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19

th

Annual Report

2013 - 14

Annual Report 2013 - 14

BOARD OF DIRECTORS

N R Panicker
Executive Chairman (w.e.f. May 7, 2014)

Malcolm F Mehta
Executive Director (w.e.f. July 1, 2014)

R Ramaraj

NOMINATION AND REMUNERATION COMMITTEE


Masaaki Miura
Bin Cheng
R Ramaraj
AUDIT COMMITTEE
R Ramaraj
Alok Sharma
Bin Cheng

Director

Bin Cheng
Non-Executive Director (w.e.f. August 13, 2014)

STAKE HOLDERS RELATIONSHIP COMMITEE


Masaaki Miura
Malcolm F Mehta
R Ramaraj

Masaaki Miura
Independent Director (w.e.f. August 13, 2014)

Steve Ting Tuan Toon


Non-Executive Director
(Ceased to be a Director w.e.f. August 13, 2014)

BANKERS
State Bank of India
IDBI Bank Limited
ICICI Bank Limited
Axis Bank Limited
Sumitomo Mitsui Banking Corporation

Alok Sharma
Independent Director

REGISTRAR & TRANSFER AGENTS

Link Intime India Private Limited


Sam (S) Santhosh
Independent Director
(Ceased to be a Director w.e.f. August 13, 2014)
CHIEF FINANCE OFFICER

C-13, Pannalal Silk Mills Compound,


LBS Marg, Bandup West,
Mumbai - 400 078
Tel. : +91.22.25963838
Email : mumbai@linkintime.co.in

K. R. Chandrasekaran
(Ceased to be a CFO w.e.f. July 1, 2014)
COMPANY SECRETARY

Sweena Nair
STATUTORY AUDITORS

K S Aiyar & Co.,


Chartered Accountants
#54/2, Paulwells Road,
St. Thomas Mount, Chennai - 600 016

REGISTERED OFFICE
75, Nelson Manickam Road
Aminjikarai,
Chennai - 600 029.
Tel : +91.44.4225 2000
Fax : +91.44.2374 1271
Email : info@accelfrontline.in
Website : www.accelfrontline.in
CIN : L30006TN1995PLC031736

INTERNAL AUDITORS

Grant Thornton
Arihant Nitco Park, 6th floor,
No. 90, Dr.Radhakrishnan Salai,
Mylapore, Chennai - 600 004, India.
SOLICITORS

S Ramasubramaniam & Associates


6/1, Boshop Wallers Avenue (West)
Mylapore, Chennai - 600 004.

Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

Contents
Directors report

Management discussion and analysis

Report on corporate governance

12

Consolidated financials

23

Standalone financials

44

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Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

Directors Report
To
The Members
The Directors are pleased to present the 19th annual report along with the audited financial statements for the financial year
ended March 31, 2014.
Financial results

INR in lakhs
Consolidated
2014

Standalone

2013

2014

2013

Sales, Services & other income

42650.46

40,137.95

29914.11

32921.26

Earnings before interest, tax, depreciation


and amortization (EBITDA)

4066..84

3,325.05

3594.12

3,345.93

Finance costs

2441.29

1,995.07

2327.49

1953.83

Depreciation and amortization expense

1106.53

1,067.77

971.69

968.60

Provision for tax (Net)

69.81

143.54

50.04

143.54

449.21

118.67

244.78

279.96

Balance brought forward from previous year

1625.69

1.507.02

1329.15

1,049.17

Amount available for appropriation

2074.90

1.625.69

1573.93

1,329.15

Balance carried to Balance Sheet

2074.90

1625.59

1573.93

1,329.15

Profit after tax

Consolidation
The domestic economy continued to languish recording a below 5
% growth for the second consequent year, during FY 14, The
constant changes in domestic and global economic landscape
continues to create uncertainty in the business environment .The
expected recovery of the Indian economy during the second half
did not materialize due to adverse political climate prevailed in the
country,. However the exchange rates showed some stability
during the second half bringing some comfort to our operations.
The prospects of growth in the indian economy continues to be
challenged due to various factors like depreciating rupee, inflation,
current account deficit etc. The company is constantly monitoring
the situation and taking various steps for risk mitigation.

On a standalone basis, the revenues from operations and


other income stood at INR 29914 lakhs , representing a
decline of 9% over previous year. However the EBITDA
margins improved as compared to the previous year. Earnings
before interest, tax, depreciation and amortization (EBITDA) at
INR 3594 lakhs were higher by 7% over previous year.
On a consolidated basis, the revenues from operations and other
income stood at INR 42,650 lakhs, representing a growth of 6%
over previous year. Earnings before interest, tax, depreciation and
amortization (EBITDA) at INR 4067 lakhs were higher by 22%
over previous year, due to improvement in the EBITDA margins
The decline in the standalone revenues is attributable to planned
gradual reduction in system integration business, with lower
margins compared to other IT service businesses. However this
reduction in revenues was offset by growth in the overseas
subsidiary operations and software services and which resulted in
better EBITDA margins in FY14 compared to FY13.

into between the company, its promoters and CAC wherein


CAC had agreed to acquire 51% stake in the company. As on
31st March 2014 the paid up capital of the company stood at
Rs. 29,76,18,730/-consisting of 2,97,61,873 Equity shares of
face value Rs. 10/- each fully paid-up.
CAC have acquired 51,41,175 Equity Shares (i.e. 17.27%) of the
company by way of a mandatory open offer. They have also acquired
75,00,000 Equity shares from the existing promoters by way of an
Inter-se sale as part of the shareholders and share purchase
agreement dated 9th December 2013. With this acquisition, CAC now
holds 1,81,41,175 Equity Shares, constituting 60.95% of the Equity
Share Capital of the company and have become the holding company.
The total promoter holding is 2,64,93,951 Equity Shares (89.02%) and
the public shareholding is 32,67,922 Equity Shares (10.98%) in the
company.

Since the public shareholding has fallen below the stipulated


minimum requirement of 25%, the company is not compliant
with Rule 19A of securities contract Regulation( Rules) 1957
(SCRR) and Clause 40A of the Listing Agreement which
stipulates a minimum public shareholding of 25%.
The company is taking necessary steps to reduce the
promoter shareholding so as to achieve the minimum public
shareholding of 25%. As per present regulations this can be
achived on or before 31 March 2015.
Human resource development
Accel employs over 3059 full time employees with diverse
background. Whose collective efforts have enabled Accel to
achieve its organizational goals and set the base right for the
next phase of growth.

Share Capital
During the FY2014, the company allotted 55,00,000 Equity shares
on 10th January 2014 by way of preferential allotment to M/s CAC
Holdings Corporation.( CAC) ( earlier CAC Corporation) as a part
of the shareholders agreement dated 9th December 2013 entered

Accel has restructured its work force into various businesses


to ensure that every business is operated and supported
equally. The human resource policies have evolved to stay
relevant to the changing economic and business environment
and enhance organizational agility.

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Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14


The company has a matured talent management process and
environment where performance is rewarded and opportunities
are provided for career growth and development. Focused
initiatives towards work life balance and safety of employees have
helped the company in gaining confidence level of the employees
and bring down the attrition levels.

Management Discussion and Analysis


The Management Discussion and Analysis and various
initiatives and future prospects of the company are enclosed,
separately as Annexure II to this report.
Directors responsibility statement

Quality standards
Accel believes in sustained commitment to highest levels of quality
to enhance customer satisfaction. During the year the company
continued to invest in technologies, infrastructure and processes
in order to keep our quality management systems updated.

The Company achieved certifications for:

ISO 9001:2008 (Quality Management)


ISO 27001:2005 (Security Management)
ISO 20000-1:2005
CMMI Level 3

An employee portal exists for knowledge management and


sharing useful information within the Company. Regular
knowledge and skill upgradation training programs are conducted
by internal as well as external knowledge management experts.

These quality driven processes help in supporting Accels


global delivery model
In order to achieve highest levels of quality and robust information
security practices, the company will endeavor to achieve
enterprise-wide CMMI Level 5 (for Development) in the near future

The directors responsibility statement pursuant to sub section


2 AA of Section 217 of the Companies Act 1956 is given as
Annexure V to this report.
CEO/CFO Certification
The Executive Chairman and the Chief Finance Officer have submitted a certificate to the Board regarding the financial statements
and other matters as required under Clause 49 (V) of the Listing
Agreement. This is provided as Annexure VI to this report

Financial Statements of Subsidiary companies:The Company has 8 subsidiaries as on March 31, 2014There
has been no material change in the nature of the business of
the subsidiaries.
As required under the Listing Agreement entered into with the
Stock Exchanges, a consolidated financial statement of the
Company and all its subsidiaries is attached. The consolidated
financial statement has been prepared in accordance with the
relevant accounting standards as prescribed Under Section 211
(3C) of the Act. The consolidated financial statement discloses the
assets, liabilities, income, expenses and other details of the
Company and its subsidiaries.

Finance, Accounts and Internal control systems


The company has adequate internal control procedures
commensurate with the size and nature of its operations. The
internal control systems were further strengthened by internal
audit carried by an independent firm of Chartered Accountants
and a periodical review by the management. The Audit
Committee of the board addresses issues raised by internal
auditors and the statutory auditors.
The financial objective of the company is to bring in
efficiencies of operations at all levels so as to maximize return
on capital employed and to generate sufficient cash profits to
fund on-going expansions and to meet the growth objectives.
The audit committee and the Board periodically review
performance parameters related to financial performance of the
company to ensure smooth implementation of the internal control
systems and efficient management of the various resources. The
audit committee conducts periodic reviews with the management,
internal auditor and the statutory auditor. There is an on-going
cost monitoring program to control various expenses and the
Board reviews the variance analysis.

Report of Corporate Governance and Auditors Certificate


on Corporate Governance
A report on Corporate Governance together with auditors
certificate on compliance with the conditions of Corporate
Governance as stipulated under Clause 49 of the Listing
Agreement is provided as Annexure III to this report.
The certificate issued by the auditors of the company on
corporate governance is given as Annexure IV to this report.

Pursuant to the provisions of Section 212(8)of the Act, the Ministry of


Corporate Affairs vide its circular dated February 8, 2011 has granted
general exemption from attaching the Balance Sheet, Statement of
Profit & Loss and other documents of the subsidiary companies with
the Balance Sheet of the Company. A statement containing brief
financial details of the Companys subsidiaries for the financial year
ended March 31, 2014 is included as an Annexure VIII to this report.
The annual accounts of these subsidiaries and the related information
will be made available to any member of the company/its subsidiaries
seeking such information and are available for inspection by any
member of the company/subsidiaries at the Registered Office of the
Company. The annual accounts of the said subsidiaries will also be
available for inspection, at the Head Offices/ Registered Offices of the
respective subsidiary companies.

Dividend
The Directors have not recommended dividend for the year
ended March 31, 2014 to conserve resources and to augment
the long term working capital for future growth.
Directors
Mr. A.P.Parigi having DIN 00087586 resigned from the Board
with effect from 7th May 2014. The Board places on record its
deep appreciation and gratitude for his guidance and
contribution to the company during his tenure.
Mr. Steve Ting Tuan Toon having DIN 00114004 resigned from
the board with effect from 13th August 2014. The Board places on
record its deep appreciation and gratitude for his guidance and
contribution to the company during his long tenure.

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Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14


Mr. Bin Cheng ( Din No. 06913491) was appointed as a
Director to fill a causal vacancy with effect from 13th August
2014, caused due to the resignation of Mr. Steve Ting Tuan
Toon. Pursuant to section 161(4) of the companies Act 2013
Mr. Bin Cheng will hold office till such time the director in
whose place he is appointed would have held office.

Credit Rating

Mr. Steve Ting Tuan Toon who has resigned on 13th August
2014, would have retired by rotation at this Annual General
Meeting. Mr. Bin cheng now retires by rotation and has
offered himself for appointment.

Internal compliants Committee

Mr. Malcolm Farrokh Mehta having DIN 03277490 was


appointed as an Additional Director of the Company with
effect from 7th May 2014 and he was further appointed as a
wholetime director designated as Executive Director with
effect from 1st July 2014 to hold office till 30th June 2017.His
appointment is being recommended for confirmation in the
ensuing Annual General Meeting. The necessary resolutions
are being placed before the shareholders for approval.
Mr. Sam (S) Santhosh Independent director has resigned fromt
the baord with effect from 13th August 2014. The causal vacancy
arisen on account of his resignation is not being filled. The Board
places on record its deep appreciation and gratitude for his
guidance and contribution to the company during his long tenure.
Mr. Masaaki Miura having Din no. 06915575 was appointed as an
Additional Independent director with effect from 13th August 2014.
Mr. Miura possess the qualifications and skills relevant for the
companys business . The company has received declarations
from Mr. Miura that he meets with the criteria of independence as
prescribed both under sub-section (6) of section 149 of the Act
and under clause 49 of the Listing agreement. The necessary
resolution is being placed before the shareholders for approval.

Auditors
M/s Walker Chandiok & Co.LLP, Chartered Accountants, Chennai
bearing ICAI Registration No. 001076N are proposed to be
appointed as Auditors of the Company from the conclusion of the
ensuing Annual General Meeting till the conclusion of the twenty
fourth Annual General Meeting of the Company held thereafter (a
period of five years), subject to ratification of the appointment by
the members at every AGM held after the ensuing AGM.

As required under Section 139 of the Companies Act, 2013,


the Company has obtained a written consent from M/s Walker
Chandiok & Co. LLP, to such appointment and also a
certificate to the effect that their appointment, if made, would
be in accordance with Section 139(1) of the Companies Act,
2013 and the rules made there under, as may be applicable.
The auditors M/s K S Aiyar & Co, Chartered Accountants have been
the Statutory auditors of the company since 2005-2006. As per the
Section 139 (2) of the Companies Act 2013 an audit firm can serve as
auditors of the company for not more than two terms of five
consecutive years. AS the Auditors have completed one term of five
consecutive years the company felt the need to rotate the auditor.

Internal Auditors
M/s K S Aiyar and Co the erstwhile statutory Auditors of the
company will be the Internal Auditor of the company for the
financial year 2014-2015. w.e.f. the conclusion of this AGM.

Secretarial Standards of the ICSI Secretarial standrads


issued by the Institute of Company secretaries of India from
time to time are currently recommendatory in nature. The
company is , however, complying with most of the standards.

With regard to the Supreme Court Judgment and guidelines issued in


Vishaka case Gazette publication dated 22nd April 2013, to provide
for the effective enforcement of the basic human right of gender
equality and guarantee against sexual harassment and abuse, more
particularly against sexual harassment at work places, the company
has formed a policy for prevention, prohibition and redressal of Sexual
harassment of women at workplace. The company has also
constituted an Internal Complaints Committee: (ICC) and Enquiry
committee to redress such complaints.

Particulars of Employees
The particulars regarding employees of the company
pursuant to Section 217 (2A) of the Companies Act, 1956
read with the Companies (Particulars of Employees) Rules,
1975 are given as annexure VII to the Directors Report. In
terms of sec 219 (1) (b) (iv) of the Companies Act 1956 the
Directors Report (excluding annexure VII) is being sent to all
the shareholders of the company. Any shareholder interested
in obtaining a copy of the said annexure may write to the
company secretary at the registered office of the company.
Conservation of energy, technology absorption, foreign
exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the
Act, read with the Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988, are set out in an
Annexure to this report.
Acknowledgement
The directors would like to express their grateful appreciation for
the assistance and co- operation received from central and state
governments, financial institutions, banks, government authorities,
customers, suppliers and investors during the year under review.
The directors wish to place on record their deep sense of
appreciation, of the dedicated and sincere services rendered by
the employees of the company for its success.

For and on behalf of the Board


Chennai,
May 7, 2014

N.R. Panicker
Executive Chairman

Annexure I to the Directors Report


Conservation of energy
The companys operations involve low energy consumption to run its
various offices and therefore the scope of energy conservation is
limited. The company has means and process to constantly monitor
the usage of power and optimize the same to the extent possible.
Accel is currently in the process of consolidating its facilities, which will
help in reduction of energy consumption without any business

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Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14


implications.The company is in the process of evaluating means of
utilizing alternate energy sources for betterment of environment
and reduce the consumption of conventional energy
Accel has a policy to replace old assets to upgrade to the changing

Accel has a strong PAN India presence in the domestic IT


infrastructure management market and serves a number of
leading MNCs in India and Indian corporate houses. With its
extensive presence and quality of delivery capability, Accel
has been successful in retaining most of its customers

technology and keeping a check on the energy consumption.

