CONSOLIDATED BALANCE SHEET AS AT MARCH 31 ... charge on leased assets 3,241 2,155 Profit on sale of investment in joint venture (2,188) - Reversal / Provision for doubtful advance

Schedules March 31, 2004 March 31, 2003

SOURCES OF FUNDSSHAREHOLDERS' FUNDSShare capital 1 373,701 186,577 Reserves and surplus 2 9,144,847 7,809,725 Less: Loan to Employees Stock Purchase Scheme ('ESPS') Trust 16 (189,425) (267,926) (Refer Note 8(a) of Schedule 16 ) 9,329,123 7,728,376

APPLICATION OF FUNDSFIXED ASSETS 3Cost 2,220,107 972,389 Less: Accumulated depreciation 691,997 664,920 Net book value 1,528,110 307,469 Capital work-in-progress and advances 147,506 221,383

1,675,616 528,852

INVESTMENTS 4 355,660 355,825

DEFERRED TAX ASSET 5 687 29,703

CURRENT ASSETS, LOANS AND ADVANCES 6Sundry debtors 2,443,531 1,444,968 Cash and bank balances 5,788,368 5,768,059 Other current assets 23,423 48,851 Loans and advances 774,119 556,878

9,029,441 7,818,756 Less: CURRENT LIABILITIES AND PROVISIONS 7Current liabilities 1,401,855 771,156 Provisions 330,426 233,604

1,732,281 1,004,760

NET CURRENT ASSETS 7,297,160 6,813,996

9,329,123 7,728,376

Notes to accounts 16

The schedules referred to above and notes to accounts form an integral part of the balance sheet.

i-flex Solutions Limited

CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2004

(All amounts in thousands of Indian rupees, unless otherwise stated)

Year ended Year endedSchedules March 31, 2004 March 31, 2003

REVENUES 8 7,881,289 6,141,213

Cost of revenues 9 (3,494,071) (2,524,284)

GROSS PROFIT 4,387,218 3,616,929

Selling and marketing expenses 10 (1,158,650) (870,969)General and administrative expenses 11 (1,001,875) (743,448)

3 (50,688) (151,298)

INCOME FROM OPERATIONS 2,176,005 1,851,214

16,712 12,427 Proft/(loss) on sale/conversion of investment (16,877) 35 Profit on sale of investment in joint venture 2,188 - Interest income 12 217,295 209,042 Other income/(expenses) 13 (80,709) (111,112)

2,314,614 1,961,606

Provision for income taxes 14 (526,758) (252,729)

NET INCOME 1,787,856 1,708,877

Basic 24.36 24.07 Diluted 23.26 23.21

15 Basic 73,379,472 71,010,143 Diluted 76,868,821 73,614,297

Notes to accounts 16

The schedules referred to above and notes to accounts form an integral part of the profit and loss account.


Number of shares used in computing earnings per share

CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED MARCH 31, 2004


INCOME BEFORE PROVISION FOR INCOME TAXES

Reversal/(Provision) for dimunition in value of investment, net

Weighted average earnings per share of Rs 5/- each (in Rs.)

Depreciation and amortisation, net of write-back of opening cumulative effect of accounting change Rs 92,888 ( March 31, 2003 --Rs nil)


CONSOLIDATED STATEMENT OF CASH FLOW FOR THE YEAR ENDED MARCH 31, 2004

Year endedMarch 31, 2003

Cash flows from operating activitiesIncome before provision for income taxes 2,314,614 1,961,607

Depreciation and amortisation 50,688 151,298 Loss on retirement/sale of fixed assets, net (1,065) (665) (Profit)/Loss on sale/conversion of Investments 16,877 (35) Reversal for diminution in the value of investments, net (16,712) (12,427) Interest income (217,295) (209,042) Effect of exchange difference on cash and bank balances (108,889) 12,781 Finance charge on leased assets 3,241 2,155 Profit on sale of investment in joint venture (2,188) - Reversal / Provision for doubtful advance (7,253) 7,253 Reversal/Provision for doubtful debts 4,107 (18,755)

(278,489) (67,437) 2,036,125 1,894,170

Changes in assets and liabilitiesIncrease/ decrease in sundry debtors (945,415) 459,587 Increase in loans and advances (120,647) (68,240) Increase in current liabilities and provisions 482,452 (583,609) 197,456 588,803 Cash from operating activities 1,452,515 2,482,973 Receipt of refund of previous assessment years 30,296 - Payment of domestic and foreign income taxes (694,811) (218,486) Net cash from operating activities 788,000 2,264,487

Cash flows from investing activitiesAdditions to fixed assets including capital work in progress (583,497) (363,459) Acquisition of SuperSolutions (504,895) - Proceeds from sale of fixed assets 1,651 1,444 Decrease/ Increase in bank fixed deposits having maturity of more than 90 days 32,387 (1,760,000) Purchase of investments - (250,131) Proceeds from sale of investment in joint venture 928 2,504 Interest received 215,275 193,465 Net cash (used in) investing activities (838,151) (2,176,177)

Cash flows from financing activitiesProceeds from Initial Public Offering ('IPO') - 1,780,800 Payment of IPO related expenses - (103,073) Proceeds from private placement of shares - 4,446 Issue of Shares against ESOP Scheme 29,593 - Advance against equity shares to be issued under ESOP Scheme - 345 Repaymnet of loan from Employee Stock Purchase Scheme ('ESPS') Trust 78,501 23,723 Payment of dividend and tax thereon (105,242) (46,644) Payment for lease obligations (8,845) (8,392) Net cash provided by financing activities (5,993) 1,651,205

Effect on exchange difference on cash and bank balances 108,889 (12,781)

Net decrease in cash and cash equivalents 52,745 1,726,734 Cash and cash equivalents at the beginning of the year 2,855,768 1,129,034 Cash and cash equivalents at the end of the year 2,908,513 2,855,768

Note :The reconciliation to the cash and bank balances as given in Schedule 6(b) is as follows :

Cash and bank balances, per Schedule 6(b) 5,788,368 5,768,059 Less: Bank deposits having maturity of more than 90 days (2,877,613) (2,910,000) Unclaimed dividend accounts (2,242) (2,291)

2,908,513 2,855,768

Adjustments to reconcile income before provision for income taxes to cash provided by operating activities :


Year ended March 31, 2004

i-flex solutions limited

Schedules annexed to and forming part of the accounts for the year ended March 31, 2004

