 37.28 million
(refer Notes 25A and 25B) and the related costs that
are determinable on redemption. The Company is in
discussion with the bond holders to meet this obligation
by way of a cashless exchange offer of new bonds with a
maturity upto July 2017. The Company has also obtained
the approval from Reserve Bank of India(RBI) in support of
this restructuring based on which the Company expects
to conclude this restructuring by the date of redemption
of the FCCBs and thereby meet all repayment obligations
that arise on account of FCCBs. Consequently these
financial statements are prepared on a going concern
basis.

II. Use of Estimates

The preparation of the financial statements in conformity with
Indian GAAP requires the Management to make estimates
and assumptions considered in the reported amounts of
assets and liabilities (including contingent liabilities) and
the reported income and expenses during the year. The
Management believes that the estimates used in preparation
of the financial statements are prudent and reasonable.
Future results could differ due to these estimates and the
differences between the actual results and the estimates are
recognised in the periods in which the results are known/
materialise.

Revenue from Contracts for software product license includes
fees for transfer of licenses, installation and commissioning.
This revenue is recognized on the basis of milestones
achieved, determined based on percentage of completion of
work completed at each milestone 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 software licenses (including additional
licenses) are recognized on transfer of such licenses.

In case of composite contracts involving granting of license
and support services, license revenues are recognized on
transfer of the license if identified separately and in other
cases, they are recognized over the period of the contract
along with revenue from support services.

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

Basis for Preparation of Financial Statements

III. Revenue Recognition

NOTES FORMING PART OF FINANCIAL STATEMENTS

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.

IV. Tangible Fixed Assets

Fixed assets are stated at cost of acquisition inclusive of
freight, duties, taxes and other direct expenditure incurred.
Assets acquired on hire purchase are capitalised at gross
value and interest thereon is charged to revenue.

Exchange differences arising on restatement/settlement of
long-term foreign currency borrowings relating to acquisition
of depreciable fixed assets are adjusted to the cost of the
respective assets and depreciated over the remaining useful
life of such assets. Subsequent expenditure relating to fixed
assets is capitalised only if such expenditure results in an
increase in the future benefits from such asset beyond its
previously assessed standard of performance. Fixed assets
acquired and put to use for project purpose are capitalised
and depreciation thereon is included in the project cost till
commissioning of the project.

Intangible Assets

Intangible assets are carried at cost
less accumulated
amortisation and impairment losses, if any. The cost of an
intangible asset comprises its purchase price, including any
import duties and other taxes (other than those subsequently
recoverable from the taxing authorities), and any directly
attributable expenditure on making the asset ready for its
intended use and net of any trade discounts and rebates.
Subsequent expenditure on an intangible asset after its
purchase/completion is recognised as an expense when
incurred unless it is probable that such expenditure will
enable the asset to generate future economic benefits in
excess of its originally assessed standards of performance
and such expenditure can be measured and attributed to
the asset reliably, in which case such expenditure is added to
the cost of the asset.(Refer Note: 2.XI for accounting for R&D
expenses).

The rates of depreciation/amortisation adopted are as under:

Particulars

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

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

Individual assets costing less than (cid:2)(cid:3)(cid:3)5,000 are depreciated in
full, in the year of purchase.

The estimated useful life of the intangible assets and the
amortisation period are reviewed at the end of each financial
year and the amortisation method is revised to reflect the
changed pattern.

VII. Employee Stock Option Plans

The Company has formulated Employee Stock Option
Schemes (ESOS) in accordance with the SEBI (Employee
Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999. The Schemes provide for grant of options
to employees of the Company and its subsidiaries to acquire
equity shares of the Company that vest in a graded manner
and that are to be exercised within a specified period. The
Company has used intrinsic value method to account for
the compensation cost of stock options. Intrinsic value is the
amount by which the quoted market price on the day prior
to the grant of the options under ESOS exceeds the exercise
price of the option. In accordance with the SEBI guidelines,
the intrinsic value is amortised on a straight line basis over
the vesting period.

VIII. Employee Benefits

Employee benefits include provident fund, gratuity fund,
compensated absences, retention and performance linked
payouts.

Defined Contribution Plans: The Company’s contribution
to provident fund is considered as defined contribution plan
and is charged as an expense as they fall due based on the
amount of contribution required to be made.

VI. 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.

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NOTES FORMING PART OF FINANCIAL STATEMENTS

cost is recognised immediately to the extent that the benefits
are already vested and otherwise is amortised on a straight-
line basis over the average period until the benefits become
vested. The retirement benefit obligation recognised in the
Balance Sheet represents the present value of the defined
benefit obligation as adjusted for unrecognised past service
cost, 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 reductions in
future contributions to the schemes.

Short-term Employee Benefits: The undiscounted amount
of short-term employee benefits expected to be paid in
exchange for the services rendered by employees are
recognised during the year when the employees render the
service. These benefits include retention and performance
linked payouts and compensated absences which are
expected to occur within twelve months after the end of the
period in which the employee renders the related service.
The cost of such compensated absences is accounted as
under:

(a)

(b)

in case of accumulated compensated absences, when
increase their
employees render the services that
entitlement of future compensated absences; and
in case of non-accumulating compensated absences,
when the absences occur.

Long-term Employee Benefits: Compensated absences
which are not expected to occur within twelve months after
the end of the period in which the employee renders the
related service are recognised as a liability at the present
value of the defined benefit obligation as at the Balance
Sheet date less the fair value of the plan assets out of which
the obligations are expected to be settled.

IX. Other Income

Interest income is accounted on accrual basis. Dividend
income is accounted for when the right to receive it is
established.

Lease arrangements where the risks and rewards incidental
to ownership of an asset substantially vest with the lessor are
recognised as operating leases. Lease rentals under operating
leases are recognised in the Statement of Profit and Loss on a
straight line basis.

XI. Research and Development

Revenue expenditure pertaining to research is charged to the
Statement of Profit and Loss. Development costs of products
are also charged to the Statement of Profit and Loss. Fixed
assets utilised for research and development are capitalised
and depreciated in accordance with the policies stated for
Tangible Fixed Assets and Intangible Assets.

XII. Foreign Currency Transactions

Initial recognition

Transactions in foreign currencies entered into by the
Company and its integral foreign operations are accounted
at the exchange rates prevailing on the date of the transaction
or at rates that closely approximate the rate at the date
of the transaction.

Measurement of foreign currency monetary items at the
Balance Sheet date

Foreign currency monetary items (other than derivative
contracts) of the Company and
in
non-integral foreign operations outstanding at the Balance
Sheet date are restated at the year-end rates.

investment

its net

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 the average exchange rates
prevailing during the year. Exchange differences arising out
of these translations are charged to the Statement of Profit
and Loss

X. Leases

Treatment of exchange differences

Assets leased by the Company in its capacity as lessee where
substantially all the risks and rewards of ownership vest in
the Company are classified as finance leases. Such leases are
capitalised at the inception of the lease at the lower of the fair
value and the present value of the minimum lease payments
and a liability is created for an equivalent amount. Each lease
rental paid is allocated between the liability and the interest
cost so as to obtain a constant periodic rate of interest on the
outstanding liability for each year.

Exchange differences arising on settlement/ restatement of
short-term foreign currency monetary assets and liabilities
of the Company and its integral foreign operations are
recognised as income or expense in the Statement of
Profit and Loss. The exchange differences on restatement/
settlement of loans to non-integral foreign operations that
are considered as net investment in such operations are
accumulated in a “Foreign currency translation reserve” until
disposal/recovery of the net investment.

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NOTES FORMING PART OF FINANCIAL STATEMENTS

The exchange differences arising on restatement/settlement
of long term foreign currency monetary items are:

(cid:2)(cid:3) capitalised,

if related to acquisition of depreciable
fixed assets, and depreciated over the remaining use
ful life of such assets; or

(cid:2) amortised over the maturity period of such items in other

cases.

Accounting for Forward contracts: Premium/discount on
forward exchange contracts, which are not intended for
trading or speculation purposes, are amortised over the
period of the contracts if such contracts relate to monetary
items as at the Balance Sheet date.

Accounting for Derivatives: The Company enters
into
derivative contracts in the nature of foreign currency swaps,
currency options, forward contracts with an intention to
hedge its existing assets and liabilities, firm commitments and
highly probable forecast transactions. Derivative contracts
which are closely linked to the existing assets and liabilities
are accounted as per the policy stated for Forward contracts.

All other derivative contracts are marked-to-market and
losses are recognised in the Statement of Profit and Loss.
Gains arising on the same are not recognised, until realised,
on grounds of prudence

XIII.

Investments

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

XIV. Taxes on Income

Current tax is the amount of tax payable on the taxable
income for the year as determined in accordance with the
provisions of the Income Tax Act, 1961.

Minimum Alternate Tax (MAT) paid in accordance with the
tax laws, which gives future economic benefits in the form of
adjustment to future income tax liability, is considered as an
asset if there is convincing evidence that the Company will
pay normal income tax in the foreseeable future. Accordingly,
MAT is recognised as an asset in the Balance Sheet when it is
probable that future economic benefit associated with it will
flow to the Company and can be measured reliably.

liabilities are recognised for all timing differences. Deferred
tax assets in respect of unabsorbed depreciation and carry
forward of losses are recognised only if there is virtual
certainty that there will be sufficient future taxable income
available to realise such assets. Deferred tax assets are
recognised for timing differences of other items only to the
extent that reasonable certainty exists that sufficient future
taxable income will be available against which these can be
realised. Deferred tax assets and liabilities are offset if such
items relate to taxes on income levied by the same governing
tax laws and the Company has a legally enforceable right for
such set off. Deferred tax assets are reviewed at each Balance
Sheet date for their realisability.

XV. Cash and Cash Equivalents (for Purposes of Cash Flow
Statement)

Cash comprises cash on hand and demand deposits with
banks. Cash equivalents are short-term balances, highly liquid
investments that are readily convertible into known amounts
of cash and which are subject to insignificant risk of changes
in value.

XVI. Cash Flow Statement

Cash flows are reported using the indirect method, whereby
profit/(loss) before tax,
is adjusted for the effects of
transactions of non-cash nature and any deferrals or accruals
of past or future cash receipts or payments. The cash flows
from operating, investing and financing activities of the
Company are segregated based on the available information.

XVII. 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.

XVIII. Impairment of Assets

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NOTES FORMING PART OF FINANCIAL STATEMENTS

based on an appropriate discount factor. When there is
indication that an impairment loss recognised for an asset
in earlier accounting periods no longer exists or may have
decreased, such reversal of impairment loss is recognised in
the Statement of Profit and Loss.

XIX. Earnings Per Share

conversion to equity shares would decrease the net profit per
share from continuing ordinary operations. Potential dilutive
equity shares are deemed to be converted as at the beginning
of the period, unless they have been issued at a later date. The
dilutive potential equity shares are adjusted for the proceeds
receivable had the shares been actually issued at fair value
(i.e. average market value of the outstanding shares). Dilutive
potential equity shares are determined independently for
each period presented. The number of equity shares and
potentially dilutive equity shares are adjusted for share
splits/reverse share splits and bonus shares, as appropriate.

XX. Segment Reporting

The Company identifies primary segments based on the
dominant source, nature of risks and returns and the internal
organization and management structure. The operating
segments are the segments for which separate financial
information is available and for which operating profit/
loss amounts are evaluated regularly by the executive
Management in deciding how to allocate resources and in
assessing performance.

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NOTES FORMING PART OF FINANCIAL STATEMENTS

Note : 3
Share Capital
AUTHORISED
245,040,000 Equity Shares of (cid:2)(cid:3)(cid:3)10/- each
(Previous Year: 128,040,000 Equity Shares of (cid:2)(cid:3)(cid:3)10/- each)

200,000 Preference Shares of (cid:2)(cid:3)(cid:3)98/- each

Total

ISSUED, SUBSCRIBED AND PAID UP EQUITY SHARES
69,310,772 Equity Shares of (cid:2)(cid:3)(cid:3)10/- each
(Previous Year : 69,310,025 Equity Shares of (cid:2)(cid:3)(cid:3)10/- each)

Total

AS AT
MARCH 31, 2012
((cid:2) in Million)

AS AT
MARCH 31, 2011
((cid:2) in Million)

2,450.40

1,280.40

19.60

2,470.00

1,300.00

693.11

693.10

693.11

693.10

NOTES
A

Reconciliation of the number of Equity shares at the beginning and at the end of the reporting period

Particulars

Equity shares
Year ended March 31, 2012
Year ended March 31, 2011

Opening
Balance

Fresh Issue

ESOP

Conversion of
FCCB

Closing
Balance

69,310,025
57,983,139

-
4,124,254

747
5,025

-
7,197,607

69,310,772
69,310,025

Reconciliation of the amount outstanding at the beginning and at the end of the reporting period

Particulars

Equity shares
Year ended March 31, 2012
Year ended March 31, 2011

Opening
Balance
((cid:2)(cid:3)(cid:3) Million)

Fresh Issue
((cid:2)(cid:3)(cid:3) Million)

ESOP
((cid:2)(cid:3)(cid:3) Million)

Conversion of
FCCB
((cid:2)(cid:3) Million)

Closing
Balance
((cid:2)(cid:3)(cid:3) Million)

693.10
579.83

41.24

0.01
0.05

-
71.98

693.11
693.10

The Company has only one class of Equity Share, having a par value of (cid:2)(cid:3)(cid:3)10/-. The holder of equity shares is entitled to
one vote per share and such amount of dividend per share as declared by the Company. In the event of liquidation of the
Company, the holders of the equity shares will be entitled to receive any of the remaining assets of the Company, after
distribution to all other parties concerned. The distribution will be in proportion to number of equity shares held by the
shareholders.
Details of shares held by each shareholder holding more than 5% shares

Class of Shares/Name of shareholder

As at March 31, 2012

As at March 31, 2011

No. of Shares
Held

% Holding in
that Class of
Shares

No. of Shares
Held

% Holding in
that Class of
Shares

Equity shares
GIC Singapore
3,498,288
KBC Aldini Capital Mauritius Limited
852,920
8,101,801
8,101,801
Promoter and Promoter Group (See Note E below)
Bank of New York is the depositary of GDRs on behalf of GDR holders holding 7,008,746 shares representing 10.11% of total
shareholding (Previous Year : 9,192,035 shares representing 13.26%). The Company does not have details of individual GDR
holders/beneficiaries to determine if anyone holds more than 5% of the beneficial interest individually in the equity shares.

3,085,274
4,124,254
8,101,801

5.05
1.23
11.69
11.69

4.45
5.95
11.69

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NOTES FORMING PART OF FINANCIAL STATEMENTS

ii)

iii)

iv)

As at March 31, 2012, 39,488,476 shares (As at March 31, 2011, 39,755,460 shares) were reserved for issuance as follows:

12,022 shares (As at March 31, 2011, 278,259 shares) of (cid:2)(cid:3)(cid:3)10 each towards outstanding employee stock options scheme
under ‘ESOP 2000’ granted/available for grant.

1,987,561 shares (As at March 31, 2011, 1,988,308 shares) of (cid:2)(cid:3)(cid:3)10 each towards outstanding employee stock options scheme
under ‘ESOP 2005’ granted/available for grant.

2,000,000 shares (As at March 31, 2011, 2,000,000 shares) of (cid:2)(cid:3)(cid:3)10 each towards outstanding employee stock options scheme
under ‘ESOP 2008’ granted/available for grant.

2,619,811 shares (As at March 31, 2011, 2,619,811 shares) of (cid:2)(cid:3)10 each towards conversion of foreign currency convertible
bonds available for conversion. Refer Note 25A.