Technology absorption, adaptation and innovation


The company is in high technology business and is constantly
upgrading and adapting latest technologies to meet the
technology challenges.
Research and development (R&D)
The Company has been taking up R&D initiatives to promote
innovation and new product development. These research
initiatives are primarily in the field of Software, Systems and
Application with the objective of coming up with new products,
solutions and technology to our customers. and in the platform
developed for warranty management business.
The company will continue to invest in these and other areas
of research interests with sufficient funds allocated to this.
The company is in the process of getting registered with
Department of Scientific & Industrial Research (DSIR).
Foreign Exchange earnings and outgo
The complete details regarding foreign exchange earnings
and outgo are being mentioned in the notes to the accounts.
Annexure II to the Directors Report
Management Discussion and Analysis
The IT industry scenario
The IT industry in India continues to go through the slow growth
phase The IT services sectors contribution to the domestic GDP
is estimated to be around 8% and the sector is estimated to
employ around 3 mn people . According to NASSCOM , India
continues to be a premier destination for global sourcing of IT
services. and the share is expected to be over 50 % . The IT
services market is expected to grow by 12 % during the next
financial year, driven by exports. The domestic market also is
expected to grow around 9-12% during the current financial
year.According to NASSCOM the combined potential for Social,
Mobile,Analytics and Cloud based technologies is estimated to be
between US $ 70 US$ 200 billions, over the next three years .
In the domestic market Government continues to be the largest IT
consumer. The overall business environment in the country was
not very conducive to sustain growth, during the previous financial
year . It is widely anticipated to improve during the current
financial year on account of changed political scenario.

Our revenues were largely contributed by IT infrastructure


and system integration services, which are driven by domestic
IT market. However system integration business in the
domestic market has become highly competitive with eroding
margins. The company will continue to focus on IT
infrastructure management and managed services in the
domestic market, where we have a large long standing
customer base across India with constant annuity revenues.
The company over the last three years has emerged as a niche
player in the software service market with a focus on embedded
systems and solutions, outsourced product development, cloud
and mobility solutions, remote infrastructure management (RIM),
etc for the international markets. The Technology services focus
on outsourced product development, testing, sustenance and reengineering services in consumer products, networking and
automotive domain. The customers are spread across US, Japan,
UK, Australia and Israel. Enterprise applications services focus on
Banking and manufacturing with support for core banking and
other enterprise applications
We are also a leading provider of warranty management services for
the India market, where our scalable time tested model has been
helping us to win new customers and create a highly successful
business unit in the company. We provide warranty fulfillment, test and
repair services and help desk support services on a PAN India basis
for more than 30 International product vendors

Our wholly owned subsidiary in UAE (Accel Frontline JLT)


has been growing strong in enterprise IT solutions space and
has won several corporate customers in the last five years.
We continue to focus on this market .
During the year under review, our existing subsidiary company
(Accel Systems and Technologies) in Singapore stabilised its
operations in IT security services in Singapore.. This business unit
is expected to grow vertically in the coming year and make
significant contribution to Companys revenue and margins .

Strategy
Accels strategy to achieve and strengthen its long term
objectives is derived from the following:
1.
2.
3.
4.
5.

Presence across IT value chain


Established player and PAN India presence
Quality and long standing customer base
Delivery model
Non- linear business model

Business overview
Accel is an end-to-end Information Technology services provider
specializing in IT Infrastructure Management, System Integration,
IT software services and warranty management services.

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Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14


Presence across IT value chain

Non- linear business model

Accel has over the years invested in building multiple service


offerings. With this, Accel is uniquely positioned to provide
end to end solutions at optimum costs to customers. The
graph below replicates Accels service portfolio

While the Company continues to make significant progress in


the traditional IT services offerings, it has been pursuing nonlinear growth opportunities, which contribute revenue growth
without commensurate growth in headcount. The following
contribute to Accels non-linear business model
Products Accels products for banking (GBM) is driving non-linear
growth through license revenue. These include State Tax Module, New
Pension Scheme, Centralized Pension Processing Centre, Centralized
EXIM, Ministry Accounts, State Treasury and Post Office catering to
Government business carried out by banks.

Accel is also developing embedded products for automotive


domain targeted at customers in the Europe
Platform / frameworks - Accel has its own, time tested, web based
CRM and logistics management system for its warranty business.
Its a fully integrated technology framework developed for IT and
telecom product vendors, which helps delivering quality services.
These help in optimizing costs for customers.

We also have a range of multi function Kiosks developed inhouse which are used for kiosk based payment solutions
Research and Development

Established player and PAN India presence


Accel is an established IT player and has a PAN India presence.
This along with a strong brand enables us to launch a new product
or service across India in a short span. Accel has offices in 5
countries outside of India viz US, Japan, UK, Dubai and Singapore

Quality and long standing Customer base


Building strong and long lasting relationship with customers is
critical to every companys success. Accel has strong relationships
with a number of Fortune 500 customers and leading corporate
houses in India and overseas. Accel has been able to retain these
key customers through process and service excellence.
Being aligned with customers and their requirements has helped
us in retaining customers and penetrate new customers.

Accel will continue to focus on developing new products and


solutions to help customers achieve their business objectives
in an optimum manner while continuing to improve the quality
and efficiency of service delivery.
Summary of development efforts spent during 2013-14 is
given below:
Rs. in Lacs
Amount in INR lakhs

2013-14

Banking related products

225.01

Other products

182.17

Total

407.18

Accel will continue to invest in the R & D of various


technologies and solutions to stay live with the technology
and to meet customer requirements.
Infrastructure

Delivery model
Accels delivery model is to provide quality services at low
cost of ownership. The companys offshore delivery centres
are strategically located at Trivandrum, Cochin, Chennai and
Noida in India.
The hybrid delivery model enables Accel to provide end to
end solutions across multiple product segments in the
warranty management space.
The domestic IT service operations span across 8 regional offices
and over 100+ direct service locations across India in a hub-andspoke model to help deliver our services on a pan India basis.
The company has strategic partnerships with international
technology providers such as Oracle, IBM and Microsoft to deliver
solutions and services that are leading edge and industry oriented.

Our registered and corporate office is located at Chennai,


India. The company occupies approximately 200,000 square
feet of office space across various locations in India. All the
major offices and software development centres are well
equipped with all necessary infrastructure facilities
The company is in the process of consolidating its
infrastructure facilities to optimize costs, at the same time
without impacting quality of delivery. This consolidation is
expected to bring in cost efficiencies in the system next year.
Human Resource management key to our success
As on 31st March 2014, the company had multicultural work force
drawn from different disciplines and domain backgrounds. The
workforce is spread across 6 countries including India. The
human resources strategy enabled the Company to attract,

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Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

integrate, develop and retain the best talent required for driving
business growth. The sustained strategic focus to enhance
employee capability, improve efficiency and groom future leaders
We have an established employee recruitment and retention
policy, which involves identifying right talents and providing them
with appropriate training. The strategy is to fulfill business
requirements, maintain high utilization and keep the costs at
optimum levels. In the course of achieving these, management is
coming up with various policy level initiatives to run the business
efficiently at optimum utilization levels, which is expected to yield
favorable results in the next financial year.

The Company has created a performance driven environment


where performance is recognized and employees are
motivated to realize their potential. Management connects
with employees on a regular basis and being transparent with
the employees has immensely helped in motivating the
employees and to realize their full potential.
Accel has its own learning and development programmes to
enhance the skills and competencies of the employees.
These include leadership development programs to develop
business and people competencies. These employees are
nurtured to build the leadership capability. The trainings
include internal and external trainings

Risk Management
Some of the key business risks faced by the company and plans to mitigate the same is given below:
Key Risk

Impact on Accel

Business model

Increased trends in customers moving Planned investment in emerging enterprise solutions, mobility
towards total IT outsourcing deals as a and could services.
single window solution which includes
tech refresh and adaptation of new age Updating existing products and developing new solutions
technologies. Large solution providers
are better positioned to take advantage
of this phenomenon

Mitigation plan

Global economic slow Economic slowdown in key markets like Despite slowdown, there is good opportunity in these markets
down
US and Europe has lead to uncertainties for high value add services like embedded solutions, outsourced
in offshoring opportunities
product development, etc., which will yield cost optimization for
the customers
Focusing on other emerging markets, which are growing at a
faster pace
Dependence on
domestic system
integration and
services business

As Accel is downsizing the hardware


Accel plans to stabilize the IT system integration business at an
related IT system integration business, optimum level in order to retain the service market share. The
there is a risk of losing some of the IT focus will be to manage costs and improve margins
services opportunities in the domestic
market

Cost pressure

The increase in key costs like employee The operations have been decentralized with every service units
costs, infrastructure costs and other
being run as a separate business to have greater control on costs
operational overhead costs are creating and profitability.
pressure on margins
Core focus to improve utilization and productivity of employees
Increase in non-linear business which will not have a direct
impact on costs

Supply chain risks

Employees are key assets to the


Mature HR processes, providing a competitive environment and
company and the company is exposed opportunities for growth will result in high employee satisfaction
to loss of talent. Inability to attract talent and talent retention
could have an impact on delivery
Learning and development by way of trainings will be key to keep
the employees up to date on emerging technologies and meet
the changing market and customer demands
Improving brand image will be critical in this competitive market

Forex exposure

The company is susceptible to volatility Larger part of costs are incurred in local currency resulting in a
in currencies resulting in transaction
natural hedge
exposures
Currency hedging policies are in place, which are reviewed on a
regular basis

High leverage

Accel has a high debt equity ratio with With a clear plan in place to invest only in high profitable
high financing costs. This could impact business, control costs and improve collection of receivables , the
further borrowing also impact the
debt pressure is expected to ease out
operations

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Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14


Detailed review of financial performance
The financial statements are prepared in compliance with the Companies Act, 1956 and Generally Accepted Accounting
Principles in India (Indian GAAP). The Company follows the revised schedule VI as notified by the Ministry of Corporate Affairs
(MCA) with effect from April 1, 2011
The following table gives an overview of the financial results of Accel Frontline Limited on a consolidated basis
FY14
In INR lakhs
Revenue from operations

FY13
%

In INR lakhs

Growth in %

42,133.83

100%

39786.11

100%

6%

17888.72

42.46%

16552.24

41.60%

7%

Costs
Raw material costs
Employee costs

9393.97

22.30%

8632.18

21.70%

8%

Other costs

11300.96

26.82%

11628.48

29.23%

-3%

Total costs

38583.65

91.57%

36812.9

92.53%

5%

4066.84

9.65%

3325.05

8.36%

18%

Other income

516.63

1.23%

351.83

0.88%

32%

Finance costs

2,441.29

5.79%

1995.07

5.01%

18%

Depreciation and amortisation expense

1,106.53

2.63%

1067.77

2.68%

4%

519.02

1.23%

262.21

0.66%

49%

69.81

0.17%

143.54

0.36%

-106%

449.21

1.07%

118.67

0.30%

74%

Earnings before interest, tax, depreciation


and amortisation (EBITDA)

Profit before tax (PBT)


Total tax expense
Profit after tax (PAT)

Revenue analysis
The revenue mix by services and a comparison with previous
year is given below:

Note- IIS IT Infrastructure solutions (system integration


business of Accel), IMS IT Infrastructure Management
services, WMS Warranty Management services
The decline in revenue on a stand alone basis for FY14 is
attributed to planned reduction in IT system integration business
(IIS), with lower margins compared to other business segments .
However this reduction in business was partly offset by increase
in software and infrastructure management services business,
which earns a higher margin apart from overseas businesses .
This is evident from the fact that consolidated EBITDA increased
from 8.3% in FY13 to 9.5% in FY14 .

Business highlights by services:


1.

Accel over the years had grown with IT system


integration (IIS), which has historically contributed to
about 50% of Companys consolidated business. Accel,
being an established player in the market with a PAN
India presence, service has a long standing customer
portfolio which includes some of the leading Corporate
houses and public sector undertakings (PSUs).
Revenues from this business declined by 38 % from INR
16810 lakhs in FY13 to INR -12136 lakhs in FY14. While
IIS has enabled Accel to penetrate and grow its portfolio
services, this domestic centric business inherently earns
low margin driven by intense competition from the large
players in the market. Given this scenario, management
planned to reduce the exposure to this business thereby
resulting in lower revenues in FY14. Going forward, the
IIS business is expected to stabilize at FY14 levels,
which we believe is important to capture the growing IT
services business in the domestic market.

9
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14


2.

Accels IT Infrastructure management services (IMS) includes


maintenance services, facility management and managed
services and is a key contributor to the profitability of the
company. Its customer portfolio includes some of the leading
Corporate houses and public sector undertakings (PSUs). While
IMS were earlier dependent on IIS for penetrating the market, this
has significantly reduced over the years. Management will
continue to have a strong focus in this service business. While
large players are increasingly focusing this market, we believe
that our established presence, service portfolio and quality and
long standing relationships with marquee clientele will be a
differentiator, to grow this segment

3.

Accels software business is relatively smaller as compared


to its peers. However this has been the key focus segment
over the last 3 years with a niche service portfolio:

The revenue mix by geography is given below:

a. Technology services focusing on outsourced


product development, testing, sustenance and reengineering services in consumer products, networking
and automotive domain. The customers are primarily
spread across USA, Japan, UK, Australia and Israel
b.
Enterprise services focusing on BFSI and manufacturing
with technologies such as core banking, Oracle ERP, mobility,
cloud computing and managed services

The software business grew from INR 6340 lakhs in FY13 to


INR 7438 lakhs in FY14, representing a 15 % growth. The
growth was driven by (a) ramp up of technology service
operations in US, Japan and UK and (b) healthy growth in
enterprise business driven by BFSI and managed services

Accel now has a long standing relationship with some of


the fortune 500 corporations and technology companies.
With a niche service practice and products in its portfolio,
this is expected to be the future for Accel. There is a
clear growth path supported by planned investments to
ramp up its overseas presence
4.

5.

Accel is considered to be a pioneer in the Warranty


Management Services space. Its service portfolio broadly
includes warranty fulfillment, test and repair services and
technical help desk and has a PAN India presence. Accel
has its own, time tested, web based, CRM and logistics
management framework which helps in managing the
operations in an efficient manner and thereby resulting in
low costs to its customers.
The company ventured into value added IT security services
business in Singapore in July 2012. The company earned
profits in its first year of operations. This is a fast growing
segment and is expected to make a significant contribution to
Accels growth and profitability as this unit ventures into
neighbouring markets in the future.

Accels
infrastructure
management
services,
warranty
management, enterprise software services are primarily driven by
domestic IT markets. The India business witnessed a negative
growth in FY14 due to decline in IT infrastructure solutions
(hardware centric business) and warranty management services.
This decline was partly offset by increase in overseas subsidiaries
business and enterprise software services .
The company witnessed a growth in all the overseas markets except
Middle East in FY14, driven by lower revenues from hardware and
enterprise business owing to delayed closing of new orders. Growth in
Singapore market was driven by IT security.

The India market is expected to grow in absolute terms with


expected growth in Infrastructure management and warranty
management businesses. However the strategy is to grow its
overseas market with focus on IT software and IT security
businesses. The Middle East market is also expected to grow
with new orders firm orders new orders being executed and
health pipeline in place.
Customer concentration
During the financial year 2013-14, our Top 10 customers
contributed 30% of the revenue (36% for 2012-13) and Top 20
customers contributed 71% of the revenue (41% for 2012-13).

EBITDA margins
On a consolidated basis EBITDA improved from INR 3325 lakhs
in FY13 to INR 4067 lakhs in FY14 in absolute terms, EBITDA
margin improved from 8.28% in FY13 to 9.5% in FY14. This was
driven by change in business mix, with increase, in service
revenues and decline in hardware revenues (IIS)
The company is in the process of implementing various initiatives,
which are expected to improve margins. These include focus on high
margin business, rationalization of FTEs to pipeline, improving
productivity of employees, consolidation of infrastructure facilities,

10
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

etc. These initiatives include are expected to further improve


margins
Depreciation and Amortization
The company has been following straight-line basis of depreciation and
has depreciated assets based on the rates mentioned in the
Companies Act. In respect of application software, estimated useful life
of the assets is taken as 7 years and has accordingly amortized the
value of the software assets capitalized. Intangible asset in the form of
goodwill is being amortized over a period of ten years.

Fixed assets (net total including


capital work in progress)

4920.73

4,704.12

Intangible assets on consolidation

1310.91

1,308.27

30.00

30

1155.49

421.29

640.28

803.76

8057.41

7,267.44

Non-current investments
Long-term loans and advances
Long-term Trade receivables

Current assets

The higher depreciation and amortization charge is due to


increase in fixed assets base during the current year

Inventories

Financing costs
The financing costs increase in FY14 driven by impact of (a) fresh
loans taken during the year and (b) full year impact of loans taken
during previous financial year 2012-13. With an aggressive plan to
bring in cost efficiencies and invest in high margin services, the
debt and interest pressure is expected to ease out . During the
year the company raised additional equity share capital by issuing
shares on a preferential basis to overseas investors, which will
also help reduce the finance costs.