March 31, 2004 March 31, 2003

SCHEDULE 1: SHARE CAPITAL

Authorised100,000,000 equity shares of Rs 5/- each 500,000 500,000

Issued, subscribed and paid-up74,740,150 equity shares of Rs 5/- each, fully paid up 373,701 186,577 (March 31, 2003 - 37,315,400 equity shares)

(a)

(b)

(c)

SCHEDULE 2: RESERVES AND SURPLUS

General reserveBalance, beginning of the year 5,488,569 3,988,569 Transferred from profit and loss account 1,250,000 1,500,000 Balance, end of the year 6,738,569 5,488,569

Securities premiumBalance, beginning of the year 2,267,997 606,760 Received during the year 29,157 1,764,000 Share of Securities premium received by joint venture - 310 Utilised towards share issue expenses - (103,073) Capitalised towards issue of bonus shares (186,688) - Balance, end of year 2,110,466 2,267,997

2,536 2,536

Profit and loss accountBalance, beginning of the year 50,623 (53,013) Net profit for the year 1,787,856 1,708,878 Transfer to general reserve (1,250,000) (1,500,000) Dividend paid on ESOP allotment (32) - Proposed dividend (261,644) (93,289) Corporate Dividend Tax (33,527) (11,953) Balance, end of year 293,276 50,623

9,144,847 7,809,725

(March 31, 2003 - 100,000,000 equity shares)

During the year ended March 31, 2004, the Company allotted 109,350 shares to its employees who excercised their options under the ESOP scheme [Refer Note 8(b) of Schedule 16].

[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]

Of the above, 62,121,800 equity shares of Rs 5/- each (March 31, 2003 -24,784,300 equity shares) have been issued as fully paid up bonus shares by capitalising the Securities premium account.

Refer Note 8(b) of Schedule 16 for the options granted for unissued equity shares.

Gain on dilution of equity investment in joint venture(Refer Note 9 of Schedule 16)



SCHEDULE 3: FIXED ASSETS

Particulars As at

31.03.2003 Additions during

the year Sale/deletions during the year

As at 31.03.2004

As at 31.03.2003

Adjustments(Refer Note 3 of

Schedule 16) For the year

On Sale/deletions during the year

As at 31.03.2004

As at 31.03.2004

As at 31.03.2003

Goodwill (Refer Note 12 of Schedule 16) - 539,479 - 539,479 - - - - - 539,479 - Land 44,734 187,940 - 232,674 - - - - - 232,674 44,734 Improvement to leasehold premises 103,242 954 - 104,196 62,005 (17,564) 12,682 - 57,123 47,073 41,237 Buildings* 20,116 209,292 - 229,408 4,129 (1,815) 2,605 - 4,919 224,489 15,987 Computer equipment 486,411 110,780 17,799 579,392 392,810 (24,665) 82,333 16,644 433,834 145,558 93,601 Electrical and office equipment 156,716 91,105 1,234 246,587 104,137 (26,412) 22,201 1,153 98,773 147,814 52,581 Furniture and fixtures 136,108 118,459 1,114 253,453 87,304 (22,448) 17,827 1,107 81,576 171,877 48,804 Leased assets:Computer equipment - 799 - 799 - - 61 - 61 738 - Furniture and fixtures - 3,263 - 3,263 - - 191 - 191 3,072 - Vehicles 25,062 11,409 5,615 30,856 14,537 16 5,676 4,709 15,520 15,336 10,525

TOTAL 972,389 1,273,480 25,762 2,220,107 664,922 (92,888) 143,576 23,613 691,997 1,528,110 307,469

Previous year 852,562 136,700 16,873 972,389 526,449 - 151,298 12,827 664,920

147,506 221,383 1,675,616 528,852

*Includes 10 shares of Rs 50/- each in Takshila Building No.9, Co-op Housing Society Limited., Mumbai

Gross Block Depreciation

Capital work-in-progress and advances

Net Book value



March 31, 2004 March 31, 2003

SCHEDULE 4: INVESTMENTS

a) Long term investments

(i) Trade (unquoted)

EBZ Online Private Limited (Note a) 45,000 45,000 242,240 equity shares of Rs.10/- each, fully paid-up (March 31, 2003 - 242,240)

(ii) Other than trade investments (unquoted)

Eastern Software Systems Limited (Note a) 7,406 7,406

(March 31, 2003 - 268,283)

12.75% KEONICS Mahiti Bonds Series-1 (Note b) 20,000 20,000 400 Bonds of Rs. 50,000/- each fully paid-up(March 31, 2003 - 400)

National Savings Certificate - VIII issue 131 131

250,000 250,000 24,965,796 units (and 858 fractions) of Rs 10/- each (March 31, 2003 - 24,965,796 units (and 858 fractions))

(iii) Other than trade investments (quoted)

6.75% Tax Free US 64 Bonds (note d) 33,123 - 331,225 Bonds of Rs. 100/- each, fully paid-up(March 31, 2003 - Nil)

355,660 322,537

b) Current investments (quoted)

Unit Trust of India - 1964 Scheme (US-64) (Note d)- 50,000

Less: Excess of cost over market value - (16,712) - 33,288

355,660 355,825

Aggregate cost of quoted investments 33,123 50,000 Aggregate market value of quoted investments 35,898 33,288 Aggregate amount of unquoted investments 322,537 322,537

Note a

Note b

Note c

Note d

JM High Liquidity Fund - Serial Plan 2004 (Growth) (Note c)

[March 31, 2003 - 3,311,258 units (and 278 fractions)] of Rs 10/- each

268,283 equity shares of Rs.10/- each, fully paid-up

The Company’s ownership interest in Eastern Software Systems Limited ('ESSL') is 6.62% .The Company also holds19.5% shares in EBZ Online Private Limited ('EBZ'). EBZ is a strategic partnership between Brihans TechnologiesPrivate Limited ('BTPL') and the Group to integrate the selected and adapted software provided under the Group’sproducts with BTPL’s products for the co-operative banking sector in India. ESSL is primarily engaged in catering tothe needs of small businesses through its flagship product, ‘ebizframe’. Both companies are unlisted companies. TheCompany's rights are limited to protecting its investments in ESSL and EBZ and it does not exert significant influenceon the operations of these companies by way of representation on the board of directors, participation in policy makingprocesses, material intercompany personnel or technological dependency. Accordingly, these investments are statedat cost less any decline in fair value below original cost when considered to be other than temporary. Managementdoes not believe that currently there is any other than temporary decline in the value of these investments.

Investments in debt securities of 12.75% KEONICS Mahiti Bonds Series -1 allotted on February 1, 2001 areredeemable at par at the end of seven years from the date of allotment and have a put and call option at the end offive years from the date of allotment.