32,869,082 shares (As at March 31, 2011, 32,869,082 shares) of (cid:2)(cid:3)(cid:3)10 each towards conversion of foreign currency convertible
bonds available for conversion. Refer Note 25B

Details of shares held by Promoter and Promoter Group

Name of the Shareholder

Subash Menon

Kivar Holdings Private Limited (KHPL) (including
Woodbridge Consulting & Investments Inc, which
merged with KHPL)

As at March 31, 2012

As at March 31, 2011

No. of Shares
Held

2,580,601

5,521,200

% Holding in
that Class of
Shares

No. of Shares
Held

3.72%

7.97%

2,580,601

5,521,200

% Holding in
that Class of
Shares

3.72%

7.97%

Total Promoter and Promoter Group

8,101,801

11.69%

8,101,801

11.69%

Aggregate number and class of shares allotted as fully paid up pursuant to contract(s) without payment being received in
cash, bonus shares and shares bought back for the period of 5 years immediately preceding the Balance Sheet date

Particulars

Company had issued Equity shares of (cid:2)(cid:3)(cid:3)10 each to the GDR holders as of June 22, 2006
towards consideration of cost of acquisition of Azure Solutions Limited at (cid:2)(cid:3)(cid:3)532.24 per
share.

Aggregate Number of Shares

As at
March 31, 2012

As at
March 31, 2011

11,728,728

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NOTES FORMING PART OF FINANCIAL STATEMENTS

NOTE
NO.

AS AT
MARCH 31, 2012
((cid:2) in Million)

AS AT
MARCH 31, 2011
((cid:2) in Million)

Note : 4

Reserves and Surplus

Capital Reserve

Opening Balance

Add : Additions during the year on account of reversal of
Accrued interest on conversion of FCCBs into Equity shares

Less : Transferred to Business Restructuring Reserve

Closing balance

General Reserve

Securities Premium Account

Opening Balance

Transferred to Business Restructuring Reserve

Add : Additions during the year on account of conversion of FCCBs, ESOP and
preferential placement of equity shares

Less : Expenses on issue of shares

Write back from/(Accrual for) redemption premium on FCCBs (Net)

Closing Balance

Business Restructuring Reserve

Opening Balance

Transferred from Securities Premium/Capital Reserve

Unutilised provisions created from BRR in earlier years now reversed

Amounts utilised for Permitted Utilisations (Net)

Closing Balance

Share Options Outstanding Account

Opening Balance

Add: Amounts recorded on Grants during the year

Less: Written back to the Statement of Profit and loss/other accounts
during the year

Closing Balance

Less : Deferred Stock Compensation Expenses

Share Options Outstanding Account (Net)

Surplus/(Deficit) in Statement of Profit and Loss

Opening balance

Add : Profit/(Loss) for the year

Closing Balance

Total Reserves and Surplus

34.67

37.05

(34.67)

37.62

(40.00)

34.67

177.98

733.39

0.03

(701.80)

31.62

389.84

34.67

25.32

(282.81)

167.02

71.88

15.57

(67.75)

19.70

8.35

11.35

2,206.53

(1,700.00)

785.71

(31.22)

(527.63)

733.39

200.21

1,740.00

(1,550.37)

389.84

74.40

6.45

(8.97)

71.88

8.71

63.17

1,025.34

23.97

1,049.31

310.25

715.09

1,025.34

1,437.28

2,424.39

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NOTES FORMING PART OF FINANCIAL STATEMENTS

Note : 5

Long-term Borrowings (Secured)

Other Loans and Advances - Hire Purchase Loan from Banks

3.73

NOTE
NO.

AS AT
MARCH 31,
2012
((cid:2) in Million)

AS AT
MARCH 31,
2011
((cid:2) in Million)

Total
A. Secured against the Hypothecation of vehicles financed under these loans. Hire Purchase loans amount to (cid:2)(cid:3)2.50 million as at
March 31, 2012 ((cid:2)(cid:3)(cid:3)9.16 million as at March 31, 2011). The interest rate on these loans range from 9% to 20%.The amounts due to
be repaid within one year from the balance sheet are included under Other Current Liabilities. Refer Note 8.

3.73

Note : 6

Long-term Provisions

Provision for Employee Benefits

Provision for compensated absences

Provision for gratuity

Provision for Tax
(net of advance tax (cid:2)(cid:3)(cid:3)13.29 million) (As at March 31, 2011 (cid:2)(cid:3)(cid:3)13.29 million )

Total

Note : 7

Short-term Borrowings

Loans repayable on demand

From banks

Secured

Unsecured

From Financial Institutions

Unsecured

Other Loans and Advances

Term Loans from Banks - Unsecured

Total

9.78

26.88

16.51

11.80

26.63

39.22

53.17

77.65

989.39
989.39

740.35

62.57

100.00

200.00

1,089.39

1,102.92

The Secured Loans from Banks are secured by a first charge on, present and future, Current and Fixed assets of the company.
Further portion of promoter shares are pledged for these facilities.

A Promoter of the company has provided a personal guarantee and the shares held by the promoters have been pledged
towards these loans.

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NOTES FORMING PART OF FINANCIAL STATEMENTS

Note : 8
Other Current Liabilities
Current Maturities of Long-term Borrowings - FCCBs (Unsecured)
Current maturities of Long-term borrowings - Hire Purchase Loans from Banks
(Secured)
Interest accrued but not due on borrowings
Unclaimed Dividends
Unearned Revenue
Advances from customers
Accrual for premium payable on redemption of bonds
Estimated Liability on Forward Contracts
Other Payables

Statutory remittances

Total

Note : 9
Short-term Provisions
Provision for Employee Benefits

Provision for compensated absences
Provision for gratuity
Warranty
Provision - Others

Provision for premium payable on redemption of bonds
Deferred Interest on Restructured FCCBs

Provision for Tax (net of advance tax (cid:2)(cid:3)(cid:3)Nil) (As at March 31, 2011 (cid:2)(cid:3)(cid:3)Nil )

Total

NOTE
NO.

AS AT
MARCH 31,
2012
((cid:2) in Million)

AS AT
MARCH 31,
2011
((cid:2) in Million)

25
5.A

38.2

25
38.5.a

28
34

4,772.08
4,772.08
2.50

10.94
0.41
155.28
42.83
1,842.15
123.94

4,183.01
5.43

9.59
0.59
154.84
38.73
-
-

27.25

49.26

6,977.38

4,441.45

0.85
1.09
4.23

-
-
0.14

0.98
-
4.23

1,140.35
80.78
-

6.31

1,226.34

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0
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3
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0
4
2

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5

9
7
4
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6
2

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6
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www.subex.com

NOTES FORMING PART OF FINANCIAL STATEMENTS

Note : 11
Non-Current Investments (At cost, unless otherwise stated)
(Long term, trade, unquoted)
Investments in Equity Instruments In wholly owned subsidiaries

3,999,994 equity shares of (cid:2)(cid:3)(cid:3)10 each fully paid up in Subex Technlogies Limited,
India {Net of provision for other than temporary diminution (cid:2)(cid:3)(cid:3)40 million (Previous
year - (cid:2)(cid:3)(cid:3)40 million)}

5,039,565,245 Equity shares fully paid, Par Value of GBP 0.00001 each, in Subex
(UK) Limited

100 equity shares full paid, no-par value, in Subex Americas Inc, Canada {Net of
provision for other than temporary diminution (cid:2)(cid:3)(cid:3)6,500 million (Previous year -
(cid:2)(cid:3)(cid:3)6,500 million)}

Total

Aggregate amount of unquoted investments (At cost)

Aggregate provision made for other than temporary diminution in value of long
term investments

Note: 12
Long-term Loans and Advances (Unsecured, considered good)
Advance Taxes (net of Provision for tax (cid:2)(cid:3)(cid:3)111.45 million, As at March 31, 2011
(cid:2)(cid:3)(cid:3)113.83 million)
Balances with government authorities - Service Tax Credit Receivable
Security Deposits
MAT credit entitlement

Total

Note: 13
Other Non - Current Assets
Long-term Trade Receivables
(Unsecured)
Outstanding for a period exceeding six months from due date
Considered Doubtful
Less: Provision for Doubtful Debts

Loans and advances to related parties

Unsecured, considered good
Doubtful
Less: Provision for doubtful loans and advances

NOTE
NO.

AS AT
MARCH 31,
2012
((cid:2) in Million)

AS AT
MARCH 31,
2011
((cid:2) in Million)

6,473.87

1,249.57

7,723.44

14,263.44

6,540.00

117.21

93.06

26.69
72.63
17.41

26.69
71.63
-

233.94

191.38

139.29
(139.29)
-

0.50
169.47
169.47
(169.47)

72.64
(72.64)
-

-
169.47
(169.47)

38.12
30.ii.e.v

www.subex.com

NOTES FORMING PART OF FINANCIAL STATEMENTS

Total
Note : 14
Trade Receivables
(Unsecured)
Outstanding for a period exceeding six months from due date
Considered Good

Other Trade receivables
Considered Good

Total

Note : 15
Cash and Cash Equivalents
Cash on hand
Balance with Banks

in Current Account
in Deposit Account
in EEFC accounts

in earmarked accounts

Unclaimed dividend accounts
Margin Money Deposits

Total

Note : 16
Short-term Loans and Advances
Loans and advances to related parties
Unsecured, considered good

NOTE
NO.

AS AT
MARCH 31,
2012
((cid:2) in Million)
0.50

AS AT
MARCH 31,
2011
((cid:2) in Million)
-

43.55

9.91

2,200.37

1,768.53

2,243.92

1,778.44

0.11
-
0.05

0.41
15.02

15.59

1.96
-
0.16

0.59
5.97

8.68

38.2

30.ii.e.iii
& 38.12

160.88

400.88

Loans and advances to employees (Unsecured, considered good)
Prepaid expenses (Unsecured, considered good)

Balances with government authorities (Unsecured, considered good)

Service Tax Credit Receivable
Others (Unsecured, considered good)

Advance to Suppliers

Total

Note : 17
Other Current Assets (Unsecured, considered good)
Unbilled Revenue
Accruals:

Interest accrued on deposits

Recoverable Expenses
Foreign Currency Monetary Item Translation Difference Account
Outstanding forward contract - Asset

27
38.5.a

www.subex.com

17.98
35.07

27.05

1.71

12.73
18.87

64.35

0.65

242.69

497.48

335.03

203.72

0.27

6.85
35.70
-

-
-
63.81

NOTES FORMING PART OF FINANCIAL STATEMENTS

Total

Note: 18
Revenue from Operations
Income from Sale of Products (and related services)

Platform Based Solutions
Standalone Product Solutions

Total

Note: 19
Employee Benefits Expense and Sub-contract Charges
Salaries & Wages
Contribution to Provident Fund and Other Funds
Expense on Employee Stock Option Scheme (ESOP)
Staff Welfare Expenses

Total

Note: 20
Other 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
Consultancy Charges
Payments to Auditors
Marketing & Allied Service Charges
Provision for Doubtful trade and other receivables
Miscellaneous Expenses

Total

Note: 21
Other Income
Exchange Fluctuation gain (Net)
Interest income

Interest on deposit accounts from banks
Interest on Inter Company loans

Other non-operating income

Provision for Doubtful Debts written back/Bad Debts recovered
Profit on sale of Fixed Assets (Net)
Miscellaneous Income

NOTE
NO.

AS AT
MARCH 31,
2012
((cid:2) in Million)
377.85

AS AT
MARCH 31,
2011
((cid:2) in Million)
267.53

209.13
3,080.98

2.70
3,132.83

3,290.11

3,135.53

740.84
33.81
(11.24)
25.84

789.25

2.04
90.61
21.62
34.47
11.67
10.42
3.09
119.04
7.29
6.35
10.66
7.81
1,144.89
66.66
7.91

736.22
29.86
2.62
29.46

798.16

5.15
88.49
22.08
34.06
13.17
12.24
4.68
117.47
5.67
6.34
14.92
7.86
959.83
-
1.69

1,544.53

1,293.65

72.44

0.43
15.72

6.32
0.76
4.49

98.22

2.02
30.12

15.34
0.41
11.66

www.subex.com

NOTES FORMING PART OF FINANCIAL STATEMENTS

Total

Note : 22
Finance Costs
Interest Expenses on:

Foreign Currency Convertible Bonds
Other Borrowings

Other Borrowings Costs - Bank Charges

Total

Note : 23
Exceptional Items
Exchange (Gain)/Loss on Restatement of FCCBs
Exchange (Gain)/Loss on intra group foreign currency loans and advances
Reversal of stock compensation expenses pursuant to voluntary surrender of
options

NOTE
NO.

AS AT
MARCH 31,
2012
((cid:2) in Million)
100.16

AS AT
MARCH 31,
2011
((cid:2) in Million)
157.77

104.54
291.77
7.61

403.92

553.36
(22.63)
(21.49)

94.33
311.37
6.18

411.88

(2.98)
(3.21)
-

Total

509.24

(6.19)

www.subex.com

NOTES FORMING PART OF FINANCIAL STATEMENTS

24. Accounting Under the Proposal Approved by the Hon’ble High Court

a) 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 utilised 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.

b) Adjustments in the BRR during the previous 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:3)

transfer of (cid:2)(cid:3)(cid:3) 1,740 million during the year from the balances in Securities Premium Account and Capital Reserve to the
BRR

(cid:2)(cid:3) utilization of the BRR for permitted utilisations to the extent of (cid:2)(cid:3) 1,550.37 million (net)

c) Adjustments in the BRR during the current year ended March 31, 2012

In accordance with the Proposal, the Board of Directors of the Company have approved the following for financial year
ended March 31, 2012:

(cid:2)(cid:3)
(cid:2)

transfer of (cid:2)(cid:3)(cid:3)34.67 million during the year from the balances in Capital Reserve to the BRR
utilization of the BRR for permitted utilisations to the extent of (cid:2)(cid:3)(cid:3)257.49 million (Net).

d) 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 (cid:2)(cid:3)(cid:3)Million except as otherwise indicated

In the Statement of Profit and Loss

- One time non-recurring expenses including restructuring fees, advisory fees,
marketing expenses and unrealizable advances, etc. (net)

- One time non-recurring Long term Retention benefit plan accrued/(reversed)
Sub-Total
Profit after Tax would have been lower by
Basic Earnings/(Loss) per share would have been – (cid:2)(cid:3)
Diluted Earnings/(Loss) per share would have been – (cid:2)(cid:3)(cid:3)

March 31,
2012

257.49

-
257.49
257.49
(3.37)
(3.37)

March 31,
2011

100.00

1,540.00

390.78

(480.41)
1,450.37
1,550.37
(13.22)
(13.22)

Note: Out of the balance outstanding in the Business Restructuring Reserve, an amount of (cid:2)(cid:3)(cid:3) Nil (as at March 31, 2011,
(cid:2)(cid:3)(cid:3) 280 million) is reserved for adjustment in Consolidation.

25. 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. 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 Old FCCBs with a face value of US$ 39 million (out
of the original bondholders holding US$ 180 million) did not choose the option for restructuring. The bonds were initially
redeemable on or by March 9, 2012, if not converted into equity shares as per terms of issue. Based on an approval received
from the Reserve Bank of India and bond holders, these bonds are now redeemable on July 9, 2012.

www.subex.com

NOTES FORMING PART OF FINANCIAL STATEMENTS

As at March 31, 2012, the face value of the US$ 39 million FCCBs amounts to (cid:2)(cid:3)(cid:3) 1,984.13 million (Previous Year: 1,739.21 million)
and is included in Note 8 - Other Current Liabilities as Current Maturities of Long-term borrowings-FCCBs (Unsecured).