Taxation
We have provided for the tax liability under MAT tax rates
prescribed under the Income Tax Act, 1961. There is no tax
liability for the Dubai subsidiary and we have unabsorbed
losses in Some of the overseas subsidiaries
The consolidated balance sheet of Accel Frontline Limited is
given below:
Consolidated balance sheet of Accel Frontline Limited

4106.44

4,386.09

16658.18

14,907.23

Cash and bank balances

1936.74

2,681.18

Short-term loans and advances

1448.22

2,689.76

Trade receivables

Other current assets

Total

5513.54

3,865.49

29663.12

28,529.75

37720.53

35,797.19

Key highlights:
Equity and reserves
During FY14, the company issued equity shares on preferential
basis to CAC Holdings Corporation, Japan (CAC). The total
amount received including on account of Securities premium was
Rs. 2475 lacs. As a result of that, the equity base went up from
2426 lacs to 2976 lacs and securities premium from 4932 lacs to
6857 lacs. Consequent to this investment and other related
transactions, the promoters entered into with CAC, and the open
offer as per SEBI guidelines, CAC emerged as the single largest
shareholder with 60.95%. the holding of erstwhile promoters Accel
reduced, to 26.20%

Borrowings
31 March
2014

31 March
2013

Shareholders funds
Share capital
Minority interest
Reserves and surplus
Total

2976.19

2426.19

621.49

398.90

9270.72

7458.74

12868.40

10,283.83

Non-current liabilities
Long term borrowings

3048.50

1,045.94

Deferred tax liability

371.33

325.81

Long-term provisions

309.45

486.43

3728.28

1,858.18

Total

Current liabilities
Short-term borrowings

8847.99

9,328.85

Trade payables

8195.24

10,554.50

Other current liabilities

4000.33

3,650.44

81.29

121.39

21124.85

23,655.18

37720.53

35,797.19

Short-term provisions

Total

Long term borrowings increased by INR 636 lakhs as at 31


March 2014 with additional term loan from financial
institutions to fund long term working capital requirements.
Short term borrowings increased with fresh unsecured loans
taken from financial institutions to fund the working capital
requirement of the company. The term loans are repayable
over a period of 3-5 years timeframe
Receivables management
The company continues to have challenges with receivable
management, due to its exposure to public sector and
Government clientele in India.
A large portion of these receivables are from turnkey projects,
which have a longer gestation to implement and the payment
terms are generally on commissioning and acceptance and
hence the longer duration of the receivable cycle.
The sundry debtors increased by INR 1751 lakhs as at 31 March 2014
from INR 14907 lakhs as at 31 March 2013, driven by higher revenues
from overseas subsidiaries business. While sundry debtors increased
in absolute terms, the average collection period decreased from 133
days as at 31 March 2013 to 121 days as at 31 March 2014. The
company expects to improve the collection period with strengthening
customer credit analysis, aggressive follow ups, advance collection
prior to service commencement, etc.

11
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14


Inventory

Annexure III to the Directors Report

Thedecrease in inventory value as at 31 March 2014 is driven


by reduction in inventory levels for SI business

REPORT ON CORPORATE GOVERNANCE

Working capital and funding


While the average collection period decreased from 133 days
to 121 days due to efficient vendor management, which has
helped the company in marginally reducing the overall
working capital cycle. The working capital requirements have
been funded through a combination of working capital facilities
from banks and internal accruals.

The Directors present the Companys Report on Corporate


Governance.
1)

Accel Frontline Limited (AFL) is respected for its


professional management and good business practices
amongst its Clientele. Integrity, emphasis on quality
service and transparency in its dealing with all
stakeholders are its core values.

The company generates adequate profits to service these


borrowings. There was no major increase in fund and nonfund based working capital during financial year 2013-14.

AFL believes that good governance generates goodwill


among business partners, customers and investors,
earns respect from society, brings about a consistent
sustainable growth for the Company and generates
competitive returns for the investors. Your Company is
committed to the principles of good governance.

Fixed Assets
During the year, the company increased its gross asset base
by 1498 lakhs, primarily driven by purchase of computer and
related
equipments,
leasehold
improvements
and
capitalization of new products developed by Accel.

Philosophy on Corporate Governance

2)

Board of Directors
a)

The additions were to replace old assets as per company


policy and also meet the increased asset requirements in
service business to achieve the growth. The additions were
primarily in India with marginal additions in Singapore

Composition of the Board

The Board of Directors consists of professionals drawn from


diverse fields. The Board currently comprises an Executive
Chairman, an Executive Director and four Non-Executive
Directors. Of the Non-Executive Directors, three are
independent which is equal to 50% of the size of the Board.
The objective judgment of the independent and NonExecutive Directors on corporate affairs and their collective
experience and contributions are valuable to the company.

Cash and bank


The cash and bank balances include INR 769 lakhs of margin
money placed to avail non-fund based facilities from the
banks. The increase in cash and bank balances were
primarily driven by cash reserves at Singapore and Dubai.

i)

Executive Directors

Executive Chairman *N.R.Panicker ( w.e.f 07-05-2014)


Executive Director ***Malcolm F Mehta (w.e.f. 01-07-2014)

Loans and advances


Long term loans and advances as at 31 March 2014 include
security deposits and deposits with statutory/government
authorities. Short term loans and advances as at 31 March
2014 include rent and other deposits, advance to associate
companies and other loans and advances. The increase is
attributed to trade tax related payments and security deposits.

ii)

Non-Executive Directors

Independent

Alok Sharma
Sam (S) Santhosh
R. Ramaraj

Other current assets

Non Independent

** Amba Preetham Parigi


Steve Ting Tuan Toon

These include income tax related balances and prepaid expenses. The
increase in other current assets balances as at 31 March 2014 were
due to increase in prepaid expenses and TDS receivables.

b) Details of Equity Shares held by the Directors as on


10-06-2014

Cautionary Statement
Statements in the Management Discussion and Analysis
describing the companys objective, Projections estimates,
expectations, may be forward-looking statements within the
meaning of applicable securities laws and regulations. Actual
results could differ materially from those expressed or implied.
Important factors that could make a difference to the companys
operations include economic conditions affecting demand/supply
and price conditions in the domestic and overseas market in which
the company operates, change in Government regulations, tax
laws, interest costs, other statutes and other incidental factors.

Name of the Director

No of shares

*N.R.Panicker, Executive Chairman

3,72,500

Mr. N.R.Panicker has been designated as Executive Chairman


w.e.f 07-05-2014 and was earlier Chairman and Managing
Director
** Mr. Amba Preetham Parigi has resigned w.e.f 07-05-2014
*** Mr. Malcolm F Mehta appointed as Additional director
with effect from 07-05-2014. He was further designated as
Executive Director with effect from 01-07-2014

Thus the company should and need not be held responsible, if


which in not unlikely, the future turns out to be something
quite different. Subject to this management disclaimer, this
discussion and analysis should be perused.

12
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14


c)

Details in regard to attendance of Directors at Board Meetings/Shareholders Meetings, the Number of


Directorship/(s) held in Indian Pubic Limited Companies and the position of Membership/Chairmanship of Audit
Committee/Remuneration Committee / Shareholders and Investor Grievance Committee.

Name of the Director

Category as at
10-06-2014

No. of Board
meetings
Attended Out
of 09 Meetings
Held as on 1006-2014

Attendance
At the
last AGM
held On
12.08.2013

No. of Director Ship


held in Indian Public
Limited Companies
(excluding Accel
Frontline Limited)

Committee/s position
as on 10-06-2014 (All
companies excluding
Accel Frontline
Limited)
Member

Chairman

N.R. Panicker

Executive Chairman

09

Yes

05

01

01

Steve Ting Tuan Toon

Non Executive Non


Independent

05

Yes

Nil

Nil

Nil

Amba Preetham Parigi

Non-Executive Non
Independent Director

07

Yes

07

00

Alok Sharma

Non-Executive
Independent Director

07

No

01

00

00

Sam (S) Santhosh

Non-Executive
Independent Director

04

Yes

Nil

Nil

Nil

R.Ramaraj

Non-Executive
Independent Director

09

Yes

05

01

Malcolm F Mehta

Executive Director

02

No

Nil

Nil

Nil

d)

Boards functioning & Procedure

The AFL Board plays a pivotal role in ensuring good governance. Its style of functioning is democratic. The Members of the Board have
always had complete freedom to express their opinion and decisions are taken on the basis of a consensus arrived at after detailed
discussion. The members are also free to bring up any matter for discussion at the Board Meetings with the permission of the Chairman.

The Boards role, functions, responsibility and accountability are clearly defined. In addition to its primary role of setting
corporate goals and monitoring corporate performance, it directs long term sustainable growth that translates itself into
progress, prosperity and the fulfillment of stakeholders aspirations, is accomplished. It also sets standards of corporate
behavior and ensures ethical behavior at all times and strict compliance with laws and regulations.
The items placed at the Meetings of the Board include the following:

Report on operations of the company.


Opportunities for organic and inorganic growth;
Business Plans and analysis of variances periodically as
compared to the plans.

The audited quarterly/half yearly financial results and the


audited annual account of the company, both consolidated
and on standalone for consideration for approval;
Financial statements such as cash flow, inventories, sundry
debtors and/or other liabilities or claims of substantial nature;
Status of borrowings and details of material foreign exchange
exposures and the steps taken by the management to limit
the risks of adverse exchange rate movement, if any;

Sale of material nature, of investments, subsidiaries


assets, which is not in normal course of business, if any;
Information on senior appointments below the board level
including the appointment/ removal of the Chief Financial
Officer (CFO) and the Company Secretary;
Proposals for joint ventures/collaborations;
Material communication from government including show
cause notices, demand, prosecution, notices and penalty
notices, if any, which are materially important;
Communication to Stock Exchanges, the shareholders
and the press regarding companys performance, future
plans and other decision/changes of significant
importance or of price sensitive nature.

All the items on the Agenda are accompanied by notes giving


Delegation of powers to the operational management;
Any material default in financial obligations to any by the information on the related subject. The Agenda and the relevant
notes are sent in advance separately to each Director to
company including substantial non-receipt of monies due
enable the Board to take informed decisions.
to the company.
Review compliance of all laws applicable to the company
including the requirements of listing agreement signed The Minutes of the meetings of the Board are individually
given to all Directors and confirmed at the subsequent Board
with the stock exchanges and steps taken by the
Meeting. The Minutes of the various committees of the Board
company to rectify instances of non-compliances, if any;
are also individually given to the Board and thereafter tabled
Transactions that involve substantial payment towards
for discussion at the subsequent Board Meeting.
goodwill, brand equity or intellectual property, if any;

13
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14


e)

Details of Board Meetings held upto 10-06-2014 and the again on 31st October 2012 with the terms of reference as specified
in clause 49 of the listing agreement with the stock exchanges
number of Directors present
and also fully confirms to the requirements of section 292A of the
Companies Act, 1956 and other applicable provisions of
Dates on which the
No. of
companies act 2013. It addresses itself, to matters pertaining to
Total strength
Sr.No.
Board Meetings
Directors
adequacy of internal controls, reliability of financial
of the Board
were held
Present
statements/others management information, adequacy of
provisions for liabilities, and whether the audit tests are
1.
29.05.2013
06
05
appropriate and scientifically carried out and that they were
2.
12.08.2013
06
05
aligned with the realities of the business, adequacy of disclosures,
3.
12.11.2013
06
04
compliance with all relevant statues and other facets of the
companys operations that are of vital concern to the company.
4.
09.12.2013
06
05

f)

5.

08.01.2014

06

05

6.

18.01.2014

06

04

7.

14.02.2014

06

04

8.

07-05-2014

06

06

10-06-2014

06

04

The re-constituted committee as on 07-05-2014 comprises of


the following persons:
Name of the Member Category

Attendance of Last Annual General Meeting.

Five directors of the company attended the last Annual


General Meeting held on 12th August 2013.
3.

Committees of the Board


a)

Capacity

Mr.R. Ramaraj

Non Executive
Independent

Chairman

Mr. Alok Sharma

Non Executive
Independent

Member

Mr. Sam (S) Santhosh

Non Executive
Independent

Member

Chief Finance Officer, General Manager (Corporate Finance ), the


Internal Auditor and the representatives of the Statutory Auditors
are permanent invitees to the Audit Committee Meetings. The
Company Secretary is the Secretary of the Committee.

Audit Committee

The committee was originally constituted on 28th April 2004. It was


reconstituted on 11th April 2006, and on 29th September 2011 and

The dates on which the Audit Committee Meetings were held and the attendance of the Members at the said meetings are as under:

Sr. No

Date of
Meeting

Attendance record of
the members R.Ramaraj
(Appointed as Chairman
with effect from
31.10.2012

*Amba Preetham Parigi


(appointed as Member
with effect from
31.10.2012

Sam (S) Santhosh


(appointed as Member
with effect from
31.10.2012

Alok Sharma (appointed


as a member with effect
from 07-05-2014)

01

29.05.2013

Yes

Yes

Yes

No

02

12.08.2013

Yes

Yes

Yes

No

03

12.11.2013

Yes

No

Yes

No

04

14.02.2014

Yes

Yes

Yes

No

05

07.05.2014

Yes

Yes

Yes

No

* Resigned with effect from 07-05-2014


Internal Auditors
The company had appointed a firm of Chartered Accountants
M/s Grant Thornton Chartered Accountants as Internal
Auditors to review the Internal Controls systems of the
company and to report thereon. The audit committee reviews
the report of the Internal Auditors.
b)

Stakeholders Relationship Committee

The company has committee titled Shareholders Investor Grievance


Committee. The committee was originally constituted on 28th April
2004. It was reconstituted on 11th April 2006, and on 29th September
2011 and again on 31st October 2012, 29th May 2013 , 7th May 2014
with the terms of reference as specified in clause 49 of the listing
agreement with the stock exchanges. Pursuant to section 178(5) of the
companies Act 2013, the name of the committee is changed to
Stakeholders Relationship committee.

Name of the Member

Category

Capacity

Mr. Alok Sharma

Non Executive
Independent

Chairman

Mr.R. Ramaraj

Non Executive
Independent

Member

Mr. Sam (S) Santhosh

Non Executive
Independent

Member

The Shareholders/Investors Grievances Committee deals


with various matters relating to:

Transfer / transmission / consolidation of shares


Issue of Duplicate Share Certificates
Review of shares dematerialized / rematerialized and all
other related matters.
Monitors expeditious redressal of Investors grievances

14
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

Non receipt of Annual Report and declared dividend


All other matters related to shares
Reviewing the performance of the Companys Registrars

The dates on which the Stakeholders Relationship committee meetings were held and the attendance of the Members at the
said meetings are as under:
Attendance record of the Members
*Amba Preetham
Parigi (Appointed
as Chairman
with effect from
29.05.2013

R.Ramaraj
(appointed as
Member with effect
from 29.05.2013

Alok Sharma (appointed


as Member with effect
from 29.05.2013.
designated as Chairman
w.e.f 07-05-2014)

Sam (S)Santhosh
( appointed as a
Member with effect
from 07-05-2014

Sr.
No

Dates of Meeting

01

29.05.2013

Yes

Yes

No

No

02

12.08.2013

Yes

Yes

No

No

03

12.11.2013

No

Yes

Yes

No

04

14.02.2014

Yes

Yes

Yes

No

05

07.05.2014

No

Yes

Yes

yes

* Resigned with effect from 07-05-2014


c)

Nomination and Remuneration Committee

The Remuneration committee was originally constituted on 28th April


2004. It was reconstituted on 11th April 2006, 29th September 2011
and again on 31.st October 2012. The Nomination committee was
incorporated on 01st February 2012. Pursuant to the sec 178 of the
companies act 2013 the company is required to form a Nomination and
remuneration committee consisting of three or more non Executive
Directors of which not less than one half will be independent . The
company has a Remuneration and Nomination committee separately.
so the Board in their meetings held on 07th May 2014 have combined
both the committees and titled the committee as Nomination and
remuneration committee. The committees goal is to ensure that the
company attracts and retains qualified employees in accordance with
its business plans, that our company fulfills its ethical and legal
responsibilities to its employees. The terms of reference of the
Nomination Remuneration Committee are given below.

1.

2.

3.

To review the remuneration of Managing Director/ Whole


time Director, including annual increment and
commissions, after reviewing their performance.
Review the remuneration policy followed by our
Company, taking into consideration the performance of
senior executives on certain parameters.
Such other matters as may from time to time be required by
any statutory, contractual or other regulatory requirements to
be attended to by the Remuneration Committee.

Director comprises of salary, performance incentive, perquisites


and allowances, contributions to Provident Fund and Gratuity.
The committee will oversee the Companys nomination process
for the top level management and specifically to identify, screen
and review individuals qualified to serve as Executive Directors,
Non-Executive Directors and Independent Directors consistent
with criteria approved by the Board and to recommend, for
approval by the Board, nominees for election at the annual
meeting of shareholders. The committee also to make
recommendations to the Board regarding candidates for :

nomination for election or re-election by the


shareholders; and
any Board vacancies that are to be filled by the Board.