Investment in JM High Liquidity - Serial Plan 2004 (Growth) is investment in debt instrument funds. As per the term ofthe fund, the maturity of the fund is in April 2004 .

On June 1, 2003 units in US-64 were converted into 6.75% Tax free US-64 bonds. The first 5,000 units wereconverted at the re-purchase price of Rs 12/- each and the balance 3,306,258.278 units at Rs.10 each.These bondsare redeemable at par on June 1, 2008.



March 31, 2004 March 31, 2003

SCHEDULE 5: DEFERRED TAX ASSET

Difference between book and tax depreciation 687 29,703

SCHEDULE 6: CURRENT ASSETS, LOANS AND ADVANCES

(a) Sundry debtors (unsecured)

-Considered good 275,604 365,868 -Considered doubtful 41,499 38,840

317,103 404,708 Other debts- Considered good

2,167,927 1,079,100 2,485,030 1,483,808

Less: Provision for doubtful debts (41,499) (38,840) 2,443,531 1,444,968

(b) Cash and bank balances

Cash in hand 648 832 Funds in transit - 7,091 Balances with scheduled banks:

-Current accounts in foreign currency 1,185,988 1,978,890 -Deposit accounts 2,999,068 1,953,253 -Deposit amount of unutilised IPO funds 929,233 1,359,017 -Margin money deposit 121,330 - -Other current accounts 39,600 51,671 -Unclaimed dividend amount 2,242 2,291

Balances with non-scheduled banks: -Current accounts in foreign currency 223 1,423 -Current accounts of foreign subsidiaries 510,036 413,591

5,788,368 5,768,059

(c) Other current assets

Interest accrued on:-Bank Deposits 22,215 26,009 -Bonds 1,208 454

Contract acquisition cost (Refer Note 10 of Schedule 16) - 22,388 23,423 48,851

(d) Loans and advances (unsecured, considered good unless otherwise stated)

Advances recoverable in cash or in kind or for value to be received:Loans to employees (secured) 8,335 10,267 Premises and other deposits 430,212 379,628 Prepaid expenses 97,409 94,151 Advance tax, net of provision for taxes 66,038 - Other advances- Considered good 172,125 72,832 - Considered doubtful - 7,253

774,119 564,131 Less:Provision for doubtful advance - (7,253)

774,119 556,878

Debts outstanding for a period exceeding six months:

[includes unbilled revenues of Rs 69,861 (March 31, 2003 - Rs 28,736)]



March 31, 2004 March 31, 2003 SCHEDULE 7: CURRENT LIABILITIES AND PROVISIONS

(a) Current liabilities

Accrued expenses 555,169 471,156 Deferred revenues 518,474 172,269 Accounts payable 136,332 22,770 Advances from customers 33,134 14,495 Finance lease obligations 22,912 11,547

2,242 2,291

Advance against equity shares to be issued - 345 Deferred forward exchange contract 5,316 - Other current liabilities 128,276 76,283

1,401,855 771,156

(b) Provisions

Proposed dividend 261,644 93,289 Corporate dividend tax 33,523 11,953 Provision for leave encashment 35,259 23,285

- 105,077 330,426 233,604

Investor Education and Protection Fund to be credited by unclaimed dividends*

Provision for taxation, net of advance payment of taxes

*There is no amount due and outstanding as at balance sheet date to be credited to the Investor Education and Protection Fund.




Year ended Year ended March 31, 2004 March 31, 2003

SCHEDULE 8: REVENUES

Product licenses and related activities 4,790,468 3,853,455 IT solutions and consulting services 3,085,264 2,285,188 Share of sales of joint venture companies 5,557 2,570

7,881,289 6,141,213

SCHEDULE 9: COST OF REVENUES

Employee costs 2,327,931 1,286,780 Travel related expenses (net of recoveries) 829,082 945,297 Professional fees 160,374 122,248 Application software 154,856 157,171 Contract acquisition cost (Refer Note 10 of Schedule 16) 21,828 12,788

3,494,071 2,524,284

SCHEDULE 10: SELLING AND MARKETING EXPENSES

Employee costs 416,675 285,210 Professional fees 216,621 163,750 Travelling expenses 203,814 186,964 Advertising expenses 79,923 65,650 Rent 62,308 50,426 Communication expenses 38,435 29,273 Miscellaneous expenses 140,874 89,696

1,158,650 870,969

SCHEDULE 11: GENERAL AND ADMINISTRATIVE EXPENSES

Employee costs 397,671 314,553 Rent 106,253 89,379 Communication expenses 99,697 120,260 Professional fees 62,417 50,572 Bad debts written off 50,474 - Power 45,164 35,810 Dispute settlement expenses 40,000 - Travelling expenses 36,332 32,674 Rates and taxes 15,053 9,026 Miscellaneous expenses 148,814 91,174

1,001,875 743,448

SCHEDULE 12: INTEREST INCOME

Interest on:-Bank deposits 206,537 204,278

-Bonds 4,606 2,550

-Loans to employees 1,092 2,214 -Income tax refunds 5,060 -

217,295 209,042

[includes tax deducted at source of Rs 561 (March 2003- Rs.536)]

[includes tax deducted at source of Rs 37,547 (March 2003- Rs. 39,372)]



Year ended Year ended March 31, 2004 March 31, 2003

SCHEDULE 13: OTHER INCOME/(EXPENSE)

Foreign exchange loss, net (118,775) (113,620) Reversal of provision for doubtful advance 7,253 - Profit on retirement/sale of fixed assets, net 1,065 665 Advances written back 26,352 - Miscellaneous income 3,396 1,843

(80,709) (111,112)

SCHEDULE 14: PROVISION FOR TAXATION

Current taxesDomestic taxes 437,926 169,778 Foreign taxes 59,816 87,996

29,016 (5,045) 526,758 252,729

Year ended Year ended

March 31, 2004 March 31, 2003

73,379,472 71,010,143 Add: Effect of dilutive stock options 3,489,349 2,604,154 Weighted average shares outstanding 76,868,821 73,614,297


No. of shares

Basic weighted average shares outstanding

SCHEDULE 15: RECONCILIATION OF BASIC AND DILUTED SHARES USED IN COMPUTING EARNING PER SHARE

Deferred tax, net of write-back of opening cumulative effect of accounting change Rs. 23,410 (March 31, 2003 Rs Nil) (Refer Note 3 of Schedule 16)

Under the Indian Income-tax Act 1961, for the year ended March 31, 2004 the Company is, under Section 10A of theIncome Tax Act, 1961.eligible to claim benefits with respect to 100% during the year , as against 90% for last year , ofthe profits earned from export revenues from its five units registered under the Software Technology Park ('STP'). Thebenefit as per the current tax laws is restricted to ten consecutive assessment years, beginning with the assessmentyear relevant to the previous year in which the Company commences operations from each unit. In respect of two ofits units where the Section 10A benefits have expired beginning from April 1, 2003, the Company claims deductionsunder section 80 HHE. Section 80 HHE provides for 30% deduction of the profits earned from export revenue for thisfiscal year.