The other terms and conditions governing the US$ 39 million Old FCCBs outstanding are as follows:

a) Conversion Price – (cid:2)(cid:3)(cid:3)656.20 per share
b) Exchange Rate for purpose of conversion - 1 US$ = (cid:2)(cid:3)(cid:3)44.08
Interest of 2% per annum payable semi-annually in arrears
c)
d) Premium payable on maturity US$ 14.05 million
e) Listing on the London Stock Exchange

The premium payable on maturity is being accrued prorata by a charge to Securities Premium/BRR over the term of the
FCCBs.

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 bonds were initially redeemable on or by March 9, 2012, if not converted into equity shares as per terms of issue.
Based on an approval received from the Reserve Bank of India and bond holders, these bonds are now redeemable on July
9, 2012.

Other terms and conditions governing the new FCCBs are as follows:
a) Conversion Price – (cid:2)(cid:3)(cid:3)80.31 per share
b) Exchange Rate for purpose of conversion - 1 US$ = (cid:2)(cid:3)(cid:3)48.17
c) 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

d) Premium payable on maturity – US$ 23.23 million.
e) Listing on the Singapore Exchange Securities Trading Limited

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, 2012 amount to US$ 54.8 million ((cid:2)(cid:3)(cid:3) 2,787.95 million), (Previous Year:
(cid:2)(cid:3)(cid:3) 2,443.80 million) and are included in other current liabilities under Note 8 – Other Current Liabilities as Current Maturities
of Long-term borrowings-FCCBs (Unsecured).

The premium payable on maturity is being accrued prorata by a charge to Securities Premium/BRR over the term of the
FCCBs.

26. Employees Stock Option Plan (ESOP)

The Company during the years 1999-2000, 2005-2006 and 2008-09 has established ESOP II, ESOP III and ESOP IV respectively.

These schemes have 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 these schemes, 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 Company has obtained in-principle approval for listing of shares upto a limit as mentioned below.

ESOP II : 883,750 shares
ESOP III : 2,000,000 shares
ESOP IV :V 2,000,000 shares

www.subex.com

NOTES FORMING PART OF FINANCIAL STATEMENTS

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

2011-12

2010-11

Options
(No’s)

Weighted
Average Exercise
Price Per Stock
Option ((cid:2)(cid:3)(cid:3))

Options
(No’s)

Weighted
Average Exercise
Price Per Stock
Option ((cid:2)(cid:3)(cid:3))

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

71.71
104.11
54.17

300,848
1,582,488
598,954

74.04
113.72
53.34

-
1,461,441
1,019,583

-
31.61
28.44

-
232,800
715,000

-
51.77
54.83

-
747
-

-
-
-

1,260
3,765
-

-
-
-

266,237

21,329

1,719,841

196,290

1,187,913

126,335

12,022
1,356,086
1,019,289

85.22
39.30
28.95

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

71.71
104.11
54.17

9,397
98,823
9,191

-
-
-

-
631,475
980,711

-
-
-

195,189
820,819
82,464

-
373,075
812,381

-
-
-

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

ESOP – II At March 31, 2011 : 2.07 Years At March 31, 2012: 1.54 Years

ESOP – III At March 31, 2011 : 2.98 Years At March 31, 2012: 3.81 Years

ESOP – IV At March 31, 2011 : 4.88 Years At March 31, 2012: 4.16 Years

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,
expected volatility of share: 33.73% (Previous Year: 48.39%) and expected dividend yield: 0% (Previous Year: 0%).The variables
detailed herein represent the average of the assumptions during the pendency of the grant dates.

www.subex.com

NOTES FORMING PART OF FINANCIAL STATEMENTS

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

Particulars

March 31, 2012 March 31, 2011

Amount in (cid:2)(cid:3)(cid:3) Million except as otherwise indicated

Net Profit for the year (as reported)

Add : Stock-based employee compensation relating to grants after Apr 1, 2006

Less : Stock-based compensation expenses determined under fair value based
method for the above grants

Net Profit/(loss) - (proforma)
Basic earnings per share (as reported) - (cid:2)
Basic earnings per share (proforma) - (cid:2)
Diluted earnings per share (as reported) - (cid:2)
Diluted earnings per share (proforma) - (cid:2)

23.97

(32.73)

3.30

(12.06)

0.35

(0.17)

0.35

(0.17)

715.09

2.62

37.39

680.32

11.32

10.77

7.88

7.53

27. The Company adopted the amendments to Accounting Standard 11 “The Effects of Changes in Foreign Exchange Rates”
that were notified during the year ended March 31, 2012. Pursuant to this amendment, exchange fluctuations arising on
restatement of all long term monetary foreign currency assets and liabilities at rates different from those at which they were
initially recorded or reported in the previous financial statements (whichever is later), are accumulated in a Foreign Currency
Monetary Item Translation Difference account and are amortised over the balance period of such long term asset/liability.
Consequently, exchange fluctuation losses (Net) arising on restatement of such items have been deferred to the extent of
(cid:2)(cid:3) 35.7 million at March 31, 2012 and the profit for the year is higher by a corresponding amount.

28. Employee Benefit Plans

a) Defined Contribution Plans

The Company makes contributions to Provident Fund, a defined contribution plan for qualifying employees. Under the
Scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The
Company recognised (cid:2)(cid:3)(cid:3) 30.96 million (Year ended March 31, 2011 (cid:2)(cid:3)(cid:3)29.18 million) for Provident Fund contributions in the
Statement of Profit and Loss.

b) Defined Benefit Plans

The Company offers Gratuity benefits to employees, a defined benefit plan. The following table sets out the funded status
of Gratuity liability and the amounts recognised in the financial statements:

Components of employer expense
1 Current Service cost

Interest cost

Expected return on plan assets

4 Curtailment cost/(credit)

Settlement cost/(credit)

Past Service Cost

7 Actuarial Losses/(Gains)

Total expense recognized in the Statement of Statement of Profit and Loss

II Actual Contribution and Benefit Payments for year ended March 31, 2012

1 Actual benefit payments

2 Actual Contributions

www.subex.com

Amount in (cid:2) Million except Assumptions
Gratuity

March 31, 2012 March 31, 2011

7.43

2.30

(0.16)

(6.72)

2.85

4.30

6.32

1.89

(0.34)

4.08

0.44

12.39

2.16

NOTES FORMING PART OF FINANCIAL STATEMENTS

III Net asset/(liability) recognized in Balance Sheet as at March 31, 2012

Present value of Defined Benefit Obligation (DBO)
1
Fair value of plan assets
2
Funded status [Surplus/(Deficit)]
3
4 Unrecognized Past Service Costs
5 Net asset/(liability) recognized in Balance Sheet

IV Change in Defined Benefit Obligations during the year ended March 31, 2012

Present Value of DBO at beginning of year

Interest cost

1
2 Current Service cost
3
4 Curtailment cost/(credit)
Settlement cost/(credit)
5
6
Plan amendments
7 Acquisitions

8 Actuarial (gains)/ losses
9 Benefits paid
10 Present Value of DBO at the end of year

V Change in Fair Value of Assets during the year ended March 31, 2012

Plan assets at beginning of year

Expected return on plan assets(estimated)

1
2 Acquisition Adjustment
3
4 Actuarial Gain/(Loss)
5 Actual Company contributions(less risk premium, ST)
6 Benefits paid
7

Plan assets at the end of period

Amount in (cid:2) Million except Assumptions
Gratuity

March 31, 2012 March 31, 2011

28.68
0.71
(27.97)
-
(27.97)

29.94
7.43
2.30
-
-
-
-

(6.69)
(4.30)
28.68

3.30
-
0.16
0.03
1.52
(4.30)
0.71

8.70%
8.60%
6.00%
5.00%

29.93
3.30
(26.63)
-
(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%

VI Actuarial Assumptions
1 Discount Rate
2
3
4 Attrition Rate

Expected Return on plan assets
Salary escalation

Experience History

Defined Benefit Obligation at end of the period
Plan Assets at end of the period
Funded Status
Experience Gain/(Loss)adjustments on Plan
Liabilities
Experience Gain/(Loss)adjustments on Plan
Assets
Actuarial Gain/(Loss) due to change on
assumptions

March 31,
2008
(10.30)
1.09
(9.21)

March 31,
2009
(15.33)
1.50
(13.83)

Period Ending
March 31,
2010
(19.32)
5.08
(14.24)

March 31,
2011
(29.94)
3.30
(26.64)

March 31,
2012
(28.68)
0.71
(27.97)

(1.13)

0.81

0.39

(0.48)

5.41

0.03

0.00

0.04

0.03

(0.13)

(1.22)

0.68

1.28

(cid:2)(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:2) Estimated amounts to be contributed in the immediate next year (cid:2)(cid:3)(cid:3) 1.095 million (Previous year (cid:2)(cid:3) Nil )
(cid:2) The discount rate is based on the prevailing market yields of Government of India securities as at the Balance Sheet

www.subex.com

NOTES FORMING PART OF FINANCIAL STATEMENTS

date for the estimated term of the obligations.

(cid:2) The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments

and other relevant factors

Actuarial Assumption for long term compensated absences

Discount rate

Expected return on plan asset

Salary escalation rate

Attrition

March 31, 2012

March 31, 2011

8.7%

8.3%

29. Since the Company prepares consolidated financial statements in addition to these financial statements, both of which form part
of the annual report of the Company, as permitted by Accounting Standard 17 “Segment reporting”, the segment information
is presented on the basis of the consolidated financial statements.

30. Related Party Information

i) Related Parties

Wholly Owned Subsidiaries
Subex Americas Inc.
Subex (UK) Limited
Subex Technologies Limited
Subex Azure Holdings Inc.
Subex (Asia Pacific) Pte. Ltd
Subex Inc.
Subex Technologies Inc.

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.

ii) Details of the transactions with the related parties:

Particulars

a) Marketing and allied Service Charges and reimbursement

( including software development charges)*

ii)

iii)

iv)

Subex (UK) Limited

Subex Inc.

Subex Americas Inc.

Subex (Asia Pacific) Pte. Ltd

Income from Software Development and Services:

ii)

iii)

iv)

Subex (UK) Limited

Subex Inc.

Subex (Asia Pacific) Pte. Ltd

Subex Americas Inc.

Subsidiaries

Amount in (cid:2) Million

Key Management
Personnel

2011-12

2010-11
2010-11

2011-12
2011-12

2010-11

613.69

658.98

97.08

53.86

873.09

386.18

152.98

372.66

445.21

601.90

36.15

66.28

648.05

307.41

332.91

428.63

www.subex.com

NOTES FORMING PART OF FINANCIAL STATEMENTS

Particulars

Salary and Perquisites (Also refer Note 38.10 and 38.11)

Subash Menon

Sudeesh Yezhuvath

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

ii)

iii)

iv)

Subex (UK) Limited

Subex Inc.

Subex (Asia Pacific) Pte. Ltd

Subex Americas Inc.

Loans outstanding as at year end from/(to)

ii)

iii)

iv)

Subex (UK) Limited

Subex (Asia Pacific) Pte. Ltd

Subex Americas Inc.

Subex Inc.

Subex Technologies Limited#

Interest received on Inter Company Loans

ii)

iii)

iv)

Subex (UK) Limited

Subex Americas Inc.

Subex Inc.

Subex (Asia Pacific) Pte Ltd

Expenses allocated to/(from):

ii)

iii)

iv)

Subex (UK) Limited

Subex, Inc.

Subex (Asia Pacific) Pte. Ltd

Subex Americas Inc.

Subsidiaries

Key Management
Personnel

2011-12

2010-11
2010-11

2011-12
2011-12

2010-11

21.65

19.74

21.21

19.57

(234.87)

(106.00)

477.10

1,545.92

(226.66)

368.99

429.83

837.39

160.88

400.88

169.97

169.47

15.72

11.19

5.20

0.39

2.38

0.03

28.25

1.84

1.43

1.18

0.07

0.91

* Amount paid/ payable in Foreign Currency.
# Advances to Subex Technologies Limited has been provided during the financial year 2010-11to an extent of (cid:2)169.47

million out of utilisation of BRR.

31. 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 Statement of Profit and Loss for the year is (cid:2) 90.61 million (Previous year - (cid:2) 88.49 million).

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

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

March 31, 2012
97.43
433.82
199.96

Amount in (cid:2) Million
March 31, 2011
97.33
417.36
313.85

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

www.subex.com

NOTES FORMING PART OF FINANCIAL STATEMENTS

32. Earnings Per Share (EPS)

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 (in million) for Basic EPS (C)
Effect of Existence of Dilutive Instruments (FCCBs and ESOPs) – (in million)
Weighted Average Number of Shares (in million) for Diluted EPS (D)
Earnings per Share – Basic [(A)/(C)] - (cid:2)
Earnings per Share - Diluted [(B)/(D)] - (cid:2)

Face value of shares: (cid:2) 10/- each

Amount in (cid:2) Million except as otherwise indicated
2010-11
2011-12
715.09
23.97
54.83
-
8.91
-
778.83
23.97
63.18
69.31
35.65
0.08
98.83
69.39
11.32
0.35
7.88
0.35

Note : FCCBs outstanding as at March 31, 2012 are anti-dilutive and hence have not been considered for purposes of Dilutive
EPS in year ended March 31, 2012.

Certain of the FCCBs as at March 31, 2011 were anti-dilutive and hence were not considered for purposes of Dilutive EPS in
year ended March 31, 2011.

33. Deferred Taxes

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

Particulars
Leave Encashment and Gratuity
Differences between the book balance and tax balance of Fixed assets
Total

34. Details of Warranty

Amount in (cid:2) Million

March 31, 2012
6.28
7.11
13.39

March 31, 2011
-
12.18
12.18

Amount in (cid:2) Million

Year

2011-12

Opening Balance

4.23

Additions During the
Year
-

Utilisation/Reversal
During the Year
-

Closing Balance

4.23

35. Contingent Liabilities

(a) Receivables factored: Current Year - (cid:2) 266.11 million (Previous year - (cid:2) 368.01 million).
(b) Claims against the Company not acknowledged as debt: Current Year – (cid:2) 1.59 million (Previous year - (cid:2) 64.52 million). These

claims relate to Indian Income Tax demands which are being contested by the Company.

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

CIF Value of Imports :
Import of systems and solutions
Capital goods
Expenditure in foreign currency (on accrual basis)
Traveling expenses
Interest expense
Product marketing expense and other expenditure incurred overseas for software
development. Also refer note 30(ii).
Earnings in foreign exchange (on accrual basis)
Income from software development services and products
Miscellaneous Income

www.subex.com

Year ended
March 31, 2012
7.97
12.18

Amount in (cid:2) Million
Year ended
March 31, 2011
9.04
13.07

51.85
169.62
0.82

49.39
161.78
1.64

2,972.07

2,882.13

11.36

NOTES FORMING PART OF FINANCIAL STATEMENTS

37. Payments to Auditors

Particulars
As Auditors – Statutory audit
For Taxation matters
For other services
For Reimbursement of Expenses
Total

38. Others

2011-12
6.50
0.15
1.00
0.16
7.81

Amount in (cid:2) Million
2010-11
6.50
0.15
1.00
0.21
7.86

1. Estimated amount of contracts, remaining to be executed on capital account and not provided for (net of advances paid)

(cid:2) 1.73 million (Previous year - (cid:2) 3.41 million)

2. Unclaimed dividend of (cid:2) 0.41 million as at March 31, 2012 (Previous Year - (cid:2) 0.59 million) represent dividends not claimed
for the period from 2004-2007. No part thereof has remained unpaid or unclaimed for a period of seven years from the date
they become due for payment requiring a transfer to the ‘Investor Education and Protection Fund’. During the current year,
the Company has transferred (cid:2) 0.18 million (Previous Year - (cid:2) 0.05 million) to Investor Protection Fund.