The committee may act on its own in identifying potential


candidates, inside or outside the Company, or may act upon
proposals submitted by the Chairperson of the Board of Directors.
The committee will review and discuss all documents pertaining to
candidates and will conduct evaluation of candidates in
accordance with a process that it sees fit and appropriate, passing
on the recommendations for nomination to the Board. The
committee also will coordinate and oversee the annual selfevaluation of the Boards performance and of individual directors
in the governance of the Company.

The re-constituted committee as on 07-05-2014 comprises of


the following persons:

Remuneration Policy:
The committee has the powers to determine and recommend to
the Board the amount of remuneration, including performancelinked bonus and perquisites , payable to the Managing Director
and Whole-Time Directors. In terms of guidelines the company
ensures that the remuneration payable to the Executive Directors
by way of salary including other allowances and monetary value of
perquisites should be within the overall limit as stipulated under
the companies Act 1956 and Companies Act 2013 and approved
by the shareholders. The remuneration structure of the Managing

Name of the Member

Category

Capacity

Mr. Sam (S) Santhosh

Non Executive
Independent

Chairman

Mr. Steve Ting Tuan Toon

Non Executive Non


Member
Independent

Mr. Alok Sharma

Non Executive
Independent

Member

15
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14


(i) The details of salary and perquisites (including
contributions to Provident Fund/Superannuation Fund)
paid/ payable to the Executive Chairman for the year
ended March 31, 2014 is as under:
Name

N.R. Panicker,
Executive Chairman

Salary

4,588,220

Perquisites

1,950,000

Commission

Contribution to Provident Fund /


Superannuation Fund
Total
(ii)

621,878
7,160,098

Remuneration to The Non-Executive Directors.

The Non-Executive Directors are being paid sitting fees @


Rs.20,000/- for each Board Meeting and @ Rs.10,000/- for
each Committee Meeting attended by them.
4.

Subsidiary Companies

c)

Special resolutions passed at the last three Annual


General Meetings.

During the AGM 29.09.2011, following special resolutions


were passed.
To re-appoint Mr. K.R.Chandrasekaran, whole-time director
for a period of two years with effect from 27Th April 2011
To appoint Ms. Shruthi Panicker daughter of Mr. N.R. Panicker as
an Executive with effect from 13.09.2010 under the provisions of
section 314(1)(b) of the Companies Act, 1956.

During the AGM 19-12-2012, the following special resolutions


were passed.
To re-appoint Mr. N.R.Panicker as Managing Director of the
Company for a period of 3 (Three) years with effect from 0111-2012 on the terms, conditions including remuneration and
perquisites as approved by the shareholders in the Annual
General Meeting held on 19/12/2012.
During the EGM 08.01.2014, following special resolutions
were passed

The Company has subsidiaries operating from Singapore, Dubai,


Japan, North America and UK which are not listed in India or abroad as
of date. The company also has an unlisted Indian Subsidiary.

For alteration of Articles of Association of the Company by altering/


amending / substituting suitably by inserting / deleting and amending
the Articles of the Company and To raise additional funds through
further issue of securities by way of preferential allotment to M/s CAC
Holdings Corporation ( earlier CAC Corporation)

The Statutory Audit Report of the Subsidiary Companies for


every financial year are placed before and reviewed by the
Audit Committee.

6.

5.

General Body Meetings


a)

Details of location & time of holding the last three


Annual General Meetings.

Year

Location

Date & Time

Rajah Sir Annamalai


Chettiar Memorial
29th Sep. 2011
16th AGM 2011 Trust Hall (Rani Seethai
3.00 PM
Hall), Mount Road,
Chennai
17th AGM 2012

The Fortune Park


Aruna Chennai,
Nungambakkam,
Chennai

19th Dec. 2012


3.00 PM

Rajah Sir Annamalai


Chettiar Memorial
12th of Aug. 2013
18th AGM 2013 Trust Hall (Rani Seethai
11.00 AM
Hall) Mount Road,
Chennai 600 001
b)

An Extra Ordinary General Meeting of the


shareholders of the company was held on 8th
January 2014 at 10.30 AM at Pearl Hall, First Floor,
The Aruna Chennai 144-145, Sterling Road,
Chennai 34 for the approval of shareholders :

For alteration of Articles of Association of the Company


by altering/amending/substituting suitably by inserting /
deleting and amending the Articles of the Company and
To raise additional funds through further issue of
securities by way of preferential allotment.

Code of Conduct

The Board of Directors has adopted the Code of Conduct for


Directors and senior management personnel. The said code has
been communicated to the Directors and members of the senior
management. The code of Conduct has been displayed on the
companys website and the Directors and Senior Management
Personnel have confirmed their adherence to the same.

7.

Insider Trading:

As per the amended SEBI (Prevention of Insider Trading)


Regulations 1992, the company is required to have a Compliance
Officer who is responsible for setting forth policies, procedures,
monitoring adherence to the rules for the preservation of price
sensitive information, pre-clearance of trade, monitoring of trades
and implementation of the Code of Conduct for trading in
Companys securities under the overall supervision of the Board.
The Board has appointed Ms. Sweena Nair, Company Secretary
as the Compliance Officer from 2nd January 2008. The Company
had adopted a Code of Conduct for all the Directors on the Board
as well as Senior level employees at all locations of the Company,
who have affirmed the adherence of the same.

8.

Disclosures

a) Disclosure on materially significant related party transactions,


i.e the companys transactions that are of material nature, with its
promoters, directors and the management, their relatives or
subsidiaries, among others that may have potential conflict with
the companys interest at large that may have potential conflict
with the interests of the company at large.

None of the transactions with any of the related parties were


in conflict with the companys interest. Attention of members
is drawn to the disclosure of transactions with related parties
set out in Note 4.5 of standalone financial Statements forming
part of the Annual report.

16
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14


The companys major related party transactions are generally with
its subsidiaries and associates. The related party transactions are
entered into based on consideration of various business,
exigencies, such as synergy in operations, sectoral specialization
and the companys long term strategy for sectoral investments,
optimization of market share profitability legal requirements,
liquidity and capital resources of subsidiaries and associates.

All related party transactions are negotiated on arms length


basis, and are intended to further the companys interests.
The particulars of transactions between the Company and its
related parties as per the Accounting Standard 18 Related
Party Disclosures referred under section 211(3(c ) of the
Companies Act, 1956 are set out in the notes to Accounts for
the Annual Report. There have been no materially significant
related party transactions, which may have potential conflicts
with the interest of the company.
b) Disclosures of Accounting treatment
In the preparation of the financial statements, the company
has followed the Accounting Standards referred to under
section 211(3)( c ) of the companies act 1956. The significant
accounting policies that are consistently applied have been
set out in the Notes to the Accounts.

Audit Qualifications.
There are no Audit qualifications in the financial statements of
the company for the year 2013-2014
Whistle blower policy:
The company has a whistle blower policy. This policy is to enable
employees to report to the management their concerns about
unethical behaviour, actual or suspected fraud or violation of
companys code of conduct of ethics policy. This mechanism
provided safeguards against victimization of employees, who avail
of the mechanism. This also provides for direct access to the
Chairman of the Audit committee in exceptional cases. The same
has put on the companys website www.accelfrontline.in.

Revised SEBI Guidelines on Corporate Governance


SEBI had notified on October 29, 2004, a revised / updated
set of guidelines relating to Corporate Governance which
have been incorporated in the Companys Listing Agreement
with the Stock Exchanges. The compliance with the earlier
guidelines here declared adequate upto March 31, 2005
(since extended upto to December 31, 2005). The revised
Guidelines came into effect from January 1, 2006.
The Company is fully compliant with the revised SEBI Guidelines.

c) Risk management
Business risk evaluation and management is on ongoing
process within the Organization. During the period under
review an exercise on Business Risk Management (BRM) was
carried out covering the entire gamut of business operations
and the Board was informed about the same.
d) Details of non- compliance by the company, penalties etc
No strictures/penalties have been imposed on the Company
by the Stock Exchanges or the Securities and Exchange
Board of India (SEBI) or any statutory authority on any matters
related to capital markets after the listing of shares on 30th
October 2006 to 31st March, 2014.
e) Mandatory and Non mandatory requirements
The Company has complied with all the applicable mandatory
requirements as provided in Revised clause 49 of the Listing
Agreement entered into with the stock Exchanges where
companys shares are listed.
The extent of implementation of the non- mandatory
requirements are as under:
The Board:
The requirement regarding the non executive is not applicable ,
since the chairman of the company is the executive chairman.

Remuneration Committee
The company has a Nomination and Remuneration committee
meeting the requirements of the Clause 49 of the Listing
Agreement and the Companies Act 2013. A detailed note on
this committee is provided in the annual report.
Shareholder right
The company is yet to comply with the same.

As per the latest directive from Securities and Exchange Board of


India(SEBI), the transferor and the transferee have to provide
documentary evidence of their PAN to effect the Share Transfers.

Corporate Governance Voluntary Guidelines 2009


The Ministry of Corporate Affairs has issued the Corporate
Governance Voluntary Guidelines 2009, for voluntary adoption by
the Corporate Sector for further improvement of corporate governance
standards and practices. These guidelines intend to provide corporate
sector a framework to govern themselves voluntarily as per the highest
standards of ethical and responsible conduct of business. The Board
has decided to adopt the voluntary guidelines .In this reference, the
company has authorized Nomination committee to determine and set
the criteria for induction of new directors on the Board of the Company,
review the strength, structure, size and composition of the board and
such other matter related to appointment of Directors. The company
has also put in place a mechanism for whistle blowing. The other
clauses of the said voluntary Guidelines are being reviewed by the
management and will be implemented in a phased manner.

To comply with the requirement of sec 178 of the companies Act


2013 the committee has merged the Nomination committee with
the remuneration committee and formed a single committee called
Nomination and Remuneration committee.

9.

Means of Communication

The unaudited quarterly / half yearly results are announced within forty
five days from the end of the quarter as stipulated under the Listing
Agreement with the Stock Exchanges. The aforesaid financial results
are taken on record by the Board of Directors and are communicated
to the Stock Exchanges where the Companys securities are listed.
Once the Stock Exchange has been intimated, these results are
published in two leading daily newspapers.

The Company also informs by way of intimation to the Stock


Exchanges all price sensitive matters or such other matters which
in its opinion are material and of relevance to the share holders
and subsequently issues a press release on the said matters.

17
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14


The quarterly/half yearly annual results as well as the press
releases of the company are put on the companys website:
www. accelfrontline.in.

b) Financial Year

Investor Complaints received and replied during the


year 2013 - 2014

Nature of queries

Received Redressed

Pending

Correction of name and


address

Issue of Duplicate
Dividend Warrants

Change of Bank details


(Demat)

Non Receipt of Dividend/


Interest/ Redemption
Warrants

Non receipt of Annual


Report

Total

0
0
0

0
0

26493951

Non-Promoters
Total

3267922

10.98
100.00

Results for quarter ending


31st December 2014

Mid February 2015

Results for year ending


31st March 2015

End May 2015

20th Annual General Meeting


(i.e. next year)

September 2015

c)

Date of Book Closure. The Register of Members and


Share Transfer Books of
the Company shall
remain closed from Sep
9, 2014 to Sep 11, 2014
(Both days inclusive)

d)

Listing on Stock Exchanges and Stock Code / Symbol.


Stock Code /
Symbol
AFL

532774

ISIN Number INE020G01017


The Annual Listing fees for the year 2014-2015 have been
paid to the concerned stock exchanges.

11. General Information for Shareholders


a)

Mid November 2014

The Bombay Stock Exchange Ltd


Phiroze Jeejebhoy Towers
Dalal Street, Mumbai 400001

89.02

29761873

Results for quarter ending


30th September 2014

The National Stock Exchange of India Ltd


Exchange Plaza, Bandra Kurla Complex
Bandra (East), Mumbai 400051

No. of Shares % to total paid up capital

Promoters

Mid August 2014

Name of Stock Exchange

The Aggregate Promoters and Non-Promoters


shareholding of the Company as at 31st March,
2014 is as shown below.

Category

Results for quarter ending


30th June 2014

As at 31st March 2014 NIL investor complaints were pending.


Also as at 31st March 2014, NIL Share Transfers and NIL
Demat requests were pending.
(ii)

April to March

Financial Calendar (Tentative)

10. Investor Services


(i)

The Company has also paid the annual custody fee for the year 20142015 to both the Depositories namely National Securities Depository
Limited (NSDL) and Central Depository Limited (CDSL).

Annual General Meeting

Date

11th September 2014

Time

11.00 A.M

Venue

Narada Gana Sabha Trust, Mini Hall,


314, T.T.K Road, Chennai - 600018

Details of shareholding in Demat suspense Account titled Accel Frontline Limited opened for shares lying unclaimed in the
Escrow Account.
Aggregate No. of
shareholders and the
outstanding shares in the
suspense account lying at
the beginning of the year

No. of shareholders
who approached issuer
for transfer of shares
from suspense account
during the year

No. of Shareholders
to whom shares were
transferred from
suspense account
during the year

Aggregate No. of
shareholders and the
outstanding shares in
the suspense account
during the year

That the voting rights on


these shares shall remain
frozen till the rightful
owner of such shares
claims the shares

(i)

(II)

(III)

(IV)

(V)

6 shareholders holding
in aggregate 894 shares

The company ensures


that the voting rights on
these shares shall remain
frozen till the rightful
owner of such shares
claims the shares

6 shareholders holding
894 shares

nil

nil

18
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

e)

Shareholding Pattern as on 30th June 2014

Category
Category of shareholder
code

(I)

(Ii)

(A)
[1]

Promoter and Promoter group


Indian
Individuals / hindu undivided family
Central government / state
government(s)
Bodies corporate
Financial institutions / banks
Any other (specify)
Sub total
Foreign
Individuals (non-resident
individuals / foreign individuals)
Bodies corporate
Institutions
Qualified fore. Investor-corporate
Qualified fore.Investor-ind
Any other (specify)
Sub total
Total (a)
Public shareholding
Institutions
Mutual funds / uti
Financial institutions / banks
Central government / state
government(s)
Venture capital funds
Insurance companies
Foreign institutional investors
Foreign venture capital investors
Qualified fore. Investor-corporate
Qualified fore. Investor-ind
Sub total
Non-institutions
Bodies corporate
Individual shareholders holding
nominal share capital upto rs. 1
Lakh.
Individual shareholders holding
nominal share capital in excess of
rs. 1 Lakh
Qualified fore. Investor-corporate
Qualified fore.Investor-ind
Clearing member
Market maker
Non resident indians (repat)
Non resident indians (non repat)
Foreign companies

[2]

(B)
[1]

[2]

Number
Total
of
number of
ShareShares
holders

(III)

Total Shareholding
as a percentage
of total number of
shares
As a
As a per- percentcentage
age of
of (A+B)
(A+B+C)

Number
of Shares
held in
dematerialized
form

(VII)

Number
of shares

As a percentage (IX) =

(VIII)

(VIII)/(IV)*100

(IV)

(V)

372500

372500

1.25

1.25

1
0
0
2

7797191
0
0
8169691

7797191
0
0
8169691

26.2
0
0
27.45

26.2 3200000
0
0
0
0
27.45 3200000

41.04
0
0
39.17

18324260 18324260
0
0
0
0
0
0
0
0
18324260 18324260
26493951 26493951

61.57
0
0
0
0
61.57
89.02

2
0
0
0
0
2
4

(VI)

Shares pledged(or otherwise encumbered)

61.57
0
0
0
0
0
0
0
0
0
61.57
0
89.02 3200000

0
0
0
0
0
0
12.08

0
1

0
229971

0
229971

0
0.77

0
0.77

0
0

0
0

0
0
0
0
0
0
1

0
0
0
0
0
0
229971

0
0
0
0
0
0
229971

0
0
0
0
0
0
0.77

0
0
0
0
0
0
0.77

0
0
0
0
0
0
0

0
0
0
0
0
0
0

107

156782

156782

0.53

0.53

5553

1527835

1451428

5.13

5.13

31

1060322

1026322

3.56

3.56

0
0
42
0
32
6
0

0
0
18585
0
257846
16481
0

0
0
18585
0
252496
16481
0

0
0
0.06
0
0.87
0.06
0

0
0
0.06
0
0.87
0.06
0

0
0
0
0
0
0
0

0
0
0
0
0
0
0

19
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

Overseas bodies corporates


Directors / relatives
Trusts
Sub total
Total (b)
Total (a)+(b)
Shares held by custodians and
against which depository receipts
have been issued
Shares held by custodians
Sub total
Total (c)
Total (a)+(b)+(c)

(C)

f)

0
0
1
5772
5773
5777

0
0
0
0
100
100
3037951 2922194
3267922 3152165
29761873 29646116

0
0
0
10.21
10.98
100

0
0
0
0
0
0
10.21
0
10.98
0
100 3200000

0
0
0
0
0
10.75

0
0
0
5777

0
0
0
0
0
0
29761873 29646116

0
0
0
100

0
0
0
0
0
0
100 3200000

0
0
0
10.75

Market Price
h)
BSE

Month

NSE

High

Low

High

Low

April 2013

35.30

24.80

38.00

24.35

May 2013

30.50

24.40

31.00

24.30

June 2013

28.50

19.80

26.00

21.45

July 2013

26.95

19.50

25.95

19.40

August 2013

24.70

18.95

23.10

18.75

September 2013

24.00

17.65

24.00

17.60

October 2013

33.30

18.00

31.00

18.35

November 2013

37.50

26.55

38.50

26.10

December 2013

43.95

33.40

44.00

33.05

January 2014

44.95

43.10

45.00

43.10

February 2014

47.60

43.60

47.70

43.05

March 2014

46.70

41.00

46.85

40.50

g)

Distribution of Shareholding

Distribution of Shareholding as on 31st March 2014 is as under.