Foreign taxes represents income taxes payable overseas by the company in the United States of America, Malaysia,Japan, United Kingdom , Kuwait and Singapore.

i-flex Solutions Limited Schedules annexed to and forming part of the accounts for the year ended

March 31, 2004

Schedule 16: Notes to accounts

1. BACKGROUND AND NATURE OF OPERATIONS i-flex Solutions Limited ('i-flex' or 'the Company'), a listed company, was incorporated in India with limited liability on September 27, 1989. The Company’s principal shareholder is OrbiTech Limited (‘Orbitech’). Orbitech is a subsidiary of Citicorp Technology Holdings Inc., USA. The Company has unilateral/joint control in the following entities: • i-flex Solutions b.v. (‘i-flex b.v.’), a 100 per cent owned subsidiary company

incorporated in May 2000 under the laws of The Netherlands; • i-flex Solutions Pte ltd, (‘i-flex Pte’), a 100 per cent owned subsidiary company

incorporated in November 2001 under the laws of Singapore; • i-flex America inc., (‘i-flex America’), a 100 per cent owned subsidiary company

incorporated in December 2003 under the laws of the United States of America. • SuperSolutions Corporation.,(‘SuperSolutions’), a 100 per cent owned subsidiary of

i-flex America inc. • i-flex Solutions inc., (‘i-flex inc.’), a 100 per cent owned subsidiary company of i-flex

America inc. • Flexcel International Private Limited (‘Flexcel’), a 40 per cent owned joint venture

company incorporated in March 2001 under Indian laws. The Company together with its wholly owned and controlled subsidiaries, i-flex b.v., i-flex Pte , i-flex inc., SuperSolutions and i-flex America inc., is principally engaged in the business of providing information technology solutions to the financial services industry worldwide. i-flex has a suite of banking products, which caters to the needs of corporate, retail and investment banking as well as treasury operations. The Company also provides consulting services and develops bespoke software for its customers from the financial services industry. The Company derives a substantial portion of its revenues from the overseas markets. Flexcel is a 40:40:20 joint venture between i-flex, HDFC Bank Limited and its group companies and Lord Krishna Bank Limited, which provides the capability of Flexcube through an Application Service Provider (‘ASP’) model to various banks and financial institutions in India who may not wish to invest in creating and maintaining their own internal IT infrastructure. DotEx International Limited was a 51:49 joint venture between NSE.IT Limited, a wholly owned subsidiary of National Stock Exchange of India limited (‘NSE’) and i-flex. DotEx has set up a broker's plaza, which enables brokers and their clients to transact in stock/securities markets through the Internet. During the current year the Company sold its stake in DotEx to National Stock Exchange of India limited for a total consideration of Rs.0.93 million.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of presentation and consolidation The accompanying consolidated financial statements are prepared under the historical cost convention, on the accrual basis of accounting, in conformity with accounting principles generally accepted in India, to reflect the financial position and the results of operations of the Company together with its wholly owned subsidiary companies i.e. i-flex b.v., i-flex Pte. and i-flex America and joint venture companies i.e. DotEx and Flexcel (hereinafter collectively referred to as ‘the Group’). In preparing consolidated financial statements, the financial statements of the Company’s wholly owned subsidiaries are combined on a line to line basis by adding together like items of assets, liabilities, income and expenses. Any excess of the cost to the parent company of its investment in a subsidiary and the parent company’s portion of equity of subsidiary at the date, at which investment in the subsidiary is made, is described as goodwill and recognized separately as an asset in the consolidated financial statements. In respect of the joint venture companies, the Group applies the proportionate consolidation method. In case of DotEx, the Company has consolidated proportionate income and expenses till the date of sale of its share in joint venture. All material inter-company transactions and balances between the entities included in the consolidated financial statements have been eliminated. In accordance with the “Employee Stock Option Scheme and Stock Purchase Guidelines, 1999 (SEBI guidelines) issued by Securities and Exchange Board of India (‘SEBI’), the Group has consolidated the ESPS trust. [Refer note 8(a) of Schedule 16]. The accounting policies have been consistently applied by the Company and except for the change in accounting policy referred to in Note 3 below are consistent with those used in the previous years. The significant accounting policies adopted by the Group, in respect of the consolidated financial statements are set out below. (b) Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the results of operations during the reporting year. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates. (c) Fixed assets and depreciation Fixed assets including assets under finance lease arrangements are stated at cost less accumulated depreciation. The Company capitalises all direct costs relating to the acquisition and installation of fixed assets. During the current year the Company has changed the Depreciation policy from written down value method (WDV) to Straight-line method (SLM). Depreciation is provided on the Straight line method, at the rates specified in Schedule XIV to the Act or based on the estimated useful life of assets, whichever is higher. Vehicles under finance lease are amortized over the useful life or lease term, whichever is lower (four to five years). The estimated useful life considered for depreciation of fixed assets are as follows:

Estimated

useful life (years)

Improvement to leasehold premises 7 Buildings 20 Computer equipment 3 Electrical and office equipment 7 Furniture and fixtures 7

Goodwill arising on consolidation of the Company’s wholly owned subsidiary is evaluated for impairment annually. The Group purchases certain specific use application software, which is in ready to use condition, for internal use. It is estimated that such software has a relatively short useful life, usually less than one year. The Group, therefore, charges to income the cost of acquiring such software. Enterprise wide resource software purchased by the Group and which the Group will implement over a period of time, is capitalized and depreciated over its estimated useful life. Advances paid towards the acquisition of fixed assets outstanding at each balance sheet date and the cost of fixed assets not ready to use before such date are disclosed under ‘Capital work-in-progress and advances’. (d) Investments Trade investments refer to the investments made with the aim of enhancing the Group’s business interests in providing information technology solutions to the financial services industry worldwide. Long-term investments are stated at cost less provision for diminution on account of other than temporary decline in the value of the investment. Current investments are stated at lower of cost and fair value determined on an individual investment basis. (e) Revenue recognition Revenues are recognized as follows: (i) Product licenses and related revenues:

- License fees are recognized, on delivery and subsequent milestone schedule as per the terms of the contract with the end user.