3. Direct Taxes paid and others in the Cash Flow Statement comprisesoutflows on account of permitted utilisations from the
BRR of (cid:2) 12.05 million (Previous Year - (cid:2) 20.91 million) and Direct Taxes of (cid:2) 39.17million. (Previous Year - (cid:2) 36.10 million).

4. Personnel Cost for the year includes expenditure on Research and Development of (cid:2) 129.51 million (Previous year -

(cid:2) 107.42 million). This is as certified by the management and relied upon by the auditors.

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

foreign exchange exposures.

(a)

Forward contracts to hedge foreign currency risk on export receivables

Amount in Million

Particulars

Forward contracts
- USD contracts

Foreign
Currency

March 31, 2012
Buy/
Sell

Amount
(INR)

Foreign
Currency

March 31, 2011
Buy/
Sell

Amount
(INR)

$ 36.13

Sell

1,732.85

$ 31.50

Sell

1,444.30

(b)

The yearend foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given
below:

Particulars

Receivable towards Export of Goods & Services

(Including receivables from wholly owned
subsidiaries)

Loans to wholly owned subsidiaries

March 31, 2012

March 31, 2011

Amount in Million

Amount
((cid:2))
2,199.40

1,640.26
697.98
6.64
16.63
4.95
1.57
7.04
5.31
0.25
49.37
111.51

Foreign
Currency
USD 43.23

GBP 20.14
SGD 17.24
AUD 0.13
EUR 0.25
AED 0.36
QAR 0.11
CHF 0.13
CAD 0.10
CNY 0.03
CAD 0.97
USD 2.19

Amount
((cid:2))
920.43

1,039.42
59.32
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

www.subex.com

NOTES FORMING PART OF FINANCIAL STATEMENTS

March 31, 2012

March 31, 2011

Amount in (cid:2) Million

Particulars

Import of goods and services

Capital goods (including intangibles)

Amount
((cid:2))
16.64

3.68

2.65

0.71

Foreign
Currency

USD 0.33

GBP 0.05

EUR 0.04

GBP 0.01

Amount
((cid:2))
5.12

Foreign
Currency

USD 0.11

2.44

EUR 0.03

3.80

Towards interest on Foreign Currency loans

10.94

USD 0.22

9.59

Differential interest on restructured FCCB’s

80.79

Towards Foreign Currency Convertible Bonds
(FCCB’s)

4,772.08

USD 93.80

4,183.01

Redemption premium accrued on FCCB’s

1,842.15

USD 36.21

1,140.35

Marketing and Allied Service Charges and
Software charges payable to wholly owned
subsidiaries

0.99

AED 0.07

0.80

6.36

0.13

CAD 0.12

EUR 0.00

0.95

129.47

USD 0.09

USD 0.22

USD 1.81

USD 93.80

USD 25.57

AED 0.07

CAD 0.02

EUR 2.04

1,553.95

GBP 19.08

963.32

GBP 13.42

0.02

MYR 0.00

13.07

118.12

SGD 2.92

52.14

MYR 0.89

SGD 1.47

2,668.95

USD 52.46

1,229.98

USD 27.58

6.26

THB 4.25

3.10

0.25

AUD 0.06

CNY 0.03

6. 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 is (cid:2) Nil
(Previous Year : Nil). This has been relied upon by the auditors.

7. Revenue is net of (cid:2) Nil (Previous Year: (cid:2) 20.62 million) being reversal of Unbilled Revenues.

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

were no inventory of such hardware/software at the beginning and end of the year.

The breakup of balances included in line 3(a) in the Statement of Profit and Loss is as under -

Particulars

Software charges

Purchased hardware/software

Total

Amount in (cid:2) Million

For the Year
Ended
March, 31 2012

For the Year
Ended
March, 31 2011

67.83

18.64

86.47

14.72

9. 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. Consequently, this will not have any impact on the
financial statements, particularly on account of tax expense and that of provision for taxation.

www.subex.com

NOTES FORMING PART OF FINANCIAL STATEMENTS

10. Remuneration to wholetime directors relating to earlier years which were subject to approval of Central Government
as at March 31, 2010 aggregated to (cid:2) 56.26 million. During the year ended March 31, 2011, the Company received the
approval for a portion of the above and accordingly, an amount of (cid:2) 33.27 million was charged to the Statement of Profit
and Loss for the year ended March 31, 2011 and the balance was recovered from the wholetime directors by March 31,
2011.

11. The Company has been legally advised that exchange differences arising out of the restatement/settlement of FCCBs, is
of a capital nature as contemplated under Section 349(5)(d) of the Companies Act, 1956 and not be deducted from the
profits of the Company in determining the remuneration and commission payable to directors. Accordingly, exchange
losses of (cid:2) 553.36 million (Previous year - exchange gain of (cid:2) 2.98 million) have been adjusted in determining the net
profits of the Company under Section 349 of the Companies Act.

12. Disclosure as per Clause 32 of the Listing Agreements with the Stock Exchanges

Loans and advances in the nature of loans given to subsidiaries:

Name of the Party

Relationship

Subex Americas Inc.

Wholly Owned Subsidiaries

Subex Technologies Limited

Wholly Owned Subsidiaries

Note: Figures in bracket relate to the previous year.

Amount in (cid:2) Million

Amount
Outstanding as at
March 31, 2012

Maximum Balance
Outstanding During the
Year

160.88
(400.88)

169.97
(169.47)

400.88
(400.88)

169.97
(169.47)

39. The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has
significantly impacted the disclosure and presentation made in the financial statements. Previous year’s figures have been
regrouped/reclassified wherever necessary to correspond with the current year’s classification/disclosures.

www.subex.com

financial review
subex limited (consolidated)

www.subex.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 31,2012, the Consolidated Statement of Profit
and Loss 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
regarding components.
Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.

information

2. We conducted our audit

3. We did not audit the financial statements of the
subsidiaries, whose financial statements reflect total assets
of (cid:2)(cid:3)143.15 million as at March 31, 2012, total revenues of
(cid:2)(cid:3)483.34 million and net cash inflows amounting to (cid:2)(cid:3) 0.05
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 2.I.b to the financial statements regarding Foreign
Currency Convertible Bonds having a face value of US$
93.8 million (equivalent (cid:2)(cid:3)(cid:3)4,772.08 million) which are
redeemable on 9th July 2012 along with premium of
US$ 37.28 million (equivalent (cid:2)(cid:3)(cid:3)1,896.62 million) and the
related costs that are determinable on redemption and
the management’s plans for meeting the redemption
obligations. 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 23 to the financial statements. 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 in prior years, credited
amounts aggregating to (cid:2)(cid:3)22.51 million (net of expenses)
to the Business Restructuring Reserve, instead of recording
such net gains in the Statement of Profit and Loss, as
required by Accounting Standard 5 ‘Net Profit or Loss for
the Period, Prior Period Items and Changes in Accounting
Policies’.

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, except for our
comments in paragraph 5 above.

the other financial

7. Further to our comments in paragraphs 4 and 5 above,
based on our audit and on consideration of the reports
of other auditors on separate financial statements
and on
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 6 above, give a true and fair view
in conformity with the accounting principles generally
accepted in India:

information of

(i) in the case of the Consolidated Balance Sheet, of the
state of affairs of the Group as at March 31, 2012;

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

(iii) in the case of 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 : Bangalore
Date : May 23, 2012

V. Balaji
Partner
(Membership No. 203685)

www.subex.com

CONSOLIDATED BALANCE SHEET AS AT

A EQUITY AND LIABILITIES

SHAREHOLDERS’ FUNDS
(a) Share Capital
(b) Reserves and Surplus
Sub Total - SHAREHOLDERS’ FUNDS

NON - CURRENT LIABILITIES
(a) Long-term Borrowings
(b) Deferred Tax Liabilities (net)
(c) Long-term Provisions
Sub Total - NON - CURRENT LIABILITIES

CURRENT LIABILITIES
(a) Short-term Borrowings
(b) Trade Payables - Other than acceptances
(c) Other Current Liabilities
(d) Short-term Provisions
Sub Total - CURRENT LIABILITIES
TOTAL

B ASSETS

NON - CURRENT ASSETS
(a) FIXED ASSETS

i) Tangible Assets
ii) Intangible Assets

(b) Goodwill on Consolidation
(c) Deferred Tax Assets (net)
(d) Long-term Loans and Advances
(e) Other Non - Current Assets
Sub Total - NON - CURRENT ASSETS

CURRENT ASSETS
(a) Trade Receivables
(b) Cash and Cash Equivalents
(c) Short-term Loans and Advances
(d) Other Current Assets
Sub Total - CURRENT ASSETS
TOTAL

NOTE
NO.

AS AT
MARCH 31, 2012
((cid:2) in Million)

AS AT
MARCH 31, 2011
((cid:2) in Million)

3
4

8
9

32
11
12

13
14
15
16

693.11
752.94
1,446.05

-
-
58.51
58.51

1,243.65
800.91
7,420.40
27.13
9,492.09
10,996.65

77.28
-
77.28
8,656.89
14.12
240.89
-
8,989.18

733.94
24.20
121.18
1,128.15
2,007.47
10,996.65

693.10
1,401.10
2,094.20

3.73
0.89
82.56
87.18

1,264.95
1,020.09
4,928.70
1,248.46
8,462.20
10,643.58

130.38
-
130.38
8,656.89
12.18
228.37
-
9,027.82

541.61
41.07
152.11
880.97
1,615.76
10,643.58

Corporate Information and Significant Accounting Policies
See accompanying notes forming part of the financial statements
In terms of our report attached

1 & 2

For Deloitte Haskins & Sells
Chartered Accountants

For and on behalf of the Board of Directors

V. Balaji
Partner

Bangalore
May 23, 2012

www.subex.com

Subash Menon
Founder Chairman
Managing Director & CEO

Sudeesh Yezhuvath
Chief Operating Officer
& Wholetime Director

Ramanathan J
Vice President- Finance &
Company Secretary

CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED

1 Revenue from Operations

NOTE
NO.

For the year
ended
MARCH 31, 2012
((cid:2) in Million)

For the year
ended
MARCH 31, 2011
((cid:2) in Million)

4,778.26

4,827.50

Total revenue

4,778.26

4,827.50

Expenses
(a) Cost of Hardware, Software and Support Charges
(b) Employee Benefits Expense and Sub-contract Charges
(c) Other Expenses
Total Expenses

4 Profit before other Income, exceptional items, interest, tax, depreciation

and amortisation (2 - 3)

5 Other Income

6 Profit before exceptional items, interest, tax, depreciation and

amortisation (4 + 5)

Finance Costs

8 Depreciation and amortisation expense

9 Profit/(Loss) before exceptional Items and tax (6 - 7 - 8)

10 Exceptional Items

11 Profit/(Loss) before Tax (9 - 10)

12 Tax expense

(a) Current Tax Expense for current year (net of reversal of (cid:2) 2.4 million

(Previous year (cid:2) Nil) relating to earlier years)
(Less): MAT credit

(b)
(c) Deferred Tax
Total Tax expense

13 Profit/(Loss) for the year (11 - 12)

14 Earnings/(Loss) Per Share (Face value of (cid:2)(cid:3)10/- each)

(a) Basic
(b) Diluted

Corporate Information and Significant Accounting Policies
See accompanying notes forming part of the financial statements

86.99
2,535.80
858.78
3,481.57

79.66
2,648.51
819.98
3,548.15

1,296.69

1,279.35

109.64

100.42

1,406.33

1,379.77

428.52

77.96

899.85

547.94

351.91

53.72

(17.41)
(2.81)
33.50

318.41

4.59
4.59

426.21

104.50

849.06

17.21

831.85

44.06

-
-
44.06

787.79

12.47
8.62

18
19

1 & 2

In terms of our report attached

For Deloitte Haskins & Sells
Chartered Accountants

V. Balaji
Partner

Bangalore
May 23, 2012

For and on behalf of the Board of Directors

Subash Menon
Founder Chairman
Managing Director & CEO

Sudeesh Yezhuvath
Chief Operating Officer
& Wholetime Director

Ramanathan J
Vice President- Finance &
Company Secretary

www.subex.com

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED

A Cash flow from Operating Activities

Net Profit/(Loss) before tax

Adjustments for
(a) Depreciation and amortization expense

(b)

Interest Income

(d)

(Profit)/Loss on sale/write off of assets- Net

(e) Expense/(Gain) on employee stock option scheme

(f ) Provision for doubtful Trade and other receivables

(g) Unrealised exchange (Gain)/Loss- Forward contracts

(h) Unrealised exchange (Gain)/Loss- Others

For the year
ended
MARCH 31, 2012
((cid:2) in Million)

For the year
ended
MARCH 31, 2011
((cid:2) in Million)

351.91

831.85

77.96

(3.45)

428.52

(0.27)

(52.20)

66.66

123.94

225.63

104.50

(2.00)

426.21

0.54

6.05

(63.81)

(0.52)

Operating profit/(loss) before working capital changes

1,218.70

1,302.82

Adjustments for (increase)/decrease in operating assets
(a) Trade receivables

(b) Short-term loans and advances

(d) Other current assets

Adjustments for increase/(decrease) in operating liabilities
(a) Trade payables

(b) Other current liabilities

(d) Long-term provisions

(229.55)

87.46

(0.44)

(211.22)

(205.72)

(71.10)

(0.33)

(1.81)

(117.83)

104.12

(419.10)

(293.94)

27.82

16.02

Cash generated from/(used in) operations

585.99

619.91

Net tax (paid)/refunds and others - Refer Note 36.3

(66.47)

(87.72)

Net cash flow from/(used in) operating activities (A)

519.52

532.19

B Cash Flow from Investing activities

(a) Capital expenditure on fixed assets, including capital advances

(b) Proceeds from sale of fixed assets

(c)

Interest received - Others

(33.62)

14.91

3.18

(40.15)

2.76

2.00

Net cash flow from/(used in) investing activities (B)

(15.53)

(35.39)

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CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED

C Cash Flow from Financing Activities

(a) Proceeds/(Utilisation) from issue of Equity shares
(b) Net increase/(decrease) in working capital borrowings
(c) Repayment of Short-term borrowings
(d) Repayment of Long-term borrowings
(e) Dividends paid- Refer Note 36.2
(f ) Finance cost
(g) Expenditure incurred on issue of Shares

For the year
ended
MARCH 31, 2012
((cid:2) in Million)

For the year
ended
MARCH 31, 2011
((cid:2) in Million)

0.04
178.70
(200.00)
(6.65)
(0.18)
(498.56)
-

334.55
558.00

(875.02)
(0.05)
(512.56)
(31.22)

Net cash flow from/(used in) financing activities (C)

(526.65)

(526.30)

Net increase/(decrease) in Cash and cash equivalents (A+B+C)
Effect of Exchange Differences on restatement/ translation of foreign
currency cash and cash equivalents

(22.66)
5.79

(29.50)
(1.82)

Cash or Cash equivalents at the beginning of the year

Cash or Cash equivalents at the end of the year (Refer Note 14)
* Cash and cash equivalents

Cash on hand
Balance with Banks

in Current Account
in Deposit Account
in EEFC accounts

In earmarked accounts

Unclaimed dividend accounts
Margin Money Deposits

Total

41.07

24.20

0.08

5.10
-
0.05

0.41
18.56

24.20

72.39

41.07

0.07

23.53
-
0.16

0.59
16.72

41.07

Corporate Information and Significant Accounting Policies

1 & 2

Notes:
(i) The earmarked account balances with banks can be utilised only for the specific identified purposes.
(ii) See accompanying notes forming part of the financial statements

In terms of our report attached

For Deloitte Haskins & Sells
Chartered Accountants

V. Balaji
Partner

Bangalore
May 23, 2012

For and on behalf of the Board of Directors

Subash Menon
Founder Chairman
Managing Director & CEO

Sudeesh Yezhuvath
Chief Operating Officer
& Wholetime Director

Ramanathan J
Vice President- Finance &
Company Secretary

www.subex.com

NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS

SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO
THE ACCOUNTS TO THE CONSOLIDATED FINANCIAL
STATEMENTS

arising on long term foreign currency monetary items
that was notified during the year ended March 31, 2012.
(Refer Note 26).

