D-Link India Ltd.

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'Notes to Accounts' D-Link India Ltd.

1. Estimated amount of contracts remaining to be executed on capital account & not provided for 6,491,956 40,379,278 2. Contingent liabilities, in respect of a. Claims against the Comp. not acknowledged as debts - Claim filed by erstwhile distributors in various Metropolitan / Civil Courts. - 1,091,241 The Comp. has arrived at amicable out of Court settlement by filing deed of settlement in Metropolitan / Civil Courts by paying Rs.800,000/- [previous year Nils] as compensation. b.Show cause notices received from customs authorities relating to imports made in earlier years. The Comp. has filed replies to these notices and does not expect any demand to materialize 242,733,026 242,733,036 c.Disputed demands of custom duty pending before the Customs, Excise and Service Tax Appellate Tribunal [CESTATs] {pending with Commissioner of Customs [Appealss] in the previous year} 2,414,221 2,414,221 d.Show cause notices received from excise authorities in connection with valuation of products manufactured by Company for purpose of calculation of excise duty. - The Comp. has filed reply to these notices & doesn't expect any demand to materialize 4,333,506 38,423,002 - Disputed demand of excise duty pending before CESTAT 34,089,496 - - Disputed penalty demands of Excise Authorities pending before the CESTAT 34,089,496 - e.Disputed penalty demands of Excise Authorities pending before the CESTAT/ pending with CESTAT/ Commissioner of Excise [Appealss] in the previous year} 802,041 802,041 f. Custom duty paid under protest The raw material/trading material/software imported by Comp. are subjected to different rates of customs duty based on classification under espective Tariff Head. The Customs department has objected to the classifications adopted by Comp. for certain items & has demanded additional duty for same. The Comp. has paid such differential duty under protest. The same is included under advances recoverable in cash or in kind in Schedule 9 pending resolution of dispute. 11,196,170 8,649,626 3.a. Managerial Remuneration under section 198 of the Companies Act, 1956, paid to the Executive Chairman & Managing director

Salary 19,653,622 3,480,574 Contribution to Provident fund 16,380 9,360 Perquisites * - - Commission 1,773,816 1,345,331 Total 21,443,818 4,835,265

Notes: The above remuneration excludes: is] contribution to gratuity fund as the incremental liability has been accounted for the Comp. as a whole. iis] sitting fees of Rs 85,000/ * Does not include monetary value of non cash perquisites as per I ncome- tax Act, 1961. b.Commission payable to Independent Directors 1,773,816 1,345,331 c.Computation of net profit as per section 349 read with section 309[5s] and section 198 of Companies Act, 1956 Profit before tax as per Profit & Loss 381,709,355 267,533,354 Less:Profit on sale of current investments [non-trades] [nets] 15,031,490 10,954,406 Provision for diminution in value of current investments [non-trades] written back 345,494 503,074 Provision for diminution in value of long term investments [trades] written back 8,299,300 - Compensation for transfer of business to Gigabyte Technology India Limited 90,420,000 - Provision for doubtful debts written back 17,547,363 6,936,009 250,065,708 249,139,865

5. The Comp. has adopted the Revised Accounting Standard [Revised AS 15s] on 'Employee Benefits' w.e.f April 1, 2007. In accordance with the transitional provision of Revised AS 15, the incremental liability at the beginning of year amounting to Rs 453,104/- [net of deferred tax of Rs.229,898s] in respect of compensated absence & Rs.573,315/- [net of deferred tax of Rs.290,892s] in respect of gratuity has been adjusted against the General reserve. The impact on the profit of the current year due to adoption of Revised AS 15 is not ascertainable.

B. Notes on Acc. [contd.s]

VI. The assumptions of future salary increases, considered in actuarial valuation, take Acc. of inflation, seniority, promotion and other relevant factors, such as supply & demand in the employment.

VII. The amounts of present value of obligation, fair value of the plan assets, surplus or deficit in the plan, experience adjustments arising on plan liabilities & plan assets for previous four annual periods have not been furnished as the revised AS-15 was adopted by the Comp. in the financial year 2007-08.

VIII. The contributions expected to be made by Comp. during the financial year 2008-09 have not been ascertained.

IX. The plan assets are managed by Gratuity trust formed by the Company. The management of funds is entrusted with Life Insurance Corporation of India. The details of investments made by them are not available.

X. The disclosure as required under AS-15 regarding the Companys defined contribution plans is as follows:

i. The Comp. has in addition to above accounted for provident fund contribution aggregating to Rs.5,105,649/-.