- Implementation/Enhancement services are recognized as services are provided when arrangements are on a time and material basis. Revenues for fixed price contracts are recognized using the Proportionate Completion method.

- Product maintenance revenues are recognized, over the period of the maintenance contract.

(ii) Revenues from IT solutions and consulting services are recognized as services are

provided when arrangements are on a time and material basis. Revenues for fixed price contracts are recognized using the Proportionate Completion method to the extent of achievement of customer certified milestones.

Proportionate Completion is measured based upon the efforts incurred to date in relation to the total estimated efforts to complete the contract. If the Proportionate Completion efforts are higher than the related contractual milestone requiring customer acceptance; revenue is recognized only to the extent customer acceptance has been received. The Group monitors estimates of total contract revenues and cost on a routine basis throughout the delivery period. The cumulative impact of any change in estimates of the contract revenues or costs is reflected in the period in which the changes become known. In the event that a loss is anticipated on a particular contract, provision is made for the estimated loss. Reimbursable expenses for projects are invoiced separately to customers and although reflected as sundry debtors to the extent outstanding as at year-end, are not included as revenues or expenses. (f) Foreign currency transactions Foreign currency transactions during the year are recorded at the exchange rates prevailing on the date of the transaction. Foreign currency assets and liabilities are translated into rupees at the rates of exchange prevailing at the date of the balance sheet except for sundry debtors covered under forward exchange contracts, which are translated at forward rates. In respect of forward exchange contracts entered into by the Group, the difference between the forward rate and the exchange rate at the inception of a forward exchange contract is recognized as an income or expense on a straight-line basis over the life of the contract. All the foreign operations of the Company are classified as integral foreign operations. The financial statements of an integral foreign operation are translated using the same principal as stated above. All exchange difference are dealt with in the statement of profit and loss, except for those relating to the acquisition of fixed assets, which are adjusted, if material, in the cost of the fixed assets. . In translating the financial statements of a integral foreign operation for incorporation in the financial statements, the assets and liabilities classified as monetary items are translated using the closing rate and non-monetary items, other than investments and fixed assets, are translated using the exchange rate at the date of transactions i.e. the date when they were acquired. Fixed assets existing at the date of acquisition of a subsidiary are translated using the exchange rate at that date. Fixed asset acquired later are translated at closing rate. Investments are translated at historical cost. Revenue and expense items are translated using appropriate weighted average exchange rates for the respective period. The net exchange difference resulting from the translation of items in the financial statements of the subsidiary is recognized as income and expense for the year. (g) Research and development expenses for software products Research and development costs are expensed as incurred. Software product development costs are expensed as incurred until technological feasibility is established. Software product development costs incurred subsequent to the achievement of technological feasibility are not material and are expensed as incurred. (h) Retirement benefits Retirement benefits to employees comprise payments to gratuity, superannuation and provident funds as per the approved schemes of the Group.

In India, the Company has schemes of retirement benefits of provident fund, superannuation fund and gratuity fund in respect of which the Company’s contribution to the funds are charged to the statement of profit and loss. The gratuity fund and superannuation fund benefits of the Company are administered by a trust formed for this purpose through the Group Schemes of the Life Insurance Corporation of India ('LIC'). In respect of gratuity, the adequacy of the accumulated funds available with the LIC has been confirmed on the basis of an actuarial valuation made at the year-end. (i) Leave encashment Accrual for leave encashment is estimated on the basis of an actuarial valuation for the unavailed leave balance standing to the credit of the employees at the year- end. (j) Operating leases Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognized as an expense on a straight-line basis over the lease term. (k) Income-tax Provision for current income tax is made on the assessable income at the estimated average annual effective tax rate that would be applicable to the relevant assessment year for the respective tax jurisdictions. Deferred income taxes are recognized for the future tax consequences attributable to timing differences between the financial statement determination of income and their recognition for tax purposes. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Unrecognized deferred tax assets of earlier years are re-assessed and recognized to the extent that it has become reasonably certain that future taxable income will be available against which deferred tax assets will be realized. (l) Earnings per share The earnings considered in ascertaining the Group’s earnings per share comprise the net profit after tax. The number of shares used in computing basic earnings per share is the weighted average number of equity shares outstanding during the year. The number of shares used in computing diluted earnings per share comprises the weighted average number of equity share considered for deriving basic earnings per share, and also the weighted average number of equity shares, if any, which would have been issued on the conversion of all dilutive potential equity shares. The number of shares and potentially dilutive equity shares are adjusted for the bonus shares and sub-division of shares. The shares issued to the ESPS trust have been considered as outstanding for basic EPS purposes, to the extent these shares have been allocated to the employees’ pursuant to the ESPS scheme and are eligible for exercise. For dilutive EPS purpose, the shares, which are not yet eligible for exercise, have been considered as dilutive potential equity shares.

3. CHANGE IN ACCOUNTING POLICY Upto the year ended March 31, 2003, the Group had been accounting for depreciation on fixed assets based on the written-down value method except for vehicles under finance leases, which were amortised on a straight-line basis over the useful life or lease term, as appropriate. During the current year, the Group has revised its accounting policy of providing for depreciation on all its other assets from the written-down value method to the straight-line method .The change in the above accounting policy has resulted in a surplus of Rs 92,888 in accumulated depreciation and a tax debit of Rs. 23,410 on account of the related deferred tax impact pertaining to the previous years. The impact of this change has been adjusted against the depreciation charge and deferred tax expense for the current year. Consequently, the net profit for the current year is higher by Rs 69,478. Had the Group followed the written-down value basis of depreciation accounting, depreciation charge for the year would have been higher by Rs 6,911 and the deferred tax charge would have been lower by Rs 12,513.



4 COMMITMENTS

(a) Capital commitments

(b) Contingencies

(c) Forward Contracts

(d) Lease commitments

(i) Finance leases

As at March 31, 2004 Principal Interest TotalNot later than one year 8,581 2,478 11,059 Later than one year and not later than five years 14,331 1,944 16,275 Total minimum payments 22,912 4,422 27,334

As at March 31, 2003 Principal Interest TotalNot later than one year 4,786 1,463 6,249 Later than one year and not later than five years 6,761 1,218 7,979 Total minimum payments 11,547 2,681 14,228

(ii) Operating leases

March 31, 2004 March 31, 2003

Not later than one year 99,603 95,811 Later than one year and not later than five years 162,508 129,985 Later than five years 84,955 55,811

The Group has taken certain office premises and residential premises for employees under operating leases, which expire at variousdates through year 2012. Gross rental expenses for the year ended March 31, 2004 aggregated to Rs 159,180 (March 31, 2003 Rs120,974).