1. CORPORATE INFORMATION

integrity management,

The Company pioneered the concept of a Revenue
Operations Center (ROC) – a centralized approach that
sustains profitable growth and financial health for the CSPs
through coordinated operational control. Subex’ s product
portfolio powers the ROC and its best-in-class solutions
enable new service creation, operational transformation,
fulfillment, provisioning automation,
subscriber-centric
data
revenue assurance, cost
management, fraud management and interconnect/inter-
party settlement. Subex also offers a scalable Managed
Services Program. The CSPs achieve competitive advantage
through Business Optimization and Service Agility and
improve their operational efficiency to deliver enhanced
service experiences to their subscribers. The Company has a
development center in India and sales offices in the form of
wholly owned subsidiaries/ branches in UK, USA, Singapore,
Australia, Dubai and Canada.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis for preparation of Financial Statements

(Accounting Standards) Rules, 2006

a. The financial statements of the Company have been
prepared in accordance with the Generally Accepted
Accounting Principles in India (Indian GAAP) to comply
with the Accounting Standards notified under the
Companies
(as
amended) and the relevant provisions of the Companies
Act, 1956 except to the extent permitted under the
Proposal approved by the Hon’ble High Court of
Karnataka (Refer Note 23). The financial statements have
been prepared on accrual basis under the historical cost
convention. The accounting policies adopted in the
preparation of the financial statements are consistent
with those followed in the previous year except for the
adoption of the provisions of Para 46A of Accounting
Standard 11 “The Effects of Changes in Foreign Exchange
Rates” regarding the accounting for exchange differences

b. The Company has outstanding Foreign Currency
Convertible Bonds (FCCBs) having face value of US$
93.8 million (equivalent (cid:2)(cid:3)(cid:3)4,772.08 million) which are
redeemable on 9th July 2012 along with premium of US$
37.28 million (equivalent (cid:2)(cid:3)(cid:3)1,896.62 million) (refer Notes
24A and 24B) and the related costs that are determinable
on redemption. The Company is in discussion with
the bond holders to meet this obligation by way of a
cashless exchange offer of new bonds with a maturity
upto July 2017. The Company has also obtained
the approval from Reserve Bank of India (RBI) in support
of this restructuring based on which the Company
expects to conclude this restructuring by the date of
redemption of the FCCBs and thereby meet all repayment
obligations that arise on account of FCCBs. Consequently
these financial statements are prepared on a going
concern basis.

II. Use of Estimates

III. Principles of Consolidation

The financial statements of the Company and its 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.

www.subex.com

NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS

The following entities are considered in the consolidated financial statements.

Name of Entity

Country of Incorporation

Subex Technologies Limited

India

% of
Ownership
Held at
March 31, 2012
100

% of
Ownership
Held at
March 31, 2011
100

United States of America

100

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

United Kingdom
United States of America

Singapore

Canada

Subex Azure Holdings Inc.
(wholly owned subsidiary of Subex Americas Inc.)
Syndesis Development India Private Limited*

United States of America

India

100
100

100

100
100

100

Sl.
No.

3
4

* During the year Syndesis Development India Private Limited (wholly owned subsidry of Subes Americas Inc.) has been wound up
under the Easy Exit Scheme

The financial statements of
its
subsidiaries are prepared under uniform accounting policies
in accordance with the generally accepted accounting
principles in India.

the Company and

IV. Revenue Recognition

licenses,

from Contracts

for software product

license
Revenue
includes fees for transfer of
installation and
commissioning. This revenue is on the basis of milestones
achieved, determined based on percentage of completion
of work completed at each milestone 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 software licenses (including additional
licenses) are recognized on transfer of such licenses.

Maintenance and service income is recognised on time
proportion basis.

V. Tangible Fixed Assets

arising

differences

restatement/
Exchange
long term foreign currency borrowings
settlement of
relating
to acquisition of depreciable fixed assets
are adjusted to the cost of the respective assets and
depreciated over the remaining useful life of such assets.
is
Subsequent expenditure
capitalised only if such expenditure results in an increase
in the future benefits from such asset beyond its previously
assessed standard of performance. Fixed assets acquired
and put to use for project purpose are capitalised and
depreciation thereon is included in the project cost till
commissioning of the project.

to fixed assets

relating

VI. Intangible Assets

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

www.subex.com

NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS

purchase/completion is recognised as an expense when
incurred unless it is probable that such expenditure will
enable the asset to generate future economic benefits in
excess of its originally assessed standards of performance
and such expenditure can be measured and attributed to
the asset reliably, in which case such expenditure is added to
the cost of the asset (Refer Note: 2.XII for accounting for R&D
expenses).

VII. Depreciation & Amortisation

The rates of depreciation/amortisation adopted are as under:

Particulars

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

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

Individual assets costing less than (cid:2)(cid:3)(cid:3)5,000 are depreciated in
full, in the year of purchase.

The estimated useful life of the intangible assets and the
amortisation period are reviewed at the end of each financial
year and the amortisation method is revised to reflect the
changed pattern.

VIII. Employee Stock Option Plans

Defined Contribution Plans: The Company’s contribution
to provident fund is considered as defined contribution
plan and
is charged as an expense as they fall due
based on the amount of contribution required to be made.

Defined Benefit Plans: For defined benefit plans in the form
of gratuity fund, the cost of providing benefits is determined
using the Projected Unit Credit method, with actuarial
valuations being carried out at each Balance Sheet date.
Actuarial gains and losses are recognised in the Statement
of Profit and Loss in the period in which they occur.
Past service cost is recognised immediately to the extent
that the benefits are already vested and otherwise
is
amortised on a straight-line basis over the average period
until the benefits become vested. The retirement benefit
obligation recognised in the Balance Sheet represents the
present value of the defined benefit obligation as adjusted for
unrecognised past service cost, 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 reductions in future contributions to
the schemes.

Short-term Employee Benefits: The undiscounted amount
of short-term employee benefits expected to be paid in
exchange for the services rendered by employees are
recognised during the year when the employees render the
service. These benefits include retention and performance
linked payouts and
compensated absences which
are expected to occur within twelve months after the end
of the period in which the employee renders the related
service. The cost of such compensated absences is accounted
as under:

(a) in case of accumulated compensated absences,
when employees render the services that
increase
their entitlement of future compensated absences;
and

(b) in case of non-accumulating compensated absences,

when the absences occur.

Long-term Employee Benefits: Compensated absences
which are not expected to occur within twelve months
after the end of the period
in which the employee
renders the related service are recognised as a liability
at the present value of the defined benefit obligation
less the fair value of
as at the Balance Sheet date
the plan assets out of which the obligations are expected to
be settled.

IX. Employee Benefits

X. Other Income

Employee benefits include provident fund, gratuity fund,
compensated absences, retention and performance linked
payouts.

Interest income is accounted on accrual basis. Dividend
income is accounted for when the right to receive it is
established.

www.subex.com

NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS

XI. Leases

XII. Research and Development

XIII. Foreign Currency Transactions

Initial recognition

Transactions in foreign currencies entered into by the
Company and its integral foreign operations are accounted at
the exchange rates prevailing on the date of the transaction
or at rates that closely approximate the rate at the date of the
transaction

Measurement of foreign currency monetary items at the
Balance Sheet date

Foreign currency monetary items (other than derivative
contracts) of the Company outstanding at the Balance Sheet
date are restated at the year-end rates.

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 the average exchange rates prevailing during the
year. Exchange differences arising out of these translations
are charged to the Statement of Profit and Loss.

Treatment of exchange differences

The exchange differences arising on restatement/settlement
of long term foreign currency monetary items are:

(cid:2)(cid:3) capitalised, if related to acquisition of depreciable fixed
assets, and depreciated over the remaining useful life of
such assets; or

(cid:2)(cid:3) amortised over the maturity period of such items in other

cases.

Accounting for Forward Contracts: Premium/discount on
forward exchange contracts, which are not intended for
trading or speculation purposes, are amortised over the
period of the contracts if such contracts relate to monetary
items as at the Balance Sheet date.

All other derivative contracts are marked-to-market and
losses are recognised in the Statement of Profit and Loss.
Gains arising on the same are not recognised, until realised,
on grounds of prudence.

On Consolidation:

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.

XIV. Investments

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

XV. Taxes on Income

Current tax is the amount of tax payable on the taxable
income for the year as determined in accordance with the
provisions of the Income Tax Act, 1961.

www.subex.com

NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS

Deferred tax

Deferred tax is recognised on timing differences, being
the differences between the taxable
income and the
accounting income that originate in one period and are
capable of reversal in one or more subsequent periods.
Deferred tax is measured using the tax rates and the
laws enacted or substantively enacted as at the
tax
reporting date.
liabilities are recognised
for all timing differences. Deferred tax assets in respect
forward of
of unabsorbed depreciation and carry
losses are recognised only
is virtual certainty
that there will be sufficient future taxable income available
to realise such assets. Deferred tax assets are recognised
for timing differences of other items only to the extent
that reasonable certainty exists that sufficient
future
taxable
income will be available against which these
can be realised. Deferred tax assets and liabilities are
income levied
items relate to taxes on
offset
by the same governing tax
laws and the Company
has a legally enforceable right for such set off. Deferred tax
assets are reviewed at each Balance Sheet date for their
realisability.

if there

if such

XVI. Cash and Cash Equivalents (for Purposes of Cash Flow
Statement)

Cash comprises cash on hand and demand deposits
with banks. Cash equivalents are short-term balances,
highly
investments that are readily convertible
into known amounts of cash and which are subject to
insignificant risk of changes in value.

liquid

XVII. Cash Flow Statement

Cash flows are reported using the
indirect method,
whereby profit/(loss) before tax, is adjusted for the effects
of transactions of non-cash nature and any deferrals or
accruals of past or future cash receipts or payments. The
cash flows from operating, investing and financing activities
of the Company are segregated based on the available
information.

XVIII. Provisions and Contingencies

Provisions are not discounted to

is recognized when an enterprise has a
A provision
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.
its
present value and are determined based on best
estimate required to settle the obligation at the balance
sheet date.
reviewed at each balance
sheet date and adjusted to reflect the current best
estimates. Contingent
for
but disclosed in the notes to the financial statements.

liabilities are not provided

These are

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XIX. Impairment of Assets

The carrying values of assets/cash generating units at each
Balance Sheet date are reviewed for impairment. If any
indication of impairment exists, the recoverable amount of
such assets is estimated and impairment is recognised, if the
carrying amount of these assets exceeds their recoverable
amount. The recoverable amount is the greater of the net
selling price and their value in use. Value in use is arrived at
by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is
indication that an impairment loss recognised for an asset
in earlier accounting periods no longer exists or may have
decreased, such reversal of impairment loss is recognised in
the Statement of Profit and Loss, except in case of revalued
assets.

XX. Earnings Per Share

Basic earnings per share is computed by dividing the profit/
(loss) after tax (including the post tax effect of extraordinary
items, if any) by the weighted average number of equity
shares outstanding during the year. Diluted earnings per
share is computed by dividing the profit/(loss) after tax
(including the post tax effect of extraordinary items, if any) as
adjusted for dividend, interest and other charges to expense
or income relating to the dilutive potential equity shares, by
the weighted average number of equity shares considered for
deriving basic earnings per share and the weighted average
number of equity shares which could have been issued
on the conversion of all dilutive potential equity shares.
Potential equity shares are deemed to be dilutive only if their
conversion to equity shares would decrease the net profit per
share from continuing ordinary operations. Potential dilutive
equity shares are deemed to be converted as at the beginning
of the period, unless they have been issued at a later date. The
dilutive potential equity shares are adjusted for the proceeds
receivable had the shares been actually issued at fair value
(i.e. average market value of the outstanding shares). Dilutive
potential equity shares are determined independently for
each period presented. The number of equity shares and
potentially dilutive equity shares are adjusted for share
splits/reverse share splits and bonus shares, as appropriate.

XXI. Segment Reporting

The Company identifies primary segments based on the
dominant source, nature of risks and returns and the internal
organisation and management structure. The operating
segments are the segments for which separate financial
information is available and for which operating profit/
loss amounts are evaluated regularly by the executive
Management in deciding how to allocate resources and in
assessing performance.

NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS

Note : 3
Share Capital
AUTHORISED
245,040,000 Equity Shares of (cid:2)(cid:3)(cid:3)10/- each (Previous Year: 128,040,000
Equity Shares of (cid:2)(cid:3)10/- each)

200,000 Preference Shares of (cid:2)(cid:3)(cid:3)98/- each

Total

ISSUED, SUBSCRIBED AND PAID UP EQUITY SHARES
69,310,772 Equity Shares of (cid:2)(cid:3)10/- each (Previous Year : 69,310,025 Equity
Shares of (cid:2)(cid:3)(cid:3)10/- each)

Total

AS AT
MARCH 31, 2012
((cid:2) in Million)

AS AT
MARCH 31, 2011
((cid:2) in Million)

2,450.40

1,280.40

19.60

2,470.00

1,300.00

693.11

693.10

693.11

693.10

NOTES
A

Reconciliation of the number of Equity shares at the beginning and at the end of the reporting period

Particulars

Equity shares
Year ended March 31, 2012
Year ended March 31, 2011

Opening
Balance

Fresh Issue

ESOP

Conversion of
FCCB

Closing
Balance

69,310,025
57,983,139

-
4,124,254

747
5,025

-
7,197,607

69,310,772
69,310,025

Reconciliation of the amount outstanding at the beginning and at the end of the reporting period

Particulars

Equity shares
Year ended March 31, 2012
Year ended March 31, 2011

Opening
Balance
((cid:2)(cid:3)(cid:3)Million)

Fresh Issue
((cid:2)(cid:3)Million)

ESOP
((cid:2)(cid:3)(cid:3)Million)

Conversion of
FCCB
((cid:2)(cid:3)Million)

Closing
Balance
((cid:2)(cid:3)Million)

693.10
579.83

-
41.24

0.01
0.05

-
71.98

693.11
693.10

The Company has only one class of Equity Share, having a par value of (cid:2)(cid:3)10/-. The holder of equity shares is entitled to
one vote per share and such amount of dividend per share as declared by the Company. In the event of liquidation of the
Company, the holders of the equity shares will be entitled to receive any of the remaining assets of the Company, after
distribution to all other parties concerned. The distribution will be in proportion to number of equity shares held by the
shareholders.
Details of shares held by each shareholder holding more than 5% shares

Class of Shares/Name of Shareholder

As at March 31, 2012

As at March 31, 2011

No. of Shares
Held

% Holding in
that Class of
Shares

No. of Shares
Held

% Holding in
that Class of
Shares

Equity shares
3,498,288
GIC Singapore
852,920
KBC Aldini Capital Mauritius Limited
Promoter and Promoter Group (See Note E below)
8,101,801
Bank of New York is the depositary of GDRs on behalf of GDR holders holding 7,008,746 shares representing 10.11% of total
shareholding (Previous Year : 9,192,035 shares representing 13.26%). The Company does not have details of individual GDR
holders/beneficiaries to determine if anyone holds more than 5% of the beneficial interest individually in the equity shares.