Share or
Debenture
holding of
nominal value

Share/ Debenture
Holders

Rs.

Number % to total

Share/ Debenture
Amount
Rs.

% to total

(1)

(2)

(3)

(4)

(5)

Upto 5000

5316

90.13

6553390

2.20

5001-10000

275

4.66

2314330

0.78

10001-20000

129

2.19

2034060

0.68

20001-30000

61

1.03

1591900

0.53

30001-40000

18

0.31

640410

0.22

40001-50000

20

0.34

953760

0.32

50001-100000

31

0.53

2263440

0.76

100001 and
above

47

0.81

281267440

94.51

Total

5897

100.00

297618730

100.00

Dematerialization of Shares and liquidity as on


31st March 2014

The Shares of the company are compulsorily traded in


Dematerialized form and are available for trading on both the
depositories in India i.e. NSDL & CDSL. As on 31st March
2014, 99.61% equity shares of the company are held in
Dematerialized form.
The companys shares are regularly traded on the NSE and
BSE in electronic form.
i)

Address for Correspondence

Shareholders desiring to communicate with the company on


any matter relating to the shares of the company may either
visit in person or write quoting their folio / demat account
number at the following address:
Registrars & Share Transfer
Agents

Company

Link Intime (India) Pvt. Limited


C-13, Pannalal Silk Mills
Compound, LBS Marg, Bhandup
(West)
Mumbai 400078
Telephone: 022 25963838
Email: mumbai@linkintime.co.in

The Company Secretary


Accel Frontline Limited
75, Nelson Manickam Road
Aminjikarai, Chennai 600029
Telephone: 044-42252000
Email : sweena.nair@
accelfrontline.in

Share holders who hold shares in Dematerialized form should


correspond with the Depository participant with whom they
have opened Demat Account/s, for their queries relating to
shareholding, change of address, ECS facility for dividend,
etc. However for enquiries relating to non-receipt of dividend,
Annual Reports, Notices, etc. the shareholders should
communicate with the Registrar / Company.
j)

Share Transfer System and other related matters

k)

Share Transfer

The Share Transfer in physical form is presently processed


and the share certificates are generally returned to the
respective holders with 30 days from the date of receipt.
ii)

Nomination facility for shareholding

As per the provisions of the amended Companies Act, 1956, facility for
making nomination is available for shareholders in respect of

20
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

shares held by them. Nomination forms can be obtained from


the Registrars and Transfer Agents or from the Company.

2.

Appropriate Accounting Policies have been selected and


applied consistently by the company and that the judgments
and the estimates made thereat are prudent and reasonable
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 March 31, 2014

3.

Proper and sufficient care has been taken in maintaining


adequate accounting records of the company in accordance
with the provisions of the Companies Act, 1956 for
safeguarding the assets of the company and for preventing
and detecting fraud and other irregularities and

4.

The Annual Accounts of the company as aforesaid have


been prepared on a going concern basis.

12. Compliance certificate of the auditors


The statutory auditors have certified that the company has
complied with the conditions of Corporate Governance as
stipulated in Clause 49 of the Listing agreement with the stock
exchange and the same is annexed to the Directors report
and management Discussions & Analysis.
DECLARATION
As provided under Clause 49 of the listing agreement with the
stock exchanges, all Board members & Senior Management
Personnel have affirmed compliance with Accel Frontline Limiteds
Code of Conduct for the year ended 31st March 2014.

For Accel Frontline Limited


Place: Chennai
Date : August 13, 2014

Annexure VI to the Directors Report


CERTIFICATION BY EXECUTIVE CHAIRMAN AND CHIEF
FINANCE OFFICER TO THE BOARD.

N.R.Panicker

Executive Chairman

We, N.R. Panicker, Executive Chairman and K.R. Chandrasekaran,


Chief Finance Officer of Accel Frontline Limited, certify that:

Annexure IV to the Directors Report

1.

We have reviewed the financial statements and cash


flow statement for the year and that to the best of our
knowledge and belief:

a)

These statements do not contain any materially untrue


statement or omit any material fact or contain statements
that might be misleading;

We have examined the compliance of conditions of Corporate


Governance by Accel Frontline Limited for the year ended
31st March 2014 as stipulated in Clause 49 of the Listing
Agreement of the said company with Stock Exchanges

b)

These statements together present a true and fair view of


the state of affairs of the Company and are in compliance
with the existing Accounting Standards, applicable laws
and regulations.

The Compliance of the conditions of Corporate Governance is the


responsibility of the Companys management. Our examination
was limited to procedures and implementation thereof, adopted by
the company for ensuring the compliance conditions of the
corporate Governance. It is neither an audit nor an expression of
opinion on the financial statements of the company.

2.

There are, to the best of our knowledge and belief, no


transactions entered into by the Company during the
year which are fraudulent, illegal or violative of the
Companys code of conduct.

3.

We accept responsibility for the Companys internal control


system for financial reporting. We have periodically
evaluated the effectiveness of the internal control systems of
the company and have disclosed to the auditors and the
audit committee deficiencies in the designs or operation of
the Internal controls, if any. We have also take effective
steps to rectify those deficiencies, if any.

4.

We indicate to the auditors and to the Audit Committee:

a)

Significant changes in internal control over financial


reporting during the year;

b)

Significant changes in accounting policies during the year;

c)

Instances of significant fraud of which we have become


aware of and which involve management or other
employees, who have significant role in the Companys
internal control system over financial reporting.

AUDITORS CERTIFICATE ON CORPORATE GOVERNANCE

The Members of Accel Frontline Limited.


75, Nelson Manickam Road
Aminjikarai
Chennai-600029

In our opinion and to the best of our information and according


to the explanation given to us, we certify that the Company
has complied with the conditions of the corporate Governance
as stipulated in the above mentioned Listing Agreement
We state that, such compliance is neither an assurance as to
the future viability of the company nor as to the efficiency or
effectiveness with which the management has conducted the
affairs of the company.
For and behalf of
K.S. Aiyar & Co
Chartered Accountants
Place: Chennai
Date : August 13, 2014

S.Kalyanaraman
Partner (M. No. 200565)

Annexure V to the Directors Report


Directors Responsibility Statement
Pursuant to Sub-Section 2AA of section 217 of the
Companies Act 1956, the Directors confirm that:
1.

N.R. Panicker
Executive Chairman

K.R.Chandrasekaran
Chief Finance Officer

Date: 07/05/2014
Place: Chennai

In the preparation of annual accounts, the applicable


accounting standards have been followed.

21
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14


Annexure VIII to the Directors Report
2. Statement pursuant to section 212 of the Companies Act, 1956 relating to Companys interest in subsidiary companies.

Name of Subsidiary Company

Accel
Network
Systems &
Accel
Technologies Frontline Programs
Pte Ltd.,
JLT, Dubai (Japan)
Inc. USA
Singapore

Network
Programs
(USA) Inc.
USA

1 The Financial Year of Subsidiary


31.03.2014 31.03.2014 31.03.2014 31.03.2014
Companies ended on
2A No. of shares held by Accel
1,000
1,500
Frontline Ltd with its nominee in the
11,730,000
1 share of
equity
equity
subsidiary at the end of the Financial shares of SGD 0.3 million
shares
shares
Year of the Subsidiary Companies.
.10 per share.
AED
of USD 1
without
each .
par value
2B Extent of interest of holding
company at the end of the financial
51%
100%
100%
100%
year of the subsidiary companies
3 The net aggregate of the Subsidiary
companies (profit/loss) so far as
it concerned the members of the
holding company
A Not dealt with in the Holding
companys account
I For the financial year ended 31st
SGD
AED
USD
USD
March 2014
483,869
1,915,475
NIL
(68,744)
INR
INR
INR
INR
22,957,739 31,429,702
NIL
(4,158,736)
II For the previous financial year of the
SGD
AED
USD
USD
subsidiary companys subsidiaries
114,439
482,515
NIL
19,419
INR
INR
INR
INR
5,000,790
7,133,413
NIL
1,054,740
B Dealt within holding companys account
I For the financial year ended 31st
Nil
Nil
Nil
Nil
March, 2013
II For the previous financial year of the
subsidiary companies they become
Nil
Nil
Nil
Nil
the holding companys subsidiaries.

Accel IT

Accel Japan
KK, Japan

Accel North
America, Inc

Accel
Technologies
Ltd. UK

31.03.2014

31.03.2014

31.03.2014

31.03.2014

212 shares
of 50,000
JPY each.

655,000
shares of USD
1 each.

10,000 shares
of GBP.1 each

30,000,000
shares of
Rs.10 each

100%

100%

100%

100%

JPY
(8,027,774)
INR
(4,847,084)
JPY
(6,356,882)
INR
(4,178,379)

USD
(256,848)
INR
(15,538,325Z)
USD
(216,336)
INR
(11,750,090)

GBP.
(26,006)
INR
(2,502,664)
GBP
(52,374)
INR
(4,495,949)

INR
(6,897,422)
INR
(6,897,422)
INR
(8,894,068)
INR
(8,894,068)

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Resources
Limited,
India

Pursuant to the general exemptions granted by the Ministry of Corporate Affairs, Government of India, the parent company is publishing the consolidated and
standalone financial statements of Accel Frontline Limited and its subsidiaries. The financial statements and Auditors Report of the Individual subsidiaries are
available for inspection by the shareholders at the registered office and that of the subsidiary companies concerned. The details of the accounts of the
individual subsidiaries is also available on the companys website. The information in aggregate on capital, reserves, total assets, total liabilities, details of
investment, turnover, Profit Before Taxation, Profit After Taxation and proposed dividend for each subsidiary are as follows.

Particulars

Share Capital (including share


application money)
Reserves & Surplus / Profit &
Loss Account(Debit Balance)
Total Assets (Fixed Assets +
Capital WIP + Current Assets
Total Liabilities (Debts +
Current Liabilities + Deferred
Tax Liability)
Investment

Accel
Systems &
Technologies
Pte Ltd.,
Singapore

Accel
Frontline
JLT, Dubai

110,075,700

4,879,530

16,757,990

60,857,218

Network
Programs
(USA) Inc.
USA

9,014,970

Provision for Taxation


Profit / (Loss) after Taxation
Proposed Dividend

3,004,990

16,985,904

Accel IT

Accel
Technologies
Ltd, UK

39,365,369

(1,554,313) (19,397,297) (24,758,503) (30,030,416)

Resources
Limited,
India

1,947,071

30,000,000

(7,826,238) (33,346,021)

10,809,523

34,806,656

27,022,055

108,367,118

887,527

45,845,124

223,171,718 112,497,501

3,348,866

51,198,963

34,794,654

99,032,165

6,766,694

49,191,146

509,840,274 533,844,366

Profit / (Loss) before taxation

Accel North
Accel Japan America, Inc,
KK. Japan
USA

350,005,407 178,234,250

Turnover

Network
Programs
(Japan) Inc.
USA

23,651,603

61,975,922

303,448,706

7,741,793

38,621,932

(4,158,736)

(4,847,084) (15,538,325)

(2,502,664)

(6,897,421)

24,934,739

31,429,702

1,977,000

22,957,739

31,429,702

47.45

16.50

60.50

60.50

47.86

16.27

60.10

60.10

(4,158,736)

(4,847,084) (15,538,325)

(2,502,664)

(6,897,421)

0.60

60.50

96.23

1.00

0.59

60.10

99.85

1.00

Exchange rate
a. P&L items average rate
b. Balance sheet items closing
rate

22
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

Independent Auditors Report on consolidated financial statements


The Members of
M/s. Accel Frontline Limited,
Chennai
Report on the Financial Statements
We have audited the accompanying consolidated financial
statements of M/s. Accel Frontline Limited and its subsidiaries,
which comprise the Consolidated Balance Sheet as at March 31,
2014, the Consolidated Statement of Profit and Loss,
Consolidated Cash Flow Statement, summary of significant
accounting policies and other notes for the year then ended
incorporating the financial transactions of Singapore branch of
Accel Frontline Limited which was audited by another auditor.

Managements Responsibility for the Financial Statements


Management is responsible for the preparation of these
consolidated financial statements that give a true and fair view
of the consolidated financial position, consolidated financial
performance and consolidated cash flows of the Company in
accordance with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956 (the
act) read with general circular of 13th September 2013 of
Ministry of Corporate Affairs in respect of Section 133 of the
Companies 2013. This responsibility includes the design,
implementation and maintenance of internal control relevant
to the preparation and presentation of the consolidated
financial statements that give a true and fair view and are free
from material misstatement, whether due to fraud or error.

whose reports have been furnished to us, and our opinion is


based solely on the reports of the other Auditors.
We report that the Consolidated Financial Statements have
been prepared by the Accel Frontline Ltds management in
accordance with the requirements of Accounting Standard
(AS) 21, consolidated financial statements.

Opinion
In our opinion and to the best of our information and according to
the explanations given to us, the consolidated financial
statements give the information required by the Act in the manner
so required and give a true and fair view in conformity with the
accounting principles generally accepted in India:

(a) In the case of the Consolidated Balance Sheet, of the


state of affairs of the company as at 31st March, 2014;
(b) In the case of the Consolidated Statement of Profit and
Loss, of the profit for the year ended on that date; and
(c) In the case of the Consolidated cash flow statement, of
the cash outflows for the year ended on that date.

K.S.AIYAR & CO.


Chartered Accountants
(Firm Regn No: 100186W)

Auditors Responsibility
Our responsibility is to express an opinion on these consolidated
financial statements based on our audit. We conducted our audit in
accordance with the Standards on Auditing issued by the Institute of
Chartered Accountants of India. Those Standards require that we
comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.

Place : Chennai - 16
Date : May 7, 2014

(S.Kalyanaraman)
Partner
(M No: 200565)

An audit involves performing procedures to obtain audit evidence


about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditors
judgment, including the assessment of the risks of material
misstatement of the consolidated financial statements, whether
due to fraud or error. In making those risk assessments, the
auditor considers internal control relevant to the Companys
preparation and fair presentation of the consolidated financial
statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of entitys internal
control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of the
accounting estimates made by management, as well as evaluating
the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
We did not audit the financial statement of subsidiaries, whose
financial statements reflect total assets (Net) of Rs.1870.84 Lakhs
as of 31st March 2014, Total Revenue (Net of duties and taxes) of
Rs.14791.25 Lakhs and net cash inflow from operating activity
amounting to Rs.864.47 Lakhs. These Financial Statements and
other financial information have been audited by other Auditors

23
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

Consolidated balance sheet as at


(hs, unless other
Notes

Mar 31, 2014

Mar 31, 2013

2.1

2,976

2,426

621

399

2.2

9,271

7,459

12,868

10,284

Equity and liabilities


Shareholders funds
Share capital
Share application money pending allotment
Minority interest
Reserves and surplus
Non-current liabilities
Long-term borrowings

2.3

3,048

1,046

Deferred tax liability

2.4

371

326

Long-term provisions

2.5

309

486

3,728

1,858

Current liabilities
Short-term borrowings

2.6

8,848

9,329

Trade payables

2.7

8,195

10,555

Other current liabilities

2.8

4,000

3,650

Short-term provisions

2.9

81

121

21,124

23,655

37,720

35,797

Tangible assets - Net

2,453

2,425

Intangible assets - Net

2,448

2,220

4,901

4,645

20

59

1,311

1,308

TOTAL
Assets
Non-current assets
Fixed assets

2.10

Capital work-in-progress
Intangible assets on consolidation
Non-current investments

2.11

30

30

Long-term loans and advances

2.12

1,155

1,049

Long-term Trade receivables

2.13

640

804

8,057

7,895

Current assets
Inventories

2.14

4,106

4,387

Trade receivables

2.15

16,658

14,907

Cash and bank balances

2.16

1,937

2,681

Short-term loans and advances

2.17

1,448

2,062

Other current assets

2.18

5,514

3,865

29,663

27,902

37,720

35,797

TOTAL
Significant Accounting Policies

Notes to the Balance Sheet

Other Notes

As per our report of even date


For K.S.AIYAR AND CO
Chartered Accountants
Firm Registration No. 100186W
S.KALYANARAMAN
Partner
Membership No. 200565