Contracts remaining to be executed on capital account and not provided for (net of advances) aggregates to Rs 98,612 as at March 31, 2004 (March 31, 2003 - Rs 507,642)

The Group enters into forward foreign exchange contracts where the counter party is a bank. The Group considers the risk of non-performance by the counter party as non-material. As at March 31, 2004 the Group held forward foreign exchange contracts of US$37.00 million.( Rs 1,684.00 million) (March 31,2003 -Rs. Nil)

i-flex BV in the Netherlands, might face an action by the Dutch authorities for alleged violation of immigration and taxation rules in theNetherlands. i-flex BV has not received any written communication from the authorities yet and shall defend itself vigorously. Thedetermination of the liability, if any, is not possible at this point.

The group takes vehicles, furniture & fixture, computer and other equipments under finance leases of upto five years. Futureminimum lease payments under finance leases as at March 31, 2004 and March 31, 2003 are as follows:


Schedules annexed to and forming part of the accounts for the year ended March 31,2004

5 SEGMENT INFORMATION

b) IT solutions and consulting services ('Services')

The Company does not track assets and liabilities geographically.


Particulars Products Services Joint ventures Corporate Eliminations Total RevenuesExternal revenue 4,790,468 3,085,264 5,557 7,881,289 Inter-segment revenue 3,668 (3,668) - Total revenue 4,794,136 3,085,264 5,557 - (3,668) 7,881,289 Cost of Revenues (1,369,360) (2,124,711) (3,494,071) Gross profit 3,424,776 960,553 5,557 - (3,668) 4,387,218 Selling and marketing expenses (987,009) (171,641) (1,158,650) General and administrative expenses (356,795) (238,792) (3,543) (402,745) (1,001,875)

Depreciation and amortisation (52,827) (70,648) (1,848) 74,635 (50,688) Inter segment expense (3,668) 3,668 - Income from operations 2,028,145 479,472 (3,502) (328,110) - 2,176,005

16,712 (16,877)

2,188 Interest income 217,295 Other income (80,711)

2,314,611 Provision for income taxes (526,758) Net income 1,787,853

Other informationSegment assets 2,154,596 1,345,595 11,669 7,549,544 11,061,404 Segment liabilities 663,467 178,126 1,989 888,699 1,732,281 Share capital and reserves and surplus 9,329,123 9,329,123 Capital expenditure by segment 488,239 30,454 2,645 752,142 1,273,480

Business segments are defined as components of an enterprise about which separate financial information is available. This informationis reviewed and evaluated regularly by the management, in deciding how to allocate resources and in assessing the performance.The Group is organised geographically and by business segment. For management purposes the Group is primarily organised on aworldwide basis into two business segments:

The activities of the joint venture monitored and disclosed as a separate segment.

a) Product licenses and related activities ('Products') and

The segments are the basis on which the Group reports its primary operational information to management. Product licenses andrelated activities segment deals with banking software products like the FLEXCUBE suite of products, Reveleus and Microbanker whichcater to needs of corporate, retail and investment banking as well as treasury operations and datawarehousing requirements. Therelated activities include enhancements, implementation and maintenance activities.

IT solutions and consulting services comprise of bespoke software development, provision of computer software solutions and relatedconsulting services arising from such activities. This segment is further sub-divided in the following subsegments i.e. Businessintelligence, Customer relationship management, Brokerage, e-commerce, Internet services and IT and Business consulting.

Income before provision for income taxes

Reversal for dimunition in value of investment, net(Loss) on sale/conversion of investmentProfit on sale of investment in joint venture


Schedules annexed to and forming part of the accounts for the year ended March 31,2004


Particulars Products Services Joint ventures Corporate Eliminations Total

RevenuesExternal revenue 3,854,294 2,284,349 2,570 - 6,141,213 Inter-segment revenue 845 1,403 (2,248) - Total revenue 3,855,139 2,285,752 2,570 - (2,248) 6,141,213 Cost of Revenues (989,565) (1,534,719) (2,524,284) Gross profit 2,865,574 751,033 2,570 - (2,248) 3,616,929 Selling and marketing expenses (773,902) (97,067) (870,969) General and administrative expenses (242,041) (205,585) (14,797) (281,025) (743,448)

Depreciation and amortisation (54,734) (76,301) (5,760) (14,503) - (151,298) Inter segment expense (2,248) 2,248 - Income from operations 1,794,897 372,080 (20,235) (295,528) - 1,851,214

12,427 35

Interest income 209,042 Other income (111,112)

1,961,606 Provision for income taxes (252,729) Net income 1,708,877

Other informationSegment assets 926,174 1,019,288 14,993 6,772,682 - 8,733,137 Segment liabilities 419,047 145,683 5,749 434,282 - 1,004,761 Share capital and reserves and surplus 7,728,376 - 7,728,376 Capital expenditure by segment 20,085 60,006 2,456 54,153 - 136,700

Segment revenue and expense:

Segment assets and liabilities:

Geographical segments

Year ended Year endedRegions March 31, 2004 % March 31, 2003 %

United States of America 3,515,236 45% 2,428,189 40%Middle East and Africa 1,271,683 16% 1,464,490 24%Asia Pacific 1,387,820 18% 1,076,328 18%Europe 1,582,076 20% 1,127,086 18%Latin America and Carribean 124,474 2% 45,120 1%

7,881,289 100% 6,141,213 100%

The following table shows the distribution of the group's consolidated sales by geographical market

Revenue is generated through licensing of software products as well as by providing software solutions to the customers including consulting services. The expenses which are not directly attributable to a business segment are shown as corporate expenses.

Segment assets include all operating assets used by a segment and consist principally of debtors, deposits for premises and fixed assets, net of allowances and provisions. Segment liabilities primarily includes deferred revenues, finance lease obligation, advance from customer, accrued employee cost and other current liabilities.While most such assets and liabilities can be directly attributable to individual segments, the carrying amounts of certain assets and liabilities used jointly by two or more segments is allocated to the segment on a reasonable basis. Assets and liabilities that cannot be allocated between the segments are shown as part of corporate assets.