3,085,274
4,124,254
8,101,801

5.05
1.23
11.69

4.45
5.95
11.69

www.subex.com

NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS

ii)

iii)

iv)

As at March 31, 2012, 39,488,476 shares (As at March 31, 2011, 39,755,460 shares) were reserved for issuance as follows:

12,022 shares (As at March 31, 2011, 278,259 shares) of (cid:2)(cid:3)10 each towards outstanding employee stock options scheme
under ‘ESOP 2000’ granted/available for grant.

1,987,561 shares (As at March 31, 2011, 1,988,308 shares) of (cid:2)(cid:3)10 each towards outstanding employee stock options scheme
under ‘ESOP 2005’ granted/available for grant.

2,000,000 shares (As at March 31, 2011, 2,000,000 shares) of (cid:2)(cid:3)10 each towards outstanding employee stock options scheme
under ‘ESOP 2008’ granted/available for grant.

2,619,811 shares (As at March 31, 2011, 2,619,811 shares) of (cid:2)(cid:3)10 each towards conversion of foreign currency convertible
bonds available for conversion. Refer Note 24.A

32,869,082 shares (As at March 31, 2011, 32,869,082 shares) of (cid:2)(cid:3)(cid:3)10 each towards conversion of foreign currency convertible
bonds available for conversion. Refer Note 24.B

Details of shares held by Promoter and Promoter Group

Name of the Shareholder

Subash Menon
Kivar Holdings Private Limited (KHPL) (including
Woodbridge Consulting & Investments Inc, which
merged with KHPL)
Total Promoter and Promoter Group

As at March 31, 2012

As at March 31, 2011

No. of Shares
Held

2,580,601
5,521,200

% Holding in
that Class of
Shares

No. of Shares
Held

3.72%
7.97%

2,580,601
5,521,200

% Holding in
that Class of
Shares

3.72%
7.97%

8,101,801

11.69%

8,101,801

11.69%

Particulars

Company had issued Equity shares of (cid:2)(cid:3)10 each to the GDR holders as of June 22, 2006
towards consideration of cost of acquisition of Azure Solutions Limited at (cid:2)(cid:3)(cid:3)532.24 per
share.

Aggregate Number of Shares

As at
March 31, 2012
11,728,728

As at
March 31, 2011
11,728,728

www.subex.com

NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS

Note : 4
Reserves and Surplus
Capital Reserve
Opening Balance

Add : Additions during the year on account of reversal of
Accrued interest on conversion of FCCBs into Equity shares
Less : Transferred to Business Restructuring Reserve
Closing balance

General Reserve

Securities Premium Account
Opening Balance
Transferred from/(to) Business Restructuring Reserve
Add : Additions due to conversion of FCCBs, ESOP and preferential
placement of equity shares

Less : Expenses on issue of shares
Write back from/(accrual for) redemption premium on FCCBs (Net)
Closing Balance

Business Restructuring Reserve
Opening Balance
Transferred from/(to) Capital Reserve
Transferred from/(to) Securities Premium
Unutilised provisions created from BRR in earlier years now reversed
Amounts utilised for Permitted Utilisations
Closing Balance

Share Options Outstanding Account
Opening Balance

Add: Amounts recorded on Grants during the year

Less: Written back to the Statement of Profit and loss/other accounts
during the year

Closing Balance

Less : Deferred Stock Compensation Expenses

Share Options Outstanding Account (Net)

Exchange Reserve on Consolidation
Opening Balance

Effect of Foreign exchange rate variations during the year

Closing Balance

Surplus/(Deficit) in Statement of Profit and Loss
Opening balance

Add : Profit/(Loss) for the year

Closing Balance

Total Reserves and Surplus

NOTE
NO.

AS AT
MARCH 31, 2012
((cid:2) in Million)

AS AT
MARCH 31, 2011
((cid:2) in Million)

34.67

37.05

-
(34.67)
-

37.62
(40.00)
34.67

177.98

733.39
-
0.03

-
(701.80)
31.62

109.84
34.67
-
85.43
(62.92)
167.02

71.88

15.57

(67.75)

19.70

8.35

11.35

(182.35)

(235.49)

(417.84)

464.40

318.41

782.81

2,206.53
(1,700.00)
785.71

(31.22)
(527.63)
733.39

200.21
40.00
1,700.00
-
(1,830.37)
109.84

74.40

6.45

(8.97)

71.88

8.71

63.17

(205.33)

22.98

(182.35)

(323.39)

787.79

464.40

752.94

1,401.10

www.subex.com

NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS

Note : 5

Long-term Borrowings (Secured)

Other Loans and Advances - Hire Purchase Loan from Banks

3.73

NOTE
NO.

AS AT
MARCH 31, 2012
((cid:2) in Million)

AS AT
MARCH 31, 2011
((cid:2) in Million)

Total
A. Secured against the Hypothecation of vehicles financed under these loans. Hire Purchase loans amount to (cid:2) 2.50 million as at
March 31, 2012 ((cid:2) 9.16 million as at March 31, 2011). The interest rate on these loans range from 9% to 20%. The amounts due to be
repaid within one year from the balance sheet are included under Other Current Liabilities. Refer Note 8.

3.73

Note : 6

Long-term Provisions

Provision for Employee Benefits

Provision for compensated absences

Provision for gratuity

Provision for other employee benefits

Provision for Tax
(net of advance tax (cid:2) 138.10 million) (As at March 31, 2011 (cid:2) 28.08 million )

Total

Note : 7

Short-term Borrowings

Loans repayable on demand

From banks

Secured

Unsecured

From Financial Institutions

Unsecured

Other Loans and Advances

Term Loans from Banks - Unsecured

Total

27.b

9.78

26.88

0.06

21.79

11.79

26.64

0.10

44.03

58.51

82.56

1,132.02

11.63

770.82

194.13

100.00

200.00

1,243.65

1,264.95

A The Secured Loans from Banks are secured by a first charge on, present and future, Current and Fixed assets of the company.

Further portion of promoter shares are pledged for these facilities.

B A Promoter of the company has provided a personal guarantee and the shares held by the promoters have been pledged

towards these loans.

www.subex.com

NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS

Note : 8
Other Current Liabilities
Current Maturities of Long-term Borrowings - FCCB (Unsecured)
Current maturities of Long-term borrowings - Hire Purchase Loans from Banks
(Secured)
Interest accrued but not due on borrowings
Unclaimed Dividends
Unearned Revenue
Advances from customers
Accrual for premium payable on redemption of bonds
Estimated Liability on Forward Contracts
Other Payables

Statutory remittances

Total

Note : 9
Short-term Provisions
Provision for Employee Benefits

Provision for compensated absences
Provision for gratuity
Warranty
Provision - Others

Provision for premium payable on redemption of bonds
Deferred Interest on Restructured FCCBs

Provision for Tax (net of advance tax (cid:2)(cid:3)(cid:3)Nil) (As at March 31, 2011 (cid:2)(cid:3)Nil )

NOTE
NO.

AS AT
MARCH 31, 2012
((cid:2) in Million)

AS AT
MARCH 31, 2011
((cid:2) in Million)

24
5.A

36.2

24
36.5

27.b
33

4,772.08
4,772.08
2.50

20.33
0.41
530.66
67.96
1,842.15
123.94

4,183.01
5.43

9.59
0.59
616.35
45.42
-
-

60.37

68.31

7,420.40

4,928.70

16.15
6.61
4.23

-
-
0.14

20.38
2.72
4.23

1,140.35
80.78
-

Total

27.13

1,248.46

www.subex.com

NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS

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www.subex.com

NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS

NOTE
NO.

AS AT
MARCH 31, 2012
((cid:2) in Million)

AS AT
MARCH 31, 2011
((cid:2) in Million)

Note : 11
Long-term Loans and Advances (Unsecured, considered good)
Advance Taxes (net of provision of (cid:2)(cid:3)(cid:3)109.39 million) (As at March 31, 2011
(cid:2) 121.83 million)
Balances with government authorities - Service Tax Credit Receivable
Security Deposits
MAT credit entitlement

Total

Note : 12
Other Non-current Assets (Unsecured, considered good)
Long-term Trade Receivables
(Unsecured)
Outstanding for a period exceeding six months from due date
Considered Doubtful
Less: Provision for Doubtful Debts

Total

Note : 13
Trade Receivables
(Unsecured)
Outstanding for a period exceeding six months from due date
Considered Good

Other Trade receivables
Considered Good

Total

Note : 14
Cash and Cash Equivalents
Cash on hand
Balance with Banks

in Current Account
in EEFC accounts

in earmarked accounts

Unclaimed dividend accounts
Margin Money Deposits

Total

117.27

122.60

26.69
79.52
17.41

26.69
79.08
-

240.89

228.37

152.33
(152.33)

84.09
(84.09)

51.46

11.08

682.48

733.94

530.53

541.61

0.08

5.10
0.05

0.41
18.56

24.20

0.07

23.53
0.16

0.59
16.72

41.07

www.subex.com

36.2

NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS

NOTE
NO.

AS AT
MARCH 31, 2012
((cid:2) in Million)

AS AT
MARCH 31, 2011
((cid:2) in Million)

Note: 15
Short-term Loans and Advances (Unsecured, considered good)
Loans and advances to employees
Prepaid expenses
Balances with government authorities
Service Tax Credit Receivable

Others

Advance to Suppliers

Total

Note : 16
Other Current Assets
Unbilled Revenue
Accruals:

Interest accrued on deposits

Others:

Receivable on sale of Activation assets (pertaining to Activation business)
Recoverable Expenses
Foreign Currency Monetary Item Translation Difference Account
Outstanding forward contract - Asset

26
36.5

26.44
63.77

27.05

3.92

20.17
64.97

64.35

2.62

121.18

152.11

1,002.67

817.16

0.27

76.31
13.20
35.70
-

-
-
-
63.81

Total

1,128.15

880.97

Note: 17
Revenue from Operations
Income from Sale of Products (and related services)
Income from Sale of Services

Total

Note: 18
Employee Benefits Expense and Sub-contract Charges
Salaries & Wages
Contribution to Provident Fund and Other Funds
Expense on Employee Stock Option Scheme (ESOP)
Staff Welfare Expenses

Sub-contract Charges

Total

4,294.92
483.34

4,181.18
646.32

4,778.26

4,827.50

2,172.98
128.99
(11.84)
120.71
2,410.84
124.96

2,255.33
112.02
6.05
130.49
2,503.89
144.62

2,535.80

2,648.51

www.subex.com

NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS

Note: 19
Other 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
Consultancy Charges
Payments to Auditors
Commission on Sales
Provision for Doubtful trade and other receivables
Miscellaneous Expenses
Loss on sale of Fixed assets (Net)

Total

Note: 20
Other Income

Exchange Fluctuation gain (Net)

Interest income

Interest on deposit accounts from banks

Other non-operating income
Bad Debts recovered

Profit on sale of Fixed Assets (Net)
Insurance claims received

Miscellaneous Income

Total

Note : 21
Finance Costs
Interest Expenses on:

Foreign Currency Convertible Bonds
Other Borrowings

Other Borrowings Costs - Bank Charges

Total

Note : 22
Exceptional Items
Exchange (Gain)/Loss on Restatement of FCCBs
Exchange (Gain)/Loss on intra group foreign currency loans and advances
(Gain) on sale of assets pertaining to activation business net of redundancy costs
Other Redundancy Costs
Reversal of stock compensation expenses pursuant to voluntary surrender of
options

NOTE
NO.

AS AT
MARCH 31, 2012
((cid:2) in Million)

AS AT
MARCH 31, 2011
((cid:2) in Million)

6.22
152.42
28.68
82.75
17.92
72.60
6.34
270.11
14.12
40.56
61.47
7.81
18.69
66.66
12.43
-

8.71
160.59
31.61
87.14
19.25
68.40
8.90
276.16
13.29
28.61
70.91
7.86
28.09
-
9.92
0.54

858.78

819.98

58.93

3.45

6.32

0.27
35.73

4.94

43.33

2.00

15.34

-
-

39.75

109.64

100.42

104.54
310.12
13.86

428.52

553.36
(19.04)
(5.62)
59.60
(40.36)

94.33
319.38
12.50

426.21

(2.98)
20.19
-
-
-

Total

547.94

17.21

www.subex.com

NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS

23. Accounting Under the Proposal Approved by the Hon’ble High Court

a) 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 utilised
from April 1, 2009 for certain Permitted Utilisations as mentioned in the Proposal.

b) Adjustments in the BRR during the previous 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)

transfer of (cid:2)(cid:3)(cid:3)1,740 million during the year from the balances in Securities Premium Account and Capital Reserve
to the BRR,
utilization of the BRR for permitted utilisations to the extent of (cid:2)(cid:3)1,830.37million.

c) Adjustments in the BRR during the current year ended March 31, 2012

In accordance with the Proposal, the Board of Directors of the Company have approved the following for financial year
ended March 31, 2012:

(cid:2)(cid:3)
(cid:2)(cid:3)

transfer of (cid:2)(cid:3)(cid:3)34.67 million during the year from the balances in Capital Reserve to the BRR,
reversals of the provisions to the BRR for an aggregate amount of (cid:2)(cid:3)22.51 million (net of expenses).

d) 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 (cid:2)(cid:3) Million except as otherwise indicated

In the Statement of Profit and Loss

Provision for doubtful debts/ write-off of unrealizable assets would have been
higher by:
The loss under Exceptional items would have been higher as follows:
- Diminution in carrying value of Goodwill on consolidation
- Reversal of unutilised Provisions for Long term Employee Benefits and
Withholding taxes
- One time non-recurring expenses including restructuring fees, advisory fees,
marketing expenses and unrealizable advances etc. (Net)
Sub-Total
Profit after Tax would have been lower by
Basic Earnings/(Loss) per share would have been – (cid:2)(cid:3)(cid:3)
Diluted Earnings/(Loss) per share would have been – (cid:2)(cid:3)

Year Ended
March 31,
2012

(85.43)

62.92

(22.51)
(22.51)
4.92

4.91

Year Ended
March 31,
2011

100.00

1,709.47

20.90

1,730.37
1,830.37
(16.50)

(16.50)

24. A. Foreign Currency Convertible Bonds (FCCBs)

www.subex.com

NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS

As at March 31, 2012, the face value of the US$ 39 million FCCBs amounts to (cid:2)(cid:3)1,984.13 million (Previous Year: 1,739.21 million)
and is included in Note 8 - Other Current Liabilities as Current Maturities of Long terms borrowings-FCCBs (Unsecured).

The other terms and conditions governing the US$ 39 million Old FCCBs outstanding are as follows:

a) Conversion Price – (cid:2)(cid:3)(cid:3)656.20 per share
b) Exchange Rate for purpose of conversion - 1 US$ = (cid:2)(cid:3)44.08
Interest of 2% per annum payable semi-annually in arrears
c)
d) Premium payable on maturity US$ 14.05 million
e) Listing on the London Stock Exchange

The Premium payable on maturity is being accrued prorata by a charge to Securities Premium/BRR over the term of the
FCCBs.

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 bonds were initially redeemable on or by March 9, 2012, if not converted into equity shares as per terms of
issue. Based on an approval received from the Reserve Bank of India and bond holders, these bonds are now redeemable on
July 9, 2012.

Other terms and conditions governing the new FCCBs are as follows:
a) Conversion Price – (cid:2)(cid:3)(cid:3)80.31 per share
b) Exchange Rate for purpose of conversion - 1 US$ = (cid:2)(cid:3)48.17
c) 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

d) Premium payable on maturity – US$ 23.23 million.
e) Listing on the Singapore Exchange Securities Trading Limited

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, 2012 amount to US$ 54.8 million ((cid:2)(cid:3)2,787.95 million), (Previous Year:
(cid:2)(cid:3)(cid:3) 2,443.80 million) and are included in other current liabilities under Note 8 – Other Current Liabilities as Current Maturities
of Long terms borrowings-FCCBs.(Unsecured).