24

For and on behalf of the Board of Directors of


Accel Frontline Limited
N.R. Panicker
Executive Chairman

R. Ramaraj
Director

K.R. Chandrasekaran
Chief Finance Officer

Sweena Nair
Company Secretary

Place : Chennai
Date : May 7, 2014

Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

Statement of consolidated profit and loss account for the year ended
(hs, unless other
Notes

Mar 31, 2014

Mar 31, 2013

39,786

Continuing operations
Income
Revenue from operations

3.1

42,134

Other income

3.2

517

352

42,651

40,138

Total revenue (I)


Expenses
Cost of raw material and components consumed

3.3

73

168

Purchase of traded goods

3.4

17,602

16,795

(Increase)/ decrease in inventories of finished goods,


work-in-progress and traded goods

3.5

214

(410)

Employee benefits expense

3.6

9,394

8,632

Other expenses

3.7

11,301

11,628

38,584

36,813

4,067

3,325

Total (II)
Earnings before interest, tax, depreciation and
amortization (EBITDA) (I) (II)
Depreciation and amortization expense

3.8

1,107

1,068

Finance costs

3.9

2,441

1,995

519

262

78

115

Profit/(loss) before tax


Tax expenses
Current tax
MAT credit entitlement

(54)

Reversal of MAT credit entitlement

41

Excess provision of earlier years reversed

(11)

Deferred tax

46

(2)

Total tax expense

70

143

449

119

(1) Basic

1.76

0.49

(2) Diluted

1.76

0.49

Profit/(loss) for the year from continuing operations


Earnings per equity share:

Significant Accounting Policies

Notes to the Statement of Profit and Loss Account

Other Notes

As per our report of even date


For K.S.AIYAR AND CO
Chartered Accountants
Firm Registration No. 100186W
S.KALYANARAMAN
Partner
Membership No. 200565

For and on behalf of the Board of Directors of


Accel Frontline Limited
N.R. Panicker
Executive Chairman

R. Ramaraj
Director

K.R. Chandrasekaran
Chief Finance Officer

Sweena Nair
Company Secretary

Place : Chennai
Date : May 7, 2014

25
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

Consolidated Cash Flow Statement for the year ended


(hs, unless other
March 31, 2014

March 31, 2013

A. Cash flow from operating activities


519

262

1,106

1,068

2,441

1,326

4,066

2,656

(2,359)

(328)

Profit before tax


Depreciation/ amortization on continuing operation
Loss/ (profit) on sale of fixed assets

Interest expenses
Operating profit before working capital changes
Changes in working capital
Increase/ (decrease) in trade payables
Increase / (decrease) in long-term provisions

(132)

163

Increase / (decrease) in short-term provisions

(110)

(390)

Increase/ (decrease) in other current liabilities

350

707

Increase/ (decrease) in other long-term liabilities

636

(1,588)

2,066

280

(411)

Decrease / (increase) in trade receivables


Decrease / (increase) in inventories
Decrease / (increase) in long-term loans and advances

(734)

10

Decrease / (increase) in short-term loans and advances

1,242

(1,011)

(1,648)

(426)

(4,063)
3

380
3,036

(1,459)

(1,203)

154
(1,305)

5
(1,198)

Proceeds from increase of Equity share capital

550

Proceeds from Minority Interest

223

Decrease / (increase) in other current assets


Cash generated from /(used in) operations
Net cash flow from/ (used in) operating activities (A)
B. Cash flows from investing activities
Purchase of fixed assets, including CWIP and capital advances
Proceeds from sale of fixed assets
Net cash flow from/ (used in) investing activities (B)
C. Cash flows from financing activities

Repayment of long-term borrowings

81

Proceeds from short-term borrowings


Interest paid
Share premium

884

595

(2,441)

(1,326)

1925

Dividend paid on equity shares


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

1141

364
(286)

Net increase/(decrease) in cash and cash equivalents (A + B + C)

(161)

1,552

Effect of exchange differences on cash & cash equivalents held in foreign currency

(583)

(42)

Cash and cash equivalents at the beginning of the year


Cash and cash equivalents at the end of the year

2,681
1,937

1,171
2,681

Components of cash and cash equivalents


Cash on hand
With banks- on current account

16

29

1,145

1,920

769

724

7
1,937

8
2,681

- on deposit account
- unpaid dividend accounts*
Total cash and cash equivalents
Summary of significant accounting policies

* The company can utilize these balances only towards settlement of the respective unpaid dividend, unpaid matured deposits and unpaid
matured debenture liabilities.

As per our report of even date


For K.S.AIYAR AND CO
Chartered Accountants
Firm Registration No. 100186W
S.KALYANARAMAN
Partner
Membership No. 200565

For and on behalf of the Board of Directors of


Accel Frontline Limited
N.R. Panicker
Executive Chairman

R. Ramaraj
Director

K.R. Chandrasekaran
Chief Finance Officer

Sweena Nair
Company Secretary

Place : Chennai
Date : May 7, 2014

26
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

Significant accounting policies forming part of the


financial statements
1.01 Background
Accel Frontline Limited (Accel or the Company) was incorporated
in Chennai in 1995. The Companys principal lines of business in
IT services includes, providing system integration solutions
comprising network design, hardware and software, IT
Infrastructure management solutions, warranty management
solutions for imported and indigenous equipments, development,
implementation and maintenance of software applications. The
company has the following subsidiaries.

amounts of assets and liabilities, disclosure of contingent assets


and liabilities on the date of financial statements and the reported
amount of revenues and expenses during the reporting period.
Management believes the estimates are prudent and reasonable.
Future results could differ from these estimates.

(b) Non Current - Tangible assets


Fixed assets are stated at cost less accumulated
depreciation. The cost comprises purchase price, borrowing
costs if capitalization criteria are met as per Accounting
standards 16 and directly attributable cost of bringing the
asset to its working condition for the intended use. Any trade
discounts and rebates are deducted in arriving at the
purchase price. Cost includes all expenses attributable to
bringing the asset to its working condition for its intended use.

Name

Holding

Country of incorporation/
origin

Accel Systems &


Technologies Pte.
Ltd.,

51%

Incorporated under the laws of


Singapore .

Accel Frontline JLT

100%

Established as a wholly owned


subsidiary enterprise as per
the license by Jumerah Lake
Towers, Dubai

Network Programs
(USA), Inc.

100%

Incorporated under the laws of


the State of Delaware, USA..

Network Programs
(Japan), Inc.

100%

Incorporated under the laws of


the State of Delaware, USA.

Accel Japan, KK

100%

Incorporated under the law of


Japan in Tokyo, Japan.

Depreciation on tangible assets

Accel North
America, Inc.

100%

Incorporated under the laws of


the State of California, USA.

Accel IT Resources
Limited

100%

Incorporated under the laws


of India.

Depreciation on fixed assets is calculated for on a straight-line basis


using the rates arrived at based on the useful lives estimated by the
management, or those prescribed under the Schedule XIV to the
Companies Act, 1956, whichever is higher. The company has used the
following rates to provide depreciation on its fixed assets.,

Accel Technologies
Limited

100%

Incorporated under the laws of


United Kingdom

Subsequent expenditure related to an item of fixed asset is added


to its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of
performance. All other expenses on existing fixed assets,
including day-to-day repair and maintenance expenditure and cost
of replacing parts, are changed to the statement of profit and loss
for the period during which such expenses are incurred.
Gains or losses arising from de-recognition of fixed assets are
measured as the difference between the net disposal proceeds
and the carrying amount of the asset and are recognized in the
statement of profit and loss when the asset is derecognized.

Asset
1.02 Statement of significant accounting policies

Rate of depreciation /
amortization (%)

Plant and machinery

4.75

(a) Basis of preparation of financial statements

Office equipment

4.75

The financial statements have been prepared and presented in


accordance with generally accepted accounting principles (GAAP)
in India. The company has prepared these financial statements to
comply in all material respects with the accounting standards
notified under the Companies (Accounting Standards) Rule, 2006,
(as amended) and the relevant provisions of the Companies Act,
1956. The financial statements have been prepared on a accrual
basis and under the historical cost convention.

Furniture and fixtures

6.33

Computer hardware (except


computers on lease)

16.21

Vehicles
Lease hold improvements

9.5
Over the lower of estimated
useful lives of the assets or the
primary period of the lease.

The accounting policies adopted in the preparation of financial


statements are consistent with those of previous year.

Fixed assets individually costing Rs 5,000 or less are fully


depreciated on purchase during the relevant year.

All assets and liabilities have been classified as current or noncurrent as per the companys normal operating cycle and other
criteria set out in the Revised Schedule VI to the Companies Act,
1956. Based on the nature of products and time between the
acquisition of assets for processing and their realization in cash
and cash equivalents, the company has ascertained its operating
cycle as 12 months for the purpose of current or non-current
classification of assets and liabilities.

Intangible assets

Use of estimates
The preparation of financial statements requires management to
make certain estimates and assumptions that affects the reported

Intangible assets acquired separately, are measured on initial


recognition at cost. The cost of intangible assets acquired in
an amalgamation in the nature of purchase is their fair value
as at the date of amalgamation. Measurement subsequent to
initial recognition, intangible assets are carried at cost less
accumulated amortization and accumulated impairment
losses, if any. Internally generated intangible assets,
excluding capitalized development costs, are not capitalized
and expenditure is reflected in the statement of profit and loss
in the year in which the expenditure is incurred.

27
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

Intangible assets are amortized on a straight line basis over the


estimated useful economic life. The company uses a rebuttable
presumption that the useful life of an intangible asset will not
exceed ten years from the date when the asset is available for
use. If the persuasive evidence exists to the effect that useful life
of an intangible asset exceeds ten years, the company amortizes
the intangible asset over the best estimate of its useful life. Such
intangible assets and intangible assets not yet available for use
are tested for impairment annually, either individually or at the
cash-generating unit level. All other intangible assets are
assessed for impairment whenever there is an indication that the
intangible asset may be impaired.
The amortization period and the amortization method are reviewed
at least at each financial year end. If the expected useful life of the
asset is significantly different from previous estimates, the
amortization period is changed accordingly. If there has been a
significant change in the expected pattern of economic benefits
from the asset, the amortization method is changed to reflect the
changed pattern. Such changes are accounted for in accordance
with AS 5 Net Profit or Loss for the Period, Prior Period Items and
Changes in Accounting Policies.
Gains or losses arising from de-recognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.

Goodwill arising out of Consolidation is not amortised. The


movement in the value of Goodwill on account of exchange
fluctuation is recognized during the relevant year.
A summary of amortization rates applied to the companys
intangible assets is as below:

Rates (SLM)
Goodwill
Brands/trademarks
Patents and intellectual property rights (IPR)
Technical know how
Computer software

10%
10%
10%
10%
14.30%

Leases, where the lessor effectively retains substantially all


the risks and benefits of ownership of the leased item, are
classified as operating leases. Operating lease payments are
recognized as an expense in the statement of profit and loss
on a straight-line basis over the lease term.
(d) Borrowing costs
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and
exchange differences arising from foreign currency borrowings to
the extent they are regarded as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale
are capitalized as part of the cost of the respective asset. All other
borrowing costs are expensed in the period they occur.

(e) Investments
Investments, which are readily realizable and intended to be
held for not more than one year from the date on which such
investments are made, are classified as current investments.
All other investments are classified as non current long-term
investments.
On initial recognition, all investments are measured at cost. The
cost comprises purchase price and directly attributable acquisition
charges such as brokerage, fees and duties. If an investment is
acquired, or partly acquired, by the issue of shares or other
securities, the acquisition cost is the fair value of the securities
issued. If an investment is acquired in exchange for another
asset, the acquisition is determined by reference to the fair value
of the asset given up or by reference to the fair value of the
investment acquired, whichever is more clearly evident.
Current investments are carried in the financial statements at
lower of cost and fair value determined on an individual
investment basis. Long-term investments are carried at cost.
However, provision for diminution in value is made to recognize a
decline other than temporary in the value of the investments.

(c) Leases

On disposal of an investment, the difference between its


carrying amount and net disposal proceeds is charged or
credited to the statement of profit and loss.

Where the company is lessee

(f) Inventories

Finance leases, which effectively transfer to the company substantially


all the risks and benefits incidental to ownership of the leased item, are
capitalized at the inception of the lease term at the lower of the fair
value of the leased property and present value of minimum lease
payments. Lease payments are apportioned between the finance
charges and reduction of the lease liability so as to achieve a constant
rate of interest on the remaining balance of the liability. Finance
charges are recognized as finance costs in the statement of profit and
loss. Lease management fees, legal charges and other intitial direct
costs of leases are capitalized.

Inventories include raw materials, components, stock in trade,


finished goods, stores and spares and work-in progress.

A leased asset is depreciated on a straight line basis over the


useful life of the asset or the useful life envisaged in the Schedule
XIV to the Companies Act, 1956, whichever is higher. However if
there is no reasonable certainty that the company will obtain the
ownership by the end of the lease term, the capitalized asset is
depreciated on a straight line basis over the shorter of the
estimated useful life of the asset, the lease term or the useful life
envisaged in Schedule XIV to the Companies Act, 1956.

Inventories of stores and spares are valued at cost, net of


provision for diminution in the value. Cost is determined on
weighted average cost basis.

Inventories of raw material, stock-in-trade are valued at the lower of


cost and the net realisable value after providing for obsolescence and
other losses, where considered necessary. However, materials and
other items held for use in the production of inventories are not written
down below cost if the finished products in which they will be
incorporated are expected to be sold at or above cost. Cost includes
all charges in bringing the goods to the point of sale.

Work-in-progress and finished goods are valued at lower of


cost and net realizable value. Cost includes direct material
and labour and a portion of the manufacturing overheads.
Cost of finished goods includes excise duty and is determined
on a weighted average basis.

28
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

Net realizable value is the estimated selling price in the


ordinary course of the business, less estimated costs of
completion and estimated cost necessary to make the sale.

For practical reasons, a rate that approximates the actual rate at


the date of the transaction is often used, for example, an average
rate for a week or a month might be used for all transactions in
each foreign currency occurring during that period.

(g) Revenue recognition


Revenue is recognized to the extent that it is probable tht the
economic benefits will flow to the company and the revenue
can be reliably measured. The following specific recognition
criteria must also be met before revenue is recognized:
Sale of goods
Revenue from sale of goods is recognized when all the significant
risks and rewards of ownership of the goods have been passed to
the buyer, usually on delivery of the goods. The company collects
sales taxes and value added taxes (VAT) on behalf of the
government and, therefore, these are not economic benefits
flowing to the company. Hence, they are excluded from revenue.
Excise duty deducted from revenue (gross) is the amount that is
included in the revenue (gross) and not the entire amount of
liability arising during the year.

Transactions denominated in foreign currencies are recorded at


the exchange rate specified by customs authorities on a monthly
basis. Current assets and liabilities denominated in foreign
currencies are translated at the exchange rate prevailing on the
date of the balance sheet. All exchange differences arising on the
Conversion/ settlement of foreign currency transactions are
accounted for in the profit and loss account, except in the cases
where they relate to the acquisition of fixed assets, in which case
they are adjusted to the cost of the corresponding asset.

Forward contracts are entered into to hedge the foreign


currency risk of the underlying outstanding periodically. The
premium or discount on all such contracts arising at the
inception of the contract is amortised as income or expense
over the life of the contract. Any profit or loss arising on the
cancellation or renewal of forward contracts is recognized as
income or as expense for the year. The exchange difference
is calculated and recorded in accordance with AS-11

Income from services


(i)
Income from Annual maintenance contracts is recognized
proportionately over the period of the respective contracts.
Accrued income shown under Other current assets represents
amount recognized based on services performed in advance
of billing in accordance with contractual terms.
Revenues from maintenance contracts are usually recognized
as the service is performed ,by the proportionate completion
method. pro-rata over the period of the service as and when
services are rendered. The company collects service tax on
behalf of the government and remit the same to the
government, therefore, it is not an economic benefit flowing to
the company. Hence, it is excluded from revenue.
Software Services
Software services are either provided on a time & material basis or
on a fixed price basis. IT Services provided on a time & material
basis are recognized in the period in which the services are
performed. IT Services provided on a fixed price basis are
recognized based on the milestones as specified in the contracts.
Unbilled revenue included under Other Current Assets represents
amount recognized based on services performed in advance of
billing in accordance with contractual terms.

Interest
Interest income is recognized on a time proportion basis
taking into account the amount outstanding and the applicable
interest rate. Interest income is included under the head
Other income in the statement of profit and loss.
Dividends
The company recognizes dividend as income only when the
right to receive the same is established by the reporting date.
(h) Foreign currency transactions
A foreign currency transaction recorded, on initial recognition
in the reporting currency, by applying to the foreign currency
amount the exchange rate between the reporting currency
and the foreign currency at the date of the transaction.