Income before provision for income taxes

Profit/(loss) on sale/conversion of investmentReversal/(Provision) for dimunition in value of investment, net



6 RELATED PARTY TRANSACTIONS

The related party transactions, other than disclosed elsewhere in the financial statements are summarised in the table below :

March 2004 March 2003 March 2004 March 2003 March 2004 March 2003

RevenuesProducts 1,160,919 1,030,440 - - 1,160,919 1,030,440 Services 2,202,244 1,386,613 - - 2,202,244 1,386,613 Reimbursement of expenses 11,555 52,872 - - 11,555 52,872 Interest on loan - - 160 127 160 127

ExpensesCommunication expenses 16,248 43,811 - - 16,248 43,811 Remuneration1 - - 118,104 75,116 118,104 75,116 Finance charges 670 1,532 - - 670 1,532 Professional fees - 1,696 - - - 1,696 Provision for doubtful debts - (1,221) - - - (1,221) Bank charges 2,477 2,729 - - 2,477 2,729 Rent2 - - 118 116 118 116

AssetsSundry debtors 885,804 646,007 - - 885,804 646,007 Loan - - 4,000 4,000 4,000 4,000 Repayment of loan - - - 844 - 844 Bank balances 1,113,272 1,377,499 - - 1,113,272 1,377,499 Advance rent - - - 49 - 49 Interest accrued on fixed deposits 4,720 454 - - 4,720 454

LiabilitiesFinance lease obligation 3,046 7,727 - - 3,046 7,727 Deferred revenue 17,243 1,869 - - 17,243 1,869

Other transactionsPayment of dividends 40,295 20,148 880 385 41,175 20,533

1. Includes salary, bonus and perquisites2. Pertains to rent paid on a flat taken on rent from a relative of a Key Managerial Person.

Names of Related Parties and description of relationship:

Promoter Company and its affiliates OrbiTech Limited OrbiTech Solution Limited Citigroup Inc.Citicorp Technology Holdings Inc, USACitibank branchesCiticorp Information Technology, Inc e-Serve International Limited

Key Managerial Personnel ('KMP') Rajesh Hukku - Chairman and Managing Director

Makarand Padalkar - Chief of StaffV Senthilkumar - Chief Exceutive Officer - i-flex b vKishore Kapoor - Chief Exceutive Officer - i-flex pte Joseph John - Head - Banking Products DivisionV Shankar - Head - Information Technology Services DivisionN R K Raman - Head - Marketing & Global SalesAtul Gupta- Head - Process and Quality Management Group(appointed on September 3, 2003)S Hariharan - Head - Infrastructure and Support Services Group Vivek Govilkar - Head - Human Resources DivisionR. Vidyasagar -Head-Human Resources Division(resigned on September 3, 2003)

R Ravisankar - Chief Executive Officer - International - Operations and TechnologyDeepak Ghaisas - Chief Executive Officer - India - Operations and Chief Financial Officer

Key Managerial Personnel

RelationshipTotal

Promotor Company and its affiliates



7 SETTLEMENT OF DISPUTE

8 STOCK BASED COMPENSATION SCHEME

a) Employee stock purchase scheme ('ESPS')

b) Employee Stock Option Plan (‘ESOP’)

March 31, 2004 March 31, 2003

Outstanding at the beginning of the year 4,499,400 4,548,920 Granted during the year 36,000 80,000 Exercised during the year (109,350) - Forfeited during the year (112,500) (129,520) Outstanding at the end of the year 4,313,550 4,499,400

As per the terms of the Scheme, the exercise price equates the price determined for the IPO through the book building process for the options granted prior to the IPO and the fair market value of the date of grant for options granted therafter. Accordingly, no compensation cost has been recorded , as the exercise price equals the fair value of the shares.

On March 29, 1998 the Company adopted the ESPS to provide equity based incentives to key employees of the Company ('1998Scheme'). Subsequently on April 1, 1999, April 1, 2000 and April 1, 2001, the Company adopted other Stock based schemes ('1999Scheme' , ‘2000 Scheme’ and '2001 Scheme'). These schemes which have similar terms, are administered through a Trust ('theTrust'). The Trust purchases shares of the Company using the proceeds of loans obtained from the Company. Such shares areoffered by the Trust to employees at an exercise price, which approximates the fair value on the date of the grant. The employeescan purchase the shares in a phased manner over a period of five years based on continued employment, until which, the Trustholds the shares for the benefit of the employee. The employee will be entitled to receive dividends, bonus etc that may be declaredby the Company from time to time for the entire portion of shares held by the Trust on behalf of the employees.

On acceptance of the offer, the selected employee shall undertake to pay within ten years from the date of acceptance of the offerthe cost of the shares incurred by the Trust including repayment of the loan relatable thereto. The repayment of the loan by the Trustto the Company would be dependent on employee repaying the amount to the Trust. In case the employee resigns fromemployment, the rights relating to shares, which are eligible for exercise, may be purchased by payment of the exercise pricewhereas, the balance shares shall be forfeited in favour of the Trust. The Trustees have the right of recourse against the employeefor any amounts that may remain unpaid on the shares accepted by the employee. The shares that an employee is eligible toexercise during the initial five-year period merely go to determine the amount and scheduling of the loan to be repaid on exercise bythe employee. The Trust shall repay the loan obtained from the Company on receipt of payments from employees against sharesexercised or otherwise.

General and Administrative expenses include expenses of Rs 40,000 towards settlement of dispute with a customer in November 2003.

No. of shares

The summary of the activity in the Company's ESOP is as follows:

The Securities and Exchange Board of India (‘SEBI’) has issued the Employee Stock Option Scheme and Stock PurchaseGuidelines, 1999 (‘SEBI guidelines’), which are applicable to stock option schemes for employees of all listed Companies. Inaccordance with these guidelines, the excess of market price of the underlying equity shares on the date of grant of the stock optionsover the exercise price of the options is to be recognised in the books of account and amortised over the vesting period. However,no compensation cost would need to be recorded as the scheme terms are fixed and the exercise price equals the market price ofthe underlying stock on the grant date. The shares issued to the Trust have been considered as outstanding for basic EPSpurposes, to the extent the shares have been allocated to the employees pursuant to the above schemes and are eligible to beexercised by the employee. For diluted EPS purpose, the share, which are not yet eligible for exercise, have also been consideredas outstanding to the extent these shares are dilutive. The loan granted to the Trust has been presented as a separate component ofshareholders' funds.