6. Additional information pursuant to the provisions of paragraphs 3,4C and 4D of part II of schedule VI to the Companies Act, 1956:

7. Excise duty collected from customers against sales has been disclosed as a deduction from turnover. The excise duty related to the difference between the opening & closing stock of finished goods is disclosed separately in the profit & loss Acc. as 'Excise Duty'

8. Hitherto, the Comp. followed the policy of providing depreciation on Computers @ 8.46% / @ 16.21%, in accordance with Schedule XIV of Companies Act, 1956. During the year, the Company, in order to have more appropriate presentation of fixed assets and having regard to the extent of usage of computers & their estimated useful life, has changed this policy & now follows the policy of depreciating all computers uniformly @ 25% . As a result of this change in the method of providing for depreciation, the charge of depreciation for the year is higher by Rs.7,526,211/- & the profit for year is lower by like amount.

9. Hitherto, the Comp. followed the policy of valuing inventory at lower of cost & net realizable value for raw materials, components, stores & spares & trading stock calculated on FIFO basis. During the year, the Comp. has used weighted average as the basis of calculation instead of aforesaid FIFO basis. As a result of this change in the method of valuation, the value of related closing stock is higher by Rs. 1,514,073/- & the profit for year is higher by like amount.

10. Cash Credit Acc. with the bank is secured by hypothecation of movable assets, stock, stores, work-in-process, book debts both present and future.

11. The Comp. held investments [unquoteds] in an associate, viz., Lanner Electronics India Limited [Lanners] aggregating to Rs.9,599,800/- The Comp. had made provision towards diminution in the previous year, to the extent of Rs.4,799,900/- [being 50% of value of Investments mades]. During the current year, the Comp. has sold the entire investment for a consideration of Rs.700,000/-. The resultant loss of Rs.4,099,900/-[net of provision for diminution made in the previous year written backs] has been included in 'Exceptional items' in the Profit & loss account.

12. The Comp. held investments [unquoteds] in Mercury Link Systems Limited [Mercurys] aggregating to Rs.3,499,400/- The Comp. had made provision towards diminution for entire value of Investments in the earlier years. During the current year, the Comp. has sold the entire investment for a consideration of Rs. 100,000/-. The resultant gain of Rs. 100,000/-[net of provision for diminution made in the earlier years written backs] has been included in 'Exceptional items' in the Profit and loss account.

13. The shareholders at the Annual General Meeting held on 6th August, 2005 had approved the transfer of business in relation to the sales and marketing of Gigabyte Motherboards to Gigabyte Technology [Indias] Limited over a period of 3 years for such consideration as may be arrived at by an Independent Valuer appointed for purpose. During the year vide Agreement dated 31st August, 2007, the Comp. has completed all formalities for said transfer for a total consideration of Rs. 90,420,000/-. The consideration has been included in' Exceptional items' in the Profit & loss account.

14. The Board of Directors as part of its strategy to focus on the core networking business of Comp. had at its meeting held on 30th July, 2007 approved the transfer & sale of shares held by Company in Gigabyte Technology [Indias] Limited to Gigabyte Technology, Taiwan or its Subsidiaries/Associates at a price which shall not be less than the Net Asset Value. The necessary agreement for same was executed on 13th September, 2007 & the shares were transferred on 26th October, 2007 for a consideration of Rs.24,990,861/-. The resultant loss ofRs.45,008,539/- has accordingly has been included in ' Exceptional items ' in the Profit & loss account.

15. The Comp. had instituted 'Employee Stock Option Plan' [ESOPs] for its employees in the year 2000. To administer the ESOP the Comp. had created a Trust viz. D-Link [Indias] Limited ESOP Trust [the Trusts] in September 2000. The said Trust was allotted 6,50,000 Equity Shares of Rs 2 each. In terms of said ESOP, the Trust has been granting options to the employees in the form of Equity Shares which vest at the rate of 25% on each successive anniversary of grant date.

The accounting of ESOPs granted by Trust to the employees of the Company is done in accordance with The SEBI [ESOS & ESPSs] Guidelines, 1999. These Guidelines were amended in July 2004 for all accounting periods commencing after 30th June 2003. The amendment required the Company to prepare its Acc. as if the ESOS/ESPS scheme was administered by itself [rather than by Trusts]. The Comp. has accordingly considered all the options granted by Trust on or after 1st April 2004. The difference between the Market price of share [intrinsic values] & the exercise price of option, on the date of grant, is being amortised over the vesting period. The annual amortization is included under 'Payments to & Provisions for Employees' in Schedule-14 & the cumulative charge is disclosed in the Balance sheet under 'Employee stock options outstanding'

16. Previous years figures have been regrouped , wherever necessary, to conform to the classification of current year.

 

 

 

 

 

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