25. Employees Stock Option Plan (ESOP)

The Company during the years 1999-2000, 2005-2006 and 2008-09 has established ESOP II, ESOP III and ESOP IV respectively.

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 Company has obtained in-principle approval for listing of shares upto a limit as mentioned below.

ESOP II : 883,750 shares
ESOP III : 2,000,000 shares
ESOP IV : 2,000,000 shares

www.subex.com

NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS

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

Particulars

ESOP – III

2011-12

2010-11

Options
(No’s)

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

-
1,461,441
1,019,583

-
747
-

Weighted
Average Exercise
Price Per Stock
Option ((cid:2))

Options
(No’s)

Weighted
Average Exercise
Price Per Stock
Option ((cid:2))

71.71
104.11
54.17

300,848
1,582,488
598,954

74.04
113.72
53.34

-
31.61
28.44

-
232,800
715,000

-
51.77
54.83

-
-
-

1,260
3,765
-

-
-
-

266,237

21,329

1,719,841

196,290

1,187,913

126,335

12,022
1,356,086
1,019,289

9,397
98,823
9,191

-
631,475
980,711

85.22
39.30
28.95

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

71.71
104.11
54.17

-
-
-

195,189
820,819
82,464

-
373,075
812,381

-
-
-

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

ESOP – II At March 31, 2011 : 2.07 Years At March 31, 2012 : 1.54 Years
ESOP – III At March 31, 2011 : 2.98 Years At March 31, 2012 : 3.81 Years
ESOP – IV At March 31, 2011 : 4.88 Years At March 31, 2012 : 4.16 Years

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.

100

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NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS

Net Profit for the year (as reported)

Particulars

Amount in (cid:2)(cid:3)(cid:3)Million except as otherwise indicated

March 31, 2012 March 31, 2011
787.79

318.41

Add : Stock-based employee compensation relating to grants after Apr 1, 2006

(52.20)

6.21

Less : Stock-based compensation expenses determined under fair value based
method for the above grants

3.30

37.39

Net Profit (proforma)
Basic earnings per share (as reported) - (cid:2)(cid:3)
Basic earnings per share (proforma) - (cid:2)(cid:3)(cid:3)
Diluted earnings per share (as reported) - (cid:2)(cid:3)
Diluted earnings per share (proforma) - (cid:2)(cid:3)

262.91
4.59

3.79

4.59

3.79

756.61
12.47

11.98

8.62

8.30

26. The Company adopted the amendments to Accounting Standard 11 “The Effects of Changes in Foreign Exchange Rates”
that were notified during the year ended March 31, 2012. Pursuant to this amendment, exchange fluctuations arising on
restatement of all long term monetary foreign currency assets and liabilities at rates different from those at which they were
initially recorded or reported in the previous financial statements (whichever is later), are accumulated in a Foreign Currency
Monetary Item Translation Difference account and are amortised over the balance period of such long term asset/liability.
Consequently, exchange fluctuation losses (Net) arising on restatement of such items have been deferred to the extent of
(cid:2)(cid:3)35.70 million at March 3 , 2012 and the profit for the year is higher by a corresponding amount.

27. Employee Benefit Plans

a) Defined Contribution Plans

The Group makes contribution to Provident Fund, a defined contribution plan, in respect of employees in India.
In respect of employees in overseas subsidiaries, the Group makes contributions to certain defined contribution plans,
based on respective local laws. Under these plans, a specified percentage of payouts are required to be contributed by
the Group. The Group recognised (cid:2)(cid:3)(cid:3)126.14 million (Year ended March 31, 2011 (cid:2)(cid:3)111.34 million) towards contributions to
these plans.

b) Defined Benefit Plans

The group offers the Gratuity benefits to employees, a defined benefit plan. The following table sets out the funded status
of Gratuity liability and the amounts recognised in the financial statements:

Components of Employer Expense
1 Current Service cost

Interest cost

Expected return on plan assets

4 Curtailment cost/(credit)

Settlement cost/(credit)

Past Service Cost

7 Actuarial Losses/(Gains)

Total expense recognized in the Statement of Statement of Profit and Loss

II Actual Contribution and Benefit Payments for year ended March 31, 2012

1 Actual benefit payments

2 Actual Contributions

Amount in (cid:2)(cid:3)(cid:3)Million except Assumptions
Gratuity

March 31, 2012 March 31, 2011

7.43

2.30

(0.16)

(6.72)

2.85

4.30

6.32

1.89

(0.34)

4.08

0.44

12.39

2.16

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101

NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS

Amount in (cid:2)(cid:3)(cid:3) Million except Assumptions
Gratuity

March 31, 2012 March 31, 2011

III Net asset/(liability) recognized in Balance Sheet as at March 31, 2012

IV Change in Defined Benefit Obligations during the year ended March 31, 2012

Present Value of DBO at beginning of year

Interest cost

1
2 Current Service cost
3
4 Curtailment cost/(credit)
Settlement cost/(credit)
5
Plan amendments
6
7 Acquisitions

8 Actuarial (gains)/ losses
9 Benefits paid
10 Present Value of DBO at the end of year

V Change in Fair Value of Assets during the year ended March 31, 2012

Plan assets at beginning of year

Expected return on plan assets(estimated)

1
2 Acquisition Adjustment
3
4 Actuarial Gain/(Loss)
5 Actual Company contributions(less risk premium, ST)
6 Benefits paid
7

Plan assets at the end of period

28.68
0.71
(27.97)
-
(27.97)

29.94
7.43
2.30
-
-
-
-

(6.69)
(4.30)
28.68

3.30
-
0.16
0.03
1.52
(4.30)
0.71

8.70%
8.60%
6.00%
5.00%

29.93
3.30
(26.63)
-
(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%

VI Actuarial Assumptions
1 Discount Rate
2
3
4 Attrition Rate

Expected Return on plan assets
Salary escalation

Experience History

Period Ending
March 31, 2008 March 31, 2009 March 31, 2010 March 31, 2011 March 31, 2012
(28.68)
(19.32)
0.71
5.08
(27.97)
(14.24)

(29.94)
3.30
(26.64)

(15.33)
1.50
(13.83)

(10.30)
1.09
(9.21)

(1.13)

0.81

0.39

(0.48)

5.41

0.03

0.00

0.04

0.03

(0.13)

(1.22)

0.68

1.28

(cid:2)(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:2) Estimated amounts to be contributed in the immediate next year (cid:2)(cid:3)1.095 million (Previous year (cid:2)(cid:3)Nil )
(cid:2)(cid:3) The discount rate is based on the prevailing market yields of Government of India securities as at the Balance Sheet

date for the estimated term of the obligations.

(cid:2)(cid:3) The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments

and other relevant factors.

102

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NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS

Actuarial Assumption for long term compensated absences

Discount rate
Expected return on plan asset
Salary escalation rate
Attrition

28. Segmental Reporting

March 31, 2012
8.7%
NA
6%
5%

March 31, 2011
8.3%
NA
6%
5%

The Group has identified business segment as its Primary reporting segment with Secondary segments reported geographically.
The accounting policies adopted for segment reporting are in line with the accounting policies of the Group outlined in Note 2.
Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of
their relationship to the operating activities of the segment.

Revenue, expenses, assets and liabilities which are not allocable to segments on reasonable basis have been included under
“unallocated revenue/expenses/assets/liabilities”.

Information about Primary Business Segment:

The Group’s operations comprise two Business segments viz (a) Software Products and (b) Services. Under the business
segment of Software products, the Group provides Software Products (and related services) in the Revenue Assurance space to
Communication Service providers (CSPs) who operate in the Telecom industry.

The Staff Augmentation business of the Group is organized under the Services segment and is carried out through its subsidiaries
Subex Technologies Limited and Subex Technologies Inc.

Revenues
Segment results before interest & taxes
Unallocable Income, net of unallocable expense
Interest expense
Profit/(Loss) before tax
Tax expenses (Net)
Profit/(Loss) After Tax

Particulars of Segment Assets & Liabilities

Segment Assets
Unallocable Assets:

Advance Income Taxes
MAT credit entitlement
Deferred tax assets (Net)

Total Assets
Segment Liabilities
Unallocable Liabilities:

Loans
Provisions for Tax
Deferred tax liability

Others
Total Liabilities

Products

Services

2011-12
4,294.92
1,318.76

2010-11
4,181.18
4,181.18
1,264.89
1,264.89

2011-12
483.34
483.34
9.61
9.61

2010-11
646.32
10.38
10.38
(547.94)
(428.52)

33.50

Products

Services

Amount in (cid:2)(cid:3)(cid:3)Million
Consolidated

2010-11
2011-12
4,778.26
4,827.50
1,328.37 1,275.27
1,328.37
(17.21)
(547.94)
(426.21)
(428.52)
831.85
351.91
33.50
44.06
318.41
787.79

Amount in (cid:2)(cid:3)Million
Consolidated

2011-12
10,717.57

2010-11
10,353.29
10,353.29

2011-12
130.28
130.28

2010-11
2011-12
155.51 10,847.85
155.51 10,847.85

2010-11
10,508.80

117.27

14.12

122.60
117.27
-
17.41
17.41
12.18
14.12
10,996.65
10,996.65 10,643.58
1,647.55
1,647.55 1,816.02

1,629.15

1,779.80
1,779.80

18.40
18.40

36.22
36.22

6,018.23
6,018.23
21.93
21.93
-

5,457.12
44.03
0.89

1,862.89
1,862.89
9,550.60

1,231.32
8,549.38

Segment assets include all assets relating to the segment and consist principally of Fixed assets, Receivables, Other current
assets and non-current assets and Goodwill (on consolidation).

www.subex.com

103

NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS

Segment liabilities include all liabilities relating to the segment and consist principally of Trade payables and other operating
liabilities.

Addition to Assets

Products
Services

Particulars

Amount in (cid:2) Million
2010-11
40.15
-

2011-12
30.49
0.05

Total amount of expense included in the segment result for depreciation and amortisation in respect of segment assets for the
period.

Particulars
Depreciation

Products

Services

Amount in (cid:2) Million
Consolidated

2011-12
77.26

2010-11
103.88

2011-12
0.70

2010-11
0.62

2011-12
77.96

2010-11
104.50

Total amount of significant non-cash expenses, other than depreciation and amortization in respect of segment assets that are
included in segment expense and, therefore, deducted in measuring segment result.

Expense on Employee Stock Option Scheme
(ESOP) (net)*
Provision for Doubtful trade and other receivables
Total

Products

Services

Amount in (cid:2) Million
Consolidated

2011-12
(52.20)

2010-11
6.05

2011-12
-

2010-11
-

2011-12
(52.20)

2010-11
6.05

66.66
14.46

-
6.05

-
-

66.66
14.46

-
6.05

* Amount in bracket indicates balance credited to Statement of Profit and Loss (net of expenses)

Information about Secondary Business Segment

The Group operations spans across the world and are categorized geographically as (a) Americas, (b) EMEA and (c) APAC and
rest of the World. ‘Americas’ comprises the Group’s operations in North America, South America and Canada. ‘EMEA’ comprises
the Group’s operations in Europe, Middle East and Africa and the Group’s operations in the rest of the world are organized under
‘APAC and the rest of the world’. Segment revenue by geographical location of customers are as follows:

AMERICAS
EMEA
APAC, and rest of the world
Total

Products

Services

Amount in (cid:2)(cid:3)(cid:3)Million
Consolidated

2011-12
1,211.75
2,427.48
655.69
4,294.92

2010-11
1,300.33
2,139.30
741.55
4,181.18

2011-12
483.34
-
-
483.34

2010-11
646.32
-
-
646.32

2011-12
1,695.09
2,427.48
655.69
4,778.26

2010-11
1,946.65
2,139.30
741.55
4,827.50

Assets and additions to tangible and intangible fixed assets by geographical area: The following table shows the carrying amount
of segment assets and additions to tangible and intangible fixed assets by geographical area in which the assets are located:

Location

2011-12

2010-11

Carrying Amount of
Segment Assets

Additions to Fixed
Assets and Intangible
Assets

Carrying Amount
of Segment Assets

Additions to Fixed
Assets and Intangible
Assets

AMERICAS
EMEA
APAC, and rest of the world
Total

1,295.96
658.15
8,893.74
10,847.85

4.69
3.36
22.49
30.54

717.68
214.80
9,576.02
10,508.80

8.69
5.84
25.62
40.15

Note : Segment assets relating to the Services business are located primarily in Americas and APAC regions

Amount in (cid:2) Million

104

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NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS

29. Related Party Information

(a) Related Parties

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.

Details of the transactions with the related parties:

Salary and Perquisites (Also refer Note 36.9)

Particulars

Subash Menon

Sudeesh Yezhuvath

30. Operating leases

Amount in (cid:2) Million

Key Management Personnel
2010-11

2011-12

21.65

19.74

40.78

19.57

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 (cid:2)(cid:3)(cid:3)152.42 million (Previous year (cid:2)(cid:3)(cid:3)160.59 million)

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

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

March 31, 2012
130.08
466.18
199.96

Amount in (cid:2) Million
March 31, 2011
142.20
477.37
313.85

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.

31. Earnings per Share (EPS)

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 (in million)for Basic EPS (C)
Effect of Existence of Dilutive Instruments (FCCBs and ESOPs) (in million)
Weighted Average Number of Shares (in million)for Diluted EPS (D)
Earnings per Share – Basic [(A)/(C)] - (cid:2)(cid:3)
Earnings per Share - Diluted [(B)/(D)] - (cid:2)(cid:3)(cid:3)
Face value of shares: (cid:2)(cid:3)10/- each.

Amount in (cid:2)(cid:3)(cid:3)Million except as otherwise indicated
2010-11
2011-12
787.79
318.41
54.83
-
8.91
-
851.53
318.41
63.18
69.31
35.65
0.08
98.83
69.39
12.47
4.59
8.62
4.59

Note : FCCBs outstanding as at March 31, 2012 are anti-dilutive and hence have not been considered for purposes of Dilutive
EPS in year ended March 31, 2012.

Certain of the FCCBs as at March 31, 2011 were anti-dilutive and hence were not considered for purposes of Dilutive EPS in
year ended March 31, 2011.

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105

NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS

32. Deferred Taxes

The deferred tax asset and liability recognised comprises of the tax impact arising from timing differences on:

Particulars
Leave Encashment and Gratuity
Differences between the book balance and tax balance of Fixed assets
Total Deferred tax Assets
Differences between the book balance and tax balance of Fixed assets
Total Deferred tax Liability

33. Details of Warranty

March 31, 2012
6.28
7.84
14.12
-
-

Amount in (cid:2) Million
March 31, 2011
-
12.18
12.18
(0.89)
(0.89)

Amount in (cid:2) Million

Year

2011-12

Opening Balance

4.23

Additions During the
year
-

Utilisation/reversal
during the year
-

Closing Balance

4.23

34. Contingent Liabilities

(a) Receivables factored : Current Year - (cid:2)(cid:3)756.95 million (Previous year - (cid:2)(cid:3)1,082.01 million).
(b) Claims against the Company not acknowledged as debt: Current Year – (cid:2)(cid:3)(cid:3)1.59 million (Previous year - (cid:2)(cid:3)64.52 million). These

claims relate to Indian Income Tax demands which are being contested by the Company.

35. Payments to Auditors

Particulars
As Auditors – Statutory audit
For Taxation matters
For other services
For Reimbursement of Expenses
Total

36. Others

2011-12
6.50
0.15
1.00
0.16
7.81

Amount in (cid:2) Million
2010-11
6.50
0.15
1.00
0.21
7.86

1. Estimated amount of contracts, remaining to be executed on capital account and not provided for (net of advances paid)

(cid:2)(cid:3)(cid:3)1.73 million (Previous year - (cid:2)(cid:3)(cid:3)5.35 million).