At the Annual General Meeting of the shareholders of the Company held on August 14, 2001, the Company introduced an additionalESOP, pursuant to which equity shares not exceeding an additional 7.5 per cent of the issued and paid-up equity share capital of theCompany had been earmarked for grant, at any given time to present and future employees and directors of the Company and itsexisting and future subsidiaries. Pursuant to the above resolution, the Board of Directors, at their meeting held on March 4, 2002approved the Employees Stock Option Scheme (‘the Scheme’) for issue of 4,753,600 options (inclusive of the 1:1 bonus declared onSeptember 11, 2003) to the employees and directors of the Group. According to the Scheme, the Company has granted 4,548,920options (inclusive of the 1:1 bonus declared on September 11, 2003) to the eligible employees and directors of the Company and itssubsidiaries, prior to the IPO, and 116,000 options thereafter. As per the terms of the Scheme, the exercise price would equate theIPO price for the options granted prior to the IPO and at the fair market value on the date of grant for options granted thereafter. 20 percent of the total options granted under the Scheme will vest to the eligible employees and directors on the completion of 12, 24, 36, 48, and 60 months from the date of grant and is subject to continued employment of the employee or director with the Company or its subsidiaries.


Schedules annexed to and forming part of accounts for the year ended March 31, 2004

9 Summary of interest in joint ventures

Proportionate assets and liabilities

March 31, 2004 March 31, 2003 March 31, 2004 March 31, 2003

Reserve and surplusCapital reserve - - 2,537 2,537 Share premium - - 310 310 Profit and loss account - (674) (16,284) (13,973)

NET RESERVE AND SURPLUS - (674) (13,437) (11,126)

Fixed assetsCost - 11,402 10,640 8,551 Less: Accumulated depreciation - 9,952 4,670 3,376 Net book value - 1,450 5,970 5,175

Current assets, loan and advancesSundry debtors - 17 2,113 - Cash and bank balances - 210 2,327 6,196 Other current assets - 1 - 160 Loans and advances - 369 1,339 1,415

- 597 5,779 7,771 Less: Current liabilities and provisions

Current liabilities - 1,938 6,324 5,211 Provisions - 12 - -

- 1,950 6,324 5,211

Net current assets - (1,353) (545) 2,560

NET ASSETS - 97 5,425 7,735

Proportionate income and expenses for the year ended

Year ended Year ended Year ended Year ended March 31, 2004 March 31, 2003 March 31, 2004 March 31, 2003

REVENUESSales 77 2,570 5,480 - Other income 20 330 585 1,262

97 2,900 6,065 1,262 EXPENDITUREGeneral and administrative expenses 394 9,522 6,817 6,119 Depreciation 289 3,591 1,559 2,169

683 13,113 8,376 8,288

Loss before tax (586) (10,213) (2,311) (7,026)

* Only upto date of sale of shares in Dotex, ie. August 1, 2003.

Dotex (unaudited) * Flexcel (unaudited)

During the nine month period, the Company had two joint ventures, DotEx (49%) and Flexcel (40%). DotEx was a51:49 joint venture between NSE.IT Limited, a wholly owned subsidiary of The National Stock Exchange of IndiaLimited ('NSE') and i-flex. On August 1, 2003 the Company has sold its stake in DotEx to NSE for a totalconsideration of Rs 0.93 million. Accordingly, the Company has consolidated only the proportionate incomeand expenses of DotEx upto the date of sale of its shares in the joint venture.

Dotex (unaudited) Flexcel (unaudited)

During the year ended March 31, 2003, the Company has diluted its equity in Flexcel by 9.49%. This dilution ofequity holding in Flexcel has resulted in a capital appreciation of Rs 2,536 which has been included as a part ofreserves and surplus. As described in Note 2(a) of Schedule 16, the consolidated financial statements includeproportionate amount of assets, liabilities, income and expenditure relating to the joint venture companies.The summary of proportionate assets, liabilities, income and expenses (including inter-company transactions)considered for consolidated with financial statements of the Company are as follows:



10

11 OTHER DISCLOSURE AS REQUIRED BY SCHEDULE VI TO THE ACT

(a)

Year ended Year endedMarch 31, 2004 March 31, 2003

Salaries and bonus 2,916,593 1,742,259 Staff welfare expenses 138,101 71,047 Contribution to provident and other funds 87,583 73,237 Travel related expenses (net of recoveries) 1,069,228 1,164,935 Professional fees 439,412 336,570 Rent 168,561 139,805 Application software 156,370 161,233 Communication expenses 138,132 149,533 Advertising expenses 84,102 72,611 Power 48,141 37,990 Dispute settlement expenses 40,000 - Bad debts written off 50,474 - Insurance 3,929 10,271 Repairs and maintenance:- Leasehold premises 5,385 2,995 - Computer equipments 35,030 12,206 - Others 12,746 10,759 Contract acquisition cost (Refer Note 10 of Schedule 16) 21,828 12,788 (Reversal)/Provision for doubtful debts, net 4,107 (18,755) Rates and taxes 17,206 9,717 Finance charge on leased assets 3,241 2,155 Provision for doubtful advance - 7,253 Other expenses 214,423 140,092

5,654,592 4,138,701

12 Acquisition of SuperSolutions

13 Prior year comparatives

On December 3, 2002 the Group acquired two IT consulting service contracts and 51 employees working on these contracts from Silverline Technologies Limited and its subsidiary, Silverline Technologies Inc. (“Silverline Group”) for a total consideration of Rs 35,176, which includes a cash payment made to/behalf of the Silverline Group and the assumption of certain employee related liabilities of the Silverline Group.

The purchase consideration of Rs 35,176 paid by the Group is fully allocated to the contracts and accordingly, there is no goodwill resulting from the transaction. The consideration allocated to the contracts is charged to cost of Revenues on a straight line basis over the remaining contract term of 11 months.

In December 2003, i-flex America inc., a Delaware corporation (“i-flex America”), was incorporated as a 100% subsidiary in theUnited States of America to hold all of the investments of the Group in its various ventures/companies in the United States ofAmerica.

Prior year amounts have been reclassified and regrouped, where necessary to conform with current year's presentation.

On January 2, 2004, i-flex America acquired 100 % equity interest in Supersolutions Corporation, an US-based company engaged inproviding specialized consumer lending solutions, for a total consideration of Rs. 590,690. The results of operations ofSuperSolutions are consolidated in the Group financial statements with effect from January 12, 2004.

Following are the aggregate amounts incurred on certain specific expenses that are required to be disclosed under Schedule VI to the Act :

Documents

CONSOLIDATED BALANCE SHEET AS AT MARCH 31 ... charge on leased assets 3,241 2,155 Profit on sale of investment in joint venture (2,188) - Reversal / Provision for doubtful advance