Retirement and employee benefits

Retirement benefit in the form of provident fund is a defined


contribution scheme. The companys contribution towards the
Provident Fund is charged to the Profit and Loss Account.
The interest rate payable to the members of the Trust formed
by the company for managing the provident fund shall not be
lower than the statutory rate of interest declared by the
Central Government under the Employees Provident Funds
and Miscellaneous Provisions Act, 1952 and the short fall, if
any, shall be made good by the Company.
The Company also provides for retirement benefits in the form
of gratuity as per the provisions of The Payment of Gratuity
Act, 1972, which is a defined benefit plan. The Liability in
respect of contribution to the gratuity fund is provided for
based on actuarial valuation carried out in accordance with
revised Accounting Standard AS -15 as at the end of the year.
The Companys policy towards leave for their employees stipulates
that the employees can only carry forward their earned leave to the
extent allowed as per policy from time to time, without any encashment
options. As per revised Accounting Standard AS 15, the Company has
provided for compensated absences that are expected to be availed.
The liability for compensated absences is determined on the basis of
actuarial valuation at the end of the financial year. Any gain or loss
arising out of such valuation is recognized in the Profit and Loss
Account, as the case may be.

(j)

Taxation

Provision for income tax is made for both current and deferred
taxes. Provision for current income tax is made at current tax
rates based on assessable income.
Minimum alternate tax (MAT) paid in a year is charged to the
statement of profit and loss as current tax. The company recognizes
MAT credit available as an asset only to the extent that there is
convincing evidence that the company will pay normal income tax
during the specific period, i.e., the period for which MAT credit is
allowed to be carried forward. In the year in which the company
recognizes MAT credit as an asset in accordance with the Guidance
Note on Accounting for Credit Available in respect of Minimum
Alternative Tax under the Income tax Act 1961, the said asset is
created by way of credit to the statement of profit and loss and

29
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14


shown as MAT Credit Entitlement. The company reviews the MAT
credit entitlement asset at each reporting date and writes down the
asset to the extent the company does not have convincing evidence
that it will pay normal tax during the specified period.
Deferred income taxes are recognized for the future tax consequences
attributable to timing differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized 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
realized. Deferred tax assets are recognized on carry forward of
unabsorbed depreciation and tax losses only if there is virtual certainty
that such deferred tax assets can be realized against future taxable
profits.

(k) Earnings per share


The earnings considered in ascertaining the companys basic and
diluted earnings per share comprise of the net profit/loss after tax.
The number of shares used in computing basic earnings per share
is the weighted average number of shares outstanding during the
year. The number of shares used in computing diluted earnings
per share comprises the weighted average shares considered for
deriving basic earnings per share and also the weighted average
number of shares, if any, which would have been issued on the
conversion of all dilutive potential equity shares.

(l)

Impairment

i.

The carrying amounts of assets are reviewed at each balance


sheet date if there is any indication of impairment based on
internal/external factors. An impairment loss is recognized
wherever the carrying amount of an asset exceed its recoverable
amount. The recoverable amount is the greater of the assets net
selling price and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value
at the weighted average cost of capital.

ii.

After impairment, depreciation is provided on the revised


carrying amount of the assets over its remaining useful life.

(m) Provisions

obligation as a result of past event and 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
management 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 management estimates.

(n) Contingent liabilities


A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not
recognized because it is not probable that an outflow of resources
will be required to settle the obligation. A contingent liability also
arises in extremely rare cases where there is a liability that cannot
be recognized because it cannot be measured reliably. The
company does not recognize a contingent liability but discloses its
existence in the financial statements.

(o)

Amalgamation accounting

The company accounts for all amalgamations in the nature of merger


using the pooling of interest method. The application of this method
requires the company to recognize any non-cash element of the
consideration at fair value. The company recognizes assets, liabilities
and reserves, whether capital or revenue, of the transferor company at
their existing carrying amounts and in the same form as at the date of
the amalgamation. The balance in the statement of profit and loss of
the transferor company is transferred to the general reserve. The
difference between the amount recorded as share capital issued, plus
any additional consideration in the form of cash or other assets, and
the amount of share capital of the transferor company is adjusted in
reserves.

(p) Measurement of EBITDA


As permitted by the Guidance Note on the Revised Schedule VI to
the Companies Act, 1956, the company has elected to present
earnings before interest, tax, depreciation and amortization
(EBITDA) as a separate line item on the face of the statement of
profit and loss. The company measures EBITDA on the basis of
profit/ (loss) from continuing operations. In its measurement, the
company does not include depreciation and amortization expense,
finance costs and tax expense.

A provision is recognized when an enterprise has a present

2. Notes to the balance sheet


(hs, unless other
2.1 Share Capital

As at March 31, 2014

As at March 31, 2013

3,300

3,300

29,761,873 (March 31, 2013: 24,261,873) equity shares of 10/- each

2,976

2,426

Total

2,976

2,426

Authorised Capital
33,000,000 (March 31, 2013: 33,000,000) equity shares of 10/- each
Issued, Subscribed & Paid up

30
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

2. Notes to the balance sheet


(hs, unless other
2.1.1

Reconciliation of the equity shares outstanding at the beginning and at the end of the reporting period:As at March 31, 2014

Equity Shares

Number

Balance at the beginning of the year


Shares Issued during the year

2.1.2

Number

Amount

24,261,873

2,426.19

24,261,873

2,426.19

5,500,000

550.00

Shares cancelled during the year


Balance at the end of the year

As at March 31, 2013

Amount

29,761,873

2,976.19

24,261,873

2,426.19

Rights, preferences and restrictions attached to shares

The Company has one class of equity shares having a par value of Rs.10 per share. Each share holder is eligible for one vote
per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company
after distribution of all preferential amounts in proportion to their share holding. During the year the company has issued
5,500,000 equity shares on preferential basis to M/s CAC Holdings Corporation ( Formerly CAC Corporation ), upon the
approval from the shareholders of the company in its EGM held on 08.01.2014 and the shares were issued on 10.01.2014
2.1.3

Shares held by holding company and subsidiary/ associates of holding company

Equity Shares

As at March 31, 2014

CAC Corporation, Tokyo Japan - Holding Company

As at March 31, 2013

18,141,175

7,797,191

14,550,166

N.R. Panicker (Promoter Group)

372,500

1,072,500

Accel Systems Group Inc, (Promoter Group)

183,085

483,085

Accel Limited, Promoter Company

2.1.4

Sr No

Details of shares held by shareholders holding more than 5% of the aggregate shares in the company:-

Name of Shareholder

CAC Corporation, Tokyo, Japan

Accel Limited

As at March 31, 2014


No. of Shares held

As at March 31, 2013

% of Holding

No. of Shares held

% of Holding

18,141,175

60.95%

0.00%

7,797,191

26.20%

14,550,166

59.97%

N. R. Panicker

372,500

1.25%

1,072,500

4.42%

Accel Systems Group Inc

183,085

0.62%

483,085

1.99%

Mega Resources Limited

0.00%

1,377,178

5.68%

2.2 Reserves & Surplus

As at March 31, 2014

As at March 31, 2013

A. Currency transalation Reserve


Balance as at the beginning of the year

42

Add : Reserve Credited during the year


Less : Reserve Utilised during the year

27
15

562
(520)

42

Balance as at the beginning of the year

4,932

4,932

Add : Securities premium credited on Share

1,925

issue Balance as at the end of the year

6,857

4,932

Balance as at the beginning of the year

859

859

Add : Reserve Credited During the year

Balance as at the end of the year

B.Securities Premium Account

C.General Reserve

Less : Reserve Utilised During the year


Balance as at the end of the year

859

859

31
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

2. Notes to the balance sheet


(hs, unless other
D. Surplus/ (Deficit) for the year
Balance as at the beginning of the year

1,626

1,507

449

119

Share of profit pertaining to Minority Interest

Tax on proposed equity dividend

Transfer to General Reserve

2,075

1,626

9,271

7,459

Profit /(Loss) For The Year


Less: Appropriations

Total appropriations
Balance as at the end of the year
Total
2.3 Long term borrowings

As at March 31, 2014

As at March 31, 2013

Secured
Term loan from banks (refer note 2.3.1)
Term loan from financial institutions
Hire purchase/hypothecation loans (refer note 2.3.2)
Loan against keyman insurance policy (refer note 2.3.3)

1,530

400

473

44

80

108

93

Loan From related parties (refer note 2.3.4)

1,366

Total

3,048

1,046

2.3.1 The term loan from a bank is secured by a pari passu charge by way of hypothecation of current assets and the moveable
assets of the company and personal guarantee of the Executive Chairman and Shares held by promoter company and the
immoveable property owned by the Executive Chairman and his personal guarantee in the case of another bank.The loan
carries an interest rate of 14.50%( SBI) & 13.50% (DLB) per annum.The loan is repayable over a period of three & Five years
(including current maturities) in the below mentioned repayment pattern
Year >> Repayment in Rs. Lacs

State Bank of India

State Bank of India

Dhanlaxmi Bank

2014-15

25.00*4

1000*1 + 25.00*3

13.33 *12

2015-16

60.00*4

84.50*4

13.33 *12

2016-17

71.25*4

13.33 *12

2017-18

13.33 *12

2018-19

13.33 *7

2.3.2 The loans have been availed for acquiring certain business assets and are secured by hypothecation of specific assets purchased
out of such loans. The loans are repaid in accordance to the repayment schedule agreed with the lenders.
2.3.3 This loan is availed from Life Insurance Corporation of India and is secured against the keyman insurance policy taken and placed
with them, which is fully paid up except the interest.
2.3.4 During the year as per the share holder aggrement, the promoter company Accel Limited has lent Rs. 1,366 lakhs to the company
for a period of 5 years at an interest rate of 11% p.a.

2.4. Deferred Tax Liability

As at March 31, 2014 As at March 31, 2013

Deferred Tax (Asset)


On impact of expenditure charged to the statement of profit and loss account in
the current year but allowed for tax purpose on payment basis

(155)

(179)

On difference between book balance and tax balance of fixed assets

526

505

Closing Deferred Liability / (Asset) Net

371

326

Deferred Tax Liability

32
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

2. Notes to the balance sheet


(hs, unless other
2.5. Long-term provisions

As at March 31, 2014 As at March 31, 2013

Provision for gratuity


Provision for leave benefits
Total

235

378

74

108

309

486

The Provision for Gratuity and Leave Encashment are based on information certified by an independent actuary and
relied upon by the auditors
2.6. Short term borrowings

As at March 31, 2014 As at March 31, 2013

Secured
Cash credit facility from banks (refer note 2.6.1)

8,748

Loans from financial institutions (refer note 2.6.2)


Total

8,829

100

500

8,848

9,329

2.6.1 Nature of Security and terms of repayment for short term secured borrowings
Type of Borrowing Nature Of Security
Cash credit facility
from banks Repayable on
Demand

Interest Rate

SBI- First Charge on Pari Pasu basis on all the current assets & Moveable assets of the
company, including Book debts and Inventories. First and exclusive charge on the Properties
owned by promoter Company , Accel Limited. Personal Guarantee of The Executive
Chairman & Corporate guarantee of Accel Limited.

SBI - 14.50%
IDBI - 14% & 16%
AXIS - 13.50%
DLB - 13.50%

IDBI - Pari Pasu Charge on all the current assets & Moveable assets of the company,
including Book debts and Inventories. Personal Guarantee of The Executive Chairman &
Corporate guarantee of Accel Limited.
AXIS Bank - Pari Pasu Charge on all the current assets & Moveable assets of the company,
including Book debts and Inventories.
Dhanlaxmi Bank - Pari Pasu Charge on all the current assets & Moveable assets of the
company, including Book debts and Inventories. Mortgage of the residential property of the
Executive Chairman. Personal Guarantee of The Executive Chairman and pledge of 20 Lakh
shares of the company held by the promoter Company Accel Limited & Corporate guarantee
of Accel Limited.
2.6.2 This loan is secured by way of pledge against 12 lakhs equity shares of the company and held by the promoter company
M/s.Accel Limited
2.7. Trade Payables
Outstanding dues to trade creditors
Advances form customers
Advances refundable
Total

As at March 31, 2014

As at March 31, 2013

8,129

10,513

66

42

8,195

10,555

2.7.1 Dues to micro and small enterprises


The company has received intimation from Suppliers regarding their status under the Micro, Small and Medium
Enterprises Development Act, 2006 and hence disclosures if any, relating to amounts unpaid for the year ended
together with interest paid / payable as required under the said Act have been furnished as stated above.

33
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

34

2. Notes to the balance sheet


(hs, unless other
2.10 Fixed assets
Gross Block At Cost

Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Sl No

Particulars

Cost as at
Apr 01,2013

Depreciation

Deletion/
Adjustment

Addition

As at
Mar 31,2014

As at
Apr 01,2013

Deletion/
Adjustments

For the year

Tangible Assets (A)


1

Office Equipment

Computers

Furniture and Fixtures

Plant and machinery

Leasehold improvements

Vehicles

Buildings

Total of Tangible Assets

Exchange Adjustment

Adjusted value of tangible assets

341

15

16

340

115

17

15

(330)

(12)

(1)

(341)

(97)

(18)

(0)

1,893

625

225

2,294

839

337

223

(1,541)

(513)

(161)

(1,893)

(703)

(293)

(158)

590

13

24

579

291

45

15

(574)

(31)

(15)

(590)

(261)

(41)

(12)

313

319

107

18

(279)

(35)

(0)

(313)

(90)

(17)

(0)

648

39

617

302

98

38

(816)

(100)

(268)

(648)

(460)

(114)

(271)

251

49

29

271

94

27

17

(275)

(24)

(251)

(90)

(23)

(19)
9

120

138

(18)

(120)

(120)

(1)

(6)

4,156

718

474

4,401

1,754

543

320

(3,935)

(691)

(469)

(4,156)

(1,702)

(512)

(460)

22

35

(0)

13

(8)

22

(16)

(0)

4,179

718

474

4,436

1,753

556

320

(3,926)

(691)

(469)

(4,179)

(1,686)

(512)

(460)

1,609

1,609

218

187

(2,299)

(690)

(1,609)

(747)

(161)

(690)

Intangible Assets (B)


8

10

Goodwill

Computer Software

Copy Rights/Technical Knowhow

Total of Intangible Assets

GRAND TOTAL (A) + (B)

2,607

779

3,386

1,830

355

(2,366)

(432)

(191)

(2,607)

(1,661)

(360)

(191)
(0)

172

172

120

(172)

(172)

(86)

(34)

4,387

779

5,167

2,168

550

(4,837)

(432)

(881)

(4,387)

(2,494)

(555)

(881)

8,566

1,498

474

9,603

3,921

1,107

320

(8,763)

(1,123)

(1,350)

(8,566)

(4,180)

(1,068)

(1,342)

Note: Previous Year Figures are given in brackets & italics.


Capital work in progress of Rs.20 lakhs (Previous year : Rs.59.40 lakhs) as appearing in the balance sheet represents capital assets which are pending completion/installation

Annual Report 2013 - 14

2. Notes to the balance sheet


(hs, unless other
2.8

Other Current Liabilities

As at March 31, 2014

As at March 31, 2013

(a) Current maturities of long-term debt:Term Loans from banks (Refer Note No.2.3.1)
Term Loans from financial institutions
Hire purchase/hypothecation loans (Refer note no.2.3.2)
(b) Unearned service revenue
(c) Unpaid dividends

78

130

84

341

247

7
1,457

(e) Liability for expenses

1,288

1,477

Total

4,000

3,650

Short Term Provisions


Provision for employee benefits
Provision for tax on proposed equity dividend
Total

2.11

300

999

(d) Statutory Dues including Provident Fund, Service Tax


and Tax Deducted at Source

2.9

1,235

Non current investments

As at March 31, 2014

As at March 31, 2013

81

62

59

81

121

As at March 31, 2014

As at March 31, 2013

Investment in equity instruments


Unquoted
Telesis Global Solutions Limited

30

30

30

30

96,374 shares of Rs.10/- each fully paid


(Previous year: 96,374 shares of Rs.10 each)
Total

2.12

Long term loans and advances

351

326

Rental Deposit

684

628

Total

Long-term trade receivables

120

95

1,155

1,049

As at March 31, 2014

As at March 31, 2013

Unsecured, considered good

640

804

Considered doubtful

121

89

Less: Provision for doubtful receivables


Total

2.14

As at March 31, 2013

Security Deposits

Deposits with statutory/government authorities

2.13

As at March 31, 2014

Inventories
Raw materials and components
Finished goods

761

893

(121)

(89)

640

804

As at March 31, 2014

As at March 31, 2013

82

158

371

562

Traded goods

1,223

1,296

Stores and spares

2,430

2,371

Total

4,106

4,387

35
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

2. Notes to the balance sheet


(hs, unless other
2.15

Trade Receivables
Trade receivables
Other receivables
Total

2.16. Cash and Cash equivalents


Cash on Hand

As at March 31, 2014

As at March 31, 2013

14,332

13,606

2,326

1,301

16,658

14,907

As at March 31, 2014

As at March 31, 2013

16

29

1,145

1,920

Balances with Banks


-on current accounts
-on unpaid dividend accounts

1,168

1,921

769

724

1,937

2,681

Other bank balances


on margin money deposits
Total

2.17. Short Term Loans And Advances

As at March 31, 2014

As at March 31, 2013

Advances to associate companies

152

980

Other deposits

521

244

Other loans and advances

775

838

1,448

2,062

Total

2.18. Other Current Assets


Advance income tax, net of tax provisions (Refer note
no.2.18.1)
MAT credit entitlement

As at March 31, 2014

As at March 31, 2013

3,832

2,820

55

Prepaid expenses

1,627

1,046

Total

5,514

3,865

2.18.1 Advance income tax represents tax deducted at source by customers out of the income net of tax provisions.
Assessments and Appeals are pending and the amounts are expected to be received/adjusted after the income tax
assessments/appeal proceedings are completed by the income tax authorities.