2. Unclaimed dividend of (cid:2)(cid:3)(cid:3)0.41 million as at March 31, 2012 (Previous Year - (cid:2)(cid:3)0.59 million) represent dividends not claimed
for the period from 2004-2007. No part thereof has remained unpaid or unclaimed for a period of seven years from the date
they become due for payment requiring a transfer to the ‘Investor Education and Protection Fund’. During the current year,
the Company has transferred (cid:2)(cid:3)(cid:3)0.18 million (Previous Year - (cid:2)(cid:3)0.05 million) to Investor Protection Fund.

3. Direct Taxes paid and Others in the Cash Flow Statement comprisesoutflows on account of permitted utilisations from the
BRR of (cid:2)(cid:3)12.05 million (Previous Year - (cid:2)(cid:3)20.91 million) and Direct Taxes of (cid:2)(cid:3)54.43 million (Previous Year - (cid:2)(cid:3)66.81 million)

4. Personnel Cost for the year includes expenditure on Research and Development of (cid:2)(cid:3)129.51million (Previous year -

(cid:2)(cid:3)132.92 million).This is as certified by the management and relied upon by the auditors.

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

foreign exchange exposures.

106

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NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS

Forward contracts to hedge foreign currency risk on export receivables:

Particulars

Forward contracts

- USD contracts

March 31, 2012

March 31, 2011

Foreign
Currency

Buy/
Sell

Amount
(INR)

Foreign
Currency

Buy/
Sell

Amount
(INR)

Amount in (cid:2) Million

$ 36.13

Sell

1,732.85

$ 31.50

Sell

1,444.30

6. The year-end foreign currency exposures that have not been hedged by derivative instruments or otherwise are given

below.

Amount in (cid:2) Million

March 31, 2012

March 31, 2011

Amount (INR)
0.17

85.25

7.04

68.78

3.31

0.01

0.82

1.57

0.31

2.63

Foreign currency

AED 0.01

AUD 1.61

CHF 0.13

EUR 1.01

GBP 0.04

- MYR

OMR0.01

QAR 0.11

SEK 0.04

SGD 0.06

Amount (INR)
4.91

67.74

-
49.67

10.59

1.61

6.69

1.42

0.26

0.29
-

Foreign currency

AED 0.40

AUD 1.47

-
EUR 0.78

GBP 0.15

MYR 0.11

OMR 0.06

QAR 0.12
-
THB 0.18

SAR 0.02
-

Note: The above does not include exposure on intra-group balances, being eliminated on consolidation.

7. Revenue is net of (cid:2)(cid:3)(cid:3)Nil (Previous Year: (cid:2)(cid:3)3.42 million) being reversal of Unbilled Revenues.

8. 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. Consequently, this will not have any impact on the
financial statements, particularly on account of tax expense and that of provision for taxation.

9. Remuneration to wholetime directors relating to earlier years which were subject to approval of Central Government
as at March 31, 2010 aggregated to (cid:2)(cid:3)(cid:3)56.26 million. During the year ended March 31, 2011, the Company received the
approval for a portion of the above and the balance of (cid:2)(cid:3)33.27 million was charged to the Statement of Profit and Loss for
the year ended March 31, 2011 and the balance was recovered from the wholetime directors by March 31, 2011.

10. The Company has been legally advised that exchange differences arising out of the restatement/settlement of FCCBs, is
of a capital nature as contemplated under Section 349(5)(d) of the Companies Act, 1956 and not be deducted from the
profits of the Company in determining the remuneration and commission payable to directors. Accordingly, exchange
losses of (cid:2)(cid:3)553.36 million (Previous year - exchange gain of (cid:2)(cid:3)(cid:3)2.98 million) have been adjusted in determining the net
profits of the Company under Section 349 of the Companies Act.

www.subex.com

107

NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS

37. Details of the subsidiaries consolidated for the year ended March 31, 2012

Amount in (cid:2) Million

Subex (Asia
Pacific)
Pte Ltd

(Note 2
below)

Subex
(UK)
Limited

(Note 2
below)

Subex
Americas
Inc.

(Note 2 & 3
below)

Subex
Inc.

(Note 2
below)

Subex
Technologies
Inc.

Subex
Technologies
Limited

(Note 1
below)

Singapore
-

(259.94)

285.19

545.13

249.27

9.41

23.56

(14.15)

UK
4.06

964.60

1406.09

437.43

2,142.94

309.39

14.07

295.33

Canada
3,827.41

(5,382.40)

1060.78

2615.77

911.90

(46.20)

0.00

(46.20)

SGD

GBP

USD

USA
-

(241.49)

520.88

762.37

1,417.32

54.53

0.00

54.53

USD

India
209.05

147.52

India
40.00

24.77

374.82

64.92

18.25

0.15

509.15

5.31

(6.18)

11.49

USD

0.00

(0.90)

5.66

(6.56)

INR

40.4775

81.4575

50.8750

1.0000

Particulars

Country of Incorporation
Capital

Reserves

Total Assets

Total Liabilities

Details of Investment
(other than Subsidiaries)

Turnover

Profit Before Taxation

Provision for Taxation

Profit After Taxation

Proposed Dividend

Base Currency

Exchange Rate

Note:

1. These details are extracted from the financial statements of the subsidiaries audited by the independent auditors of

Subex technologies Limited.

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 for the purpose of being included in the consolidation financial statements of the
Company.

3. The details given in respect of 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.

Country of Incorporation

United States of America

38. The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has
significantly impacted the disclosure and presentation made in the financial statements. Previous year’s figures have been
regrouped/reclassified wherever necessary to correspond with the current year’s classification /disclosures.

108

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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

: September 28, 2012

Venue : Adarsh Tech Park, Outer Ring Road,

Devarabisanahalli, Bangalore – 560 037

Time

: 12.30 PM

DATES OF BOOK CLOSURE

From September 25, 2012 to September 28, 2012 (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, 2012

– on August 9, 2012

For quarter ending September 30, 2012 – 4th week of

October, 2012

For quarter ending December 31, 2012 – 4th week of

For the year ending March 31, 2013

DIVIDEND

January, 2013

– 3rd week of
May, 2013

The Directors have not proposed any dividend to be paid for
the financial year 2011-12.

LISTING ON STOCK EXCHANGES

Equity Shares of the Company are quoted on the National
Stock Exchange of India Limited (NSE) since September
5, 2003 and on the BSE Limited (BSE) since July 31, 2000.
The Company has paid listing fees for the year 2012-13 in
accordance with the provisions of the Listing Agreement with
NSE and BSE.

The Global Depositary Receipts (GDRs) of the Company are
listed on the Professional Securities Market of London Stock
Exchange since March 9, 2007.

The Company’s outstanding US$ 180 million 2% Coupon
Convertible Unsecured Bonds have been listed on the London
Stock Exchange since March 9, 2007.

The Company’s outstanding 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 Company’s US$ 127.721 million 5.70% Convertible
Secured Bonds, issued pursuant to the restructuring of US$
180 million 2% Convertible Unsecured Bonds and US$ 98.7
million 5% Convertible Unsecured Bonds, have been listed on
the Singapore Exchange Securities Trading Limited since July
10, 2012.

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 - 400 051

BSE Limited,
Phiroze Jeejeebhoy Towers,
Dalal Street, Fort,
Mumbai - 400 001

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
(SUBEX US$ 98.7
million 5% bonds)

2EUB
(SUBEX US$127.721
million 5.70% bonds)

The International Securities Identification Number (ISIN)
for the Company’s Equity Shares in dematerialized form is
INE754A01014.

CUSTODIAL FEE

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 2012-13 to
NSDL and CDSL on
the number of
beneficial accounts maintained by them as on March 31,
2012.

the basis of

www.subex.com

109

STOCK MARKET DATA RELATING TO EQUITY SHARES LISTED IN INDIA

Monthly high and low quotes during each month in the financial year 2011-12 as well as the volume of shares traded on NSE and
BSE are as under:

Month

Apr-11

May-11

Jun-11

Jul-11

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

High
`

80.10

65.20

66.70

65.60

57.85

48.95

42.85

41.55

35.30

33.45

34.05

31.10

NSE

Low
`

56.55

57.15

54.70

55.55

42.10

41.95

40.45

29.05

23.55

25.40

29.80

24.20

Volume
Nos.

54,700,960

18,979,922

22,840,210

43,059,877

14,211,804

12,341,993

12,198,126

15,356,689

12,855,676

15,709,540

2,979,959

10,355,848

High
`

80.05

65.15

66.70

65.65

58.00

49.00

42.85

41.45

35.35

33.55

34.15

31.15

BSE

Low
`

56.40

57.25

54.70

55.70

42.20

42.00

40.40

29.15

23.65

25.40

29.80

24.10

Volume
Nos.

29,212,126

10,847,709

12,557,909

22,259,407

8,496,153

6,432,686

6,682,540

6,965,859

5,588,578

6,949,396

1,998,109

6,573,891

TOTAL

235,590,604

TOTAL

124,564,363

SUBEX LIMITED SHARE PRICE VERSUS NSE S&P CNX NIFTY AND SENSEX

SHAREHOLDING PATTERN

Distribution of Shareholding:

No. of Equity Shares Held

As on March 31, 2012

As on March 31, 2011

No. of Shareholders % to Total Shareholders

–

5000

5001 – 10000

10001 –

20000

20001 – 30000

30001 – 40000

40001 –

50000

50001 – 100000

100001 and above

TOTAL

110

www.subex.com

52,565

5,696

2,681

895

447

398

528

452

82.57

8.95

4.21

1.41

0.70

0.63

0.83

0.70

47,720

4,267

1,989

608

335

316

444

383

85.12

7.61

3.55

1.08

0.60

0.56

0.79

0.69

63,662

100.00

56,062

100.00

Categories of Shareholders:

Category

Public & Others
Companies/Bodies Corporate
Core Promoters
Mutual Funds
ESOP- employee shareholders
FIIs
TOTAL

As on March 31, 2012

As on March 31, 2011

No. of
Shareholders
62,451
1,146
2
1
52
10
63,662

Voting
Strength %
52.36
13.51
11.69
1.77
0.33
20.34
100.00

No. of
Shares Held
36,286,857
9,366,826
8,101,801
1,224,490
229,792
14,101,006
69,310,772

No. of
Shareholders
54,806
1,178
3
4
54
17
56,062

Voting
Strength %
40.99
11.49
11.69
2.43
0.25
33.15
100.00

No. of
Shares Held
28,409,375
7,962,242
8,101,801
1,682,482
177,609
22,976,516
69,310,025

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:

With a view to expedite the transfer process in the interest
of investors, SEBI vide its Circular No. CIR/MIRSD/8/2012
dated July 5, 2012 has reduced the timeline for registering
from
the transfer of shares to 15 days with effect
October 1, 2012.

Share transfers would be registered and returned within
a period of fifteen days from the date of receipt, if the
documents are clear in all respects. The Company holds Share
Transfer Committee Meetings up to four times a month, 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, 2012, 99.93% of the Company’s shares were
held in dematerialised form and the rest in physical form.

OUTSTANDING GDRs / ADRs / WARRANTS / CONVERTIBLE
INSTRUMENTS AND THEIR IMPACT ON EQUITY

As on March 31, 2012, 7,008,746 GDRs were outstanding. As
on March 31, 2012, the Company had outstanding FCCBs

aggregating to US$ 39 million under its US$ 180,000,000
2% Convertible Unsecured Bonds (“FCCBs I”) and US$ 54.80
million under its US$ 98,700,000 5% Convertible Unsecured
Bonds (“FCCBs II”). 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, 2012 available on the Company’s website under the
Investors section.

In July 2012, pursuant to the exchange of US$ 38 million
out of FCCBs I and US$ 53.40 million out of FCCBs II under a
cashless exchange offer, the Company issued US$127,721,000
5.70% Secured Convertible Bonds (“FCCBs III”) with a maturity
period due July 2017 with a conversion price of ` 22.79 per
equity share. As a part of the terms and conditions of FCCBs III,
principal amount of US$ 36.321 million out of FCCBs III were
mandatorily converted into equity shares at the aforesaid
conversion price. Pursuant to the mandatory conversion,
US$ 91.40 million is currently outstanding under FCCBs III.
Also, the maturity period of the un-exchanged FCCBs I worth
US$ 1 million and the un-exchanged FCCBs II worth US$ 1.40
million now stands extended to March 2017.

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 M/s 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.subex.com

111

Information Technology Act, 2000. Being a Company with
strong focus on green initiatives, Subex has been sending all
shareholder communications such as the notice of General
Meetings, Audited Financial Statements, Directors’ Report,
Auditors’ Report, etc., 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@subex.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 the
Dividend Pertains
2003-04
2004-05
2004-05
2005-06

2006-07

Declared at the AGM /
Board Meeting Held on
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

Final
Interim
Final
Interim
Final
Interim
Final

20
10
20
15
10
15
20

to the Fund
See note below*
See note below*
September 3, 2012
December 4, 2012
October 4, 2013
March 7, 2014
September 1, 2014

The Company declared bonus at 1:1 in the years 2000-01 and
2005-06.

* The final dividend for the Financial Year 2003-04 and the
interim dividend declared for the financial year 2004-05 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 Investor 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 Investor
Education and Protection Fund.

Pursuant to the Provisions of
Investor Education and
Protection Fund (Uploading of information regarding unpaid
and unclaimed amounts lying with companies) Rules, 2012,
the Company will be making available the requisite details of
unpaid dividend to the MCA and will also be uploading the
same on its website. The Investors may refer to these details in
order to ascertain the unpaid dividend standing to their credit.

INVESTOR GRIEVANCES

Investor grievances received from April 1, 2011 to March 31, 2012:

Nature of Complaints

Received Cleared

Non-receipt of share certificates/refund orders/call money notice/allotment advice/dividend warrant
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

12
-
-
-
-
12

During the year ended March 31, 2012, the Company has
attended to all the
investor 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:
Vinay M A
Company Secretary & Compliance Officer
Subex Limited, Adarsh Tech Park, Outer Ring Road,
Devarabisanahalli, Bangalore – 560 037, India.

112

www.subex.com

Telephone: +91 80 6659 8700 Fax: +91 80 6696 3333
e-mail: vinay.a@subex.com; investorrelations@subex.com

WEBSITE

about
investor relations.

Company’s website www.subex.com contains comprehensive
the Company, products, press
information
releases and
It serves as a source
information to the shareholders by providing key
of
information like Board of Directors and the committees,
financial
results, shareholding pattern, distribution of
shareholding, dividend etc.

About Subex

Subex's customers include 28 of top 50 operators* and 33 of the world’s 50 biggest# Telecommunications Service Providers
worldwide. The company has more than 300 installations across 70 countries.

*GTB Carrier Guide, 2011
#Forbes’ Global 2000 list, 2011

powerin g the ROC

Annual Report
2011-2012

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Nurturing a
Strong Foundation

www.subex.com

Subex Limited

Adarsh Tech Park,
Devarabisanahalli,
Outer Ring Road,
Bangalore - 560037
India

Subex Inc.

Subex (UK) Limited

Subex (Asia Pacific) Pte. Ltd

12101 Airport Way,
Suite 300 Broomfi eld,
Colorado 80021
USA

3rd Floor, Finsbury Tower,
103-105 Bunhill Row,
London, EC1Y 8LZ
UK

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: +65 6338 1218
Fax: +65 6338 1216

Other Offices:

Dubai

Ipswich

Sydney

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