3. Notes to the Statement of Profit and Loss for the year ended
(hs, unless other
3.1.

Revenue from operations

March 31,2014

March 31,2013

Traded goods

21,287

18,235

Sale of services

20,875

21,391

Other operating revenue


Scrap sales
Other
Revenue from operations (gross)
Less: Excise duty
Revenue from operations (net)

189

42,162

39,824

28

38

42,134

39,786

36
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

3. Notes to the Statement of Profit and Loss for the year ended
(hs, unless other
3.2.

Other income

March 31,2014

March 31,2013

Interest income on
Bank deposits
Others

50
262

Other non-operating income

466

40

Total

517

352

March 31,2014

March 31,2013

154

157

3.3. Cost of raw material and components consumed


Inventory at the beginning of the year
Add: Purchases

165

154

322

Less: inventory at the end of the year

81

154

Cost of raw material and components consumed

73

168

3.4. Purchase of traded goods

3.5.

51

March 31,2014

March 31,2013

Traded purchases less returns

17,602

16,795

Total

17,602

16,795

March 31,2014

March 31,2013

Traded goods

2,431

2,441

Spares

1,223

1,295

(Increase)/decrease in inventories
Inventories at the end of the year

Finished goods

371

496

4,025

4,232

Traded goods

2,371

2,232

Spares

1,295

1,199

573

391

4,239

3,822

214

(410)

March 31,2014

March 31,2013

8,922

7,843

Contribution to provident and other funds

401

445

Gratuity expense

(56)

159

Leave encashment

(34)

13

Staff welfare expenses

161

172

9,394

8,632

Total

Inventories at the beginning of the year

Finished goods
Total
Net (Increase) / decrease in Inventory

3.6.

Employee benefits expense


Salaries, wages and bonus

Total

37
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

3. Notes to the Statement of Profit and Loss for the year ended
(hs, unless other
Disclosure required under AS 15 (Revised) Employee
Benefits i. DEFINED CONTRIBUTION PLAN
Defined Contribution Plan, recognized as expenses for the year as under:
Particulars

March 31,2014

March 31,2013

248.66

284.93

67.18

60.83

March 31,2014

March 31,2013

Discount Rate (per annum)

8.00%

8.00%

Salary Escalation Rate*

5.00%

5.00%

1-3%

1-3%

Employers Contribution to Provident fund


Employers contribution to Employee State Insurance
Corporation

ii. DEFINED BENEFIT PLANS


Gratuity Funded Obligation

a) Actuarial Assumption for the year


Particulars

Attrition rate

*The assumption of future salary increases takes into account of inflation, seniority, promotions and other relevant
factors such as demand and supply in the employment market.

b) Reconciliation of present value of obligations


Particulars

March 31,2014

March 31,2013

1,178.02

930.84

Current Services Cost

78.48

417.87

Interest Cost

99.62

92.77

Actuarial (gain)/loss

(535.35)

(188.45)

Benefits Paid

(144.96)

(75.01)

675.81

1,178.02

March 31,2014

March 31,2013

Present value of obligations at the end of the year

675.81

1,178.02

Fair Value of Plan Assets

164.38

216.33

Net (Asset) / Liability recognized in Balance Sheet

511.43

961.69

March 31,2014

March 31,2013

78.48

417.87

Present Value of Obligation at the beginning of the year

Present Value of Obligation at the end of the year

c) Net (Asset) / Liability recognized in the Balance Sheet as at year end


Particulars

d) Expenses recognized in the Profit and Loss Account


Particulars
Current Service Cost
Interest Cost
Expected Return on Plan asset
Actuarial (gain) / loss recognized in the period
Total expenses recognized in the Profit and Loss Account for
the year

99.62

92.77

(16.40)

(21.50)

(535.35)

(188.44)

(55.96)

158.56

The above disclosures are based on information certified by an independent actuary, and relied on by the auditors

38
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

3. Notes to the Statement of Profit and Loss for the year ended
(hs, unless other
iii. LONG TERM EMPLOYEE BENEFITS
Compensated absences (Leave encashment) Unfunded Obligation

a) Actuarial Assumption for the year.


Particulars

March 31,2014

March 31,2013

Discount Rate (per annum)

8.00%

8.00%

Salary Escalation Rate

5.00%

5.00%

24.62

24.62

March 31,2014

March 31,2013

Present Value of Obligation at the beginning of the year

380.89

354.11

Current Services Cost

643.13

610.11

Expected average remaining lives of working employees (year)

b) Reconciliation of present value of obligations


Particulars

Interest Cost
Actuarial (gain)/loss
Benefits Paid
Present Value of Obligation at the end of the year

56.68

52.28

(890.21)

(635.61)

190.49

380.89

March 31,2014

March 31,2013

190.49

380.89

c) Net (Asset) / Liability recognized in the Balance Sheet as at year end


Particulars
Present value of obligations at the end of the year
Fair Value of Plan Assets
Net (Asset) / Liability recognized in Balance Sheet

190.49

380.89

March 31,2014

March 31,2013

643.13

610.11

d) Expenses recognized in the Profit and Loss Account


Particulars
Current Service Cost
Interest Cost

56.68

52.28

Actuarial (gain) / loss recognized in the period

(890.21)

(635.61)

Total expenses recognized in the Profit and Loss Account for


the year

(190.40)

26.78

The above disclosures are based on information certified by an independent actuary and relied on by the auditors.

3.7.

Other expenses

March 31,2014

March 31,2013

Sub-contracting and outsourcing cost

5,512

5,764

Rent

1,238

1,318

275

261

Power and fuel


Repairs and maintenance
- Equipments
- Leased premises
- Others

19

28

270

263

95

81

Insurance

144

86

Rates and taxes

191

268

Communication costs

525

449

39
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

3. Notes to the Statement of Profit and Loss for the year ended
(hs, unless other

Travelling and conveyance

March 31,2014

March 31,2013

1,086

1,128

Printing and stationery

72

105

Freight and forwarding

402

503

Legal and professional fees

586

536

Directors sitting fees

Payment to auditor (Refer 3.7.1)

33

27

Advertising and sales promotion

117

119

18

Brokerage and discounts


Sales Commission
Exchange differences
Bad debts / advances written off
Provision for doubtful debts and advances
Loss on sale of fixed assets (net)

33

131

257

152

33

41

399

338

11,301

11,628

March 31,2014

March 31,2013

22

21

Limited review

Other services (certification fees)

Miscellaneous expenses
Total

3.7.1. Payment to auditors


As auditor:
Audit fee

Reimbursement of expenses

33

27

March 31,2014

March 31,2013

Depreciation of tangible assets

556

512

Amortization of intangible assets

551

556

1,107

1,068

March 31,2014

March 31,2013

2,024

1,637

412

351

Total

3.8.

Depreciation and amortization expense

Total

3.9.

Finance costs
Interest
Bank charges & Commission
Exchange Fluctuation in Foreign exchange
Total

2,441

1,995

40
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

4. Other notes forming part of the financial statements


(hs, unless other
4.1 Minority Interest
Minority interest in the consolidated financial statements
represents amount of equity and profits attributable to the
minority shareholders. The Minority interest pertains to Accel
Systems & Technologies PTE Limited, Singapore, in which
the company has 51% equity stake
4.2 Sundry debtors/sundry creditors/loans & advances
a)

The balances stated at their values shown under sundry


debtors, sundry creditors and loans & advances are
subject to confirmation

b)

During the year, a provision for doubtful debts was created


for Rs.3,312,576/- (previous year Rs.4,109,530/- ). A sum of
Rs.25,721,877/- (previous year Rs.15,154,325/-) was written
off as bad debts as the management felt that these are
doubtful of recovery / irrecoverable.

Note : The contingent liability with respect to Income tax as


mentioned above has been shown based on the various
assessment orders received by the company. However, part
of the disallowances as mentioned in the said orders has
already been allowed in the subsequent assessment years.
The adjustments (if any) will be made in the financials after
our appeals before appropriate authorities are disposed off.
During the year 2010-2011, Accel IT Resources Limited hived off
its outsourcing division for a total consideration of Rs.500 lacs
based on independent valuation from a Chartered Accountant
pursuant to the approval of the shareholders in their meeting held
on 04th February, 2011 w.e.f closing business hours of 31st
March, 2011. The amount of such consideration has been
included under Income from Sale of Business in the year 31st
March, 2011. The transaction included transfer of all contracts,
consents, commercial rights, know how, employees outsourced to
different organizations, all rights, powers, liabilities relating to or
connected with business of providing/ outsourcing IT manpower
etc. There was no transfer of tangible assets of the company.

4.3 Contingent liabilities


Sales tax
Service tax
Income tax
Central Excise
Bank Guarantees outstanding
Provident Fund Authorities
Claims against the company
not acknowledged as debt

2014
8,740,588
584,433
103,707,400
2,431,495
257,960,823
18,417,730

2013
6,071,815
4,428,905
123,884,050
297,344,600
-

22,233,262

21,952,808

As per clause no.10.7. of the agreement for the sale of the outsourcing
division of the company, dated 15th March, 2011, in the unlikely event
of the business getting reduced by the Group companies, the company
agrees to indemnify the purchaser an amount equivalent to the short
fall in the yearly minimum service charges of Rs.1.25 crores as
mentioned in clause no.10.5 of the said agreement. The shortfall
amount would be paid back to the purchaser at the end of each
subsequent financial year. If the short fall is not made good in the next
financial year the company has the right to adjust any such refunds on
any time before 31st March, 2016.

41
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14


4.4 Segment reporting
During the year under review, the segment information of the company is as given below.
Rs. In Lacs
Particulars

Year Ended

Revenue
Segment Result
Unallocable Expenses ( Net)
Operating Income
Other Income ( Net )
Interest Expense
Profit before tax
Tax Expense
Profit before minority interest
Profit for the Year

Segment Assets
Unallocable assets
Total assets
Segment Liabilities
Unallocable liabilities
Total liabilities

SI

IMS

SS

Mar/14

22,318

9,318

7,438

2,977

WMS Training

Mar/13

18,756

10,698

6,340

Mar/14

762

1,611

1,178

Mar/13

216

2,178

854

Others

Total

359

42,411

3,501

491

39,786

243

(16)

3,778

489

(5)

3,733

Mar/14

1,106

Mar/13

1,067

Mar/14

2,672

Mar/13

2,666

Mar/14

260

Mar/13

(408)

Mar/14

2,413

Mar/13

1,995

Mar/14

519

Mar/13

263

Mar/14

70

Mar/13

144

Mar/14

449

Mar/13

119

Mar/14

449

Mar/13

119

Mar/14

14,234

8,585

4,222

2,672

615

Mar/13

12,744

8,342

5,118

2,514

587

30,328
29,305

Mar/14

7,393

Mar/13

6,492

7,393
6,492

Mar/14

14,234

8,585

4,222

2,672

615

7,393

37,721

Mar/13

12,744

8,342

5,118

2,514

587

6,492

35,797

Mar/14

8,574

6,149

2,569

1,859

235

Mar/13

9,641

6,146

3,246

2,219

552

19,386
21,805

Mar/14

5,466

5,466

Mar/13

3,708

3,708

Mar/14

8,574

6,149

2,569

1,859

235

5,466

24,852

Mar/13

9,641

6,146

3,246

2,219

552

3,708

25,513

Mar/14

847

16

441

106

50

Other Information
Capital Expenditure

Mar/13
Depreciation & amortization

Mar/14

159

128

609

123

70

Mar/13
Other Significant non Cash Expenses
(allocable )

Mar/14

47

184

24

38

1,498

1,123

1,123

18

1,107

1,068

1,068

257

Mar/13
Other Significant non Cash Expenses
(unallocable )

Mar/14

Mar/13
SI - System Integration
IMS - Infrastructure Management Services
SS - Software Services
WMS - Warranty Management Services

42
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

33

33

193

193

Annual Report 2013 - 14


4.5 Related party transactions
Related parties where control exists:
Name of the Party
CAC Holdings Corporation, Tokyo, Japan
Accel Limited, Chennai

Nature of relationship
Holding Company
Promoter company

Other related parties with whom transactions have taken place during the year:
Name of the Party
Accel Transmatic Limited, Chennai.

Nature of relationship
Associate Comapny

Key Management Personnel


Mr. N R Panicker

Executive Chairman

Relative of Key Management Personnel


Mrs. Sreekumari Panicker

Wife of the Executive Chairman

Transactions with related parties

Particulars
Sales and other income
Share of Expenses
Purchases
Rent
Remuneration
Interest Paid
Interest Received

Balances outstanding as at the March 31, 2014


Loans received
Receivables
Loans and advances
Maximum amount outstanding at any time during the year

Promoter company Associate Company

Key Management
personnel

7,673,040
9,759,804
3,005,200
5,036,500
-

310,140
4,560,137
5,357,026
1,250,588
3,730,644
8,217,269
-

1,950,000
2,352,500
5,210,098
6,949,092
-

136,600,000
(366,559)
41,460,446
57,570,489
44,405,630

2,083,782
4,333,764
63,878,005
65,628,986
63,878,005

8,202,558
-

Note: Numbers appearing in Grey color, represent previous year numbers


4.6 Comparative financial information
The previous years balances have been regrouped/reclassified wherever necessary to conform to the current years presentation in
accordance with the revised schedule VI of the companies act 1956.
For and on behalf of the Board of Directors of
As per our report of even date
For K.S.AIYAR AND CO
Chartered Accountants
Firm Registration No. 100186W
S.KALYANARAMAN
Partner
Membership No. 200565

Accel Frontline Limited


N.R. Panicker
Executive Chairman

R. Ramaraj
Director

K.R. Chandrasekaran
Chief Finance Officer

Sweena Nair
Company Secretary

Place : Chennai
Date : May 07, 2014

Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

43

Annual Report 2013 - 14

Independent Auditors Report on financial statements


The Members of
M/s. Accel Frontline Limited,
Chennai.
Report on the Financial Statements

(a) In the case of the Balance Sheet, of the state of affairs of


the company as at 31st March, 2014;
(b) In the case of the Statement of Profit and Loss, of the
profit for the year ended on that date; and

We have audited the accompanying financial statements of


M/s. Accel Frontline Limited, which comprise the Balance
Sheet as at March 31, 2014, the Statement of Profit and Loss
and Cash Flow Statement, summary of significant accounting
policies and other notes for the year then ended incorporating
the financial transactions of Singapore branch of Accel
Frontline Limited which was audited by another auditor.

(c) In the case of the cash flow statement, of the cash


outflows for the year ended on that date.

Managements Responsibility for the Financial Statements

(E) in terms of sub-section (4A) of section 227 of the Companies


Act, 1956, we enclose in the annexure a statement on the matters
specified in paragraph 4 and 5 of the said Order.

Management is responsible for the preparation of these financial


statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in
accordance with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956 (the act)
read with general circular of 13th September 2013 of Ministry of
Corporate Affairs in respect of Section 133 of the Companies
2013. This responsibility includes the design, implementation and
maintenance of internal control relevant to the preparation and
presentation of the financial statements that give a true and fair
view and are free from material misstatement, whether due to
fraud or error.

Auditors Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in
accordance with the Standards on Auditing issued by the Institute
of Chartered Accountants of India. Those Standards require that
we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditors judgment,
including the assessment of the risks of material misstatement of
the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control
relevant to the Companys preparation and fair presentation of the
financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of entitys internal
control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of the
accounting estimates made by management, as well as evaluating
the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.

Opinion

Report on Other Legal and Regulatory Requirements


1.
As required by the Companies (Auditors Report) Order, 2003
(CARO) as amended by Companies (Auditors Report)(Amendment)
order, 2004 issued by the Government of India vide GSR No.766

2.

As required by section 227(3) of the Act, we report that:

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 appears from
our examination of those books
bb. The report on the accounts of the branch office audited
under section 228 by a another auditor has been forwarded to
us as required by clause (c) of the sub section (3) of section
228 and have been dealt with in preparing our report in the
manner considered necessary by us;
c. The balance sheet, statement of profit and loss account
and cash flow statement dealt with by this report are in
agreement with the books of account and with the audited
returns received from branch.
d. In our opinion, the balance sheet, statement of profit and
loss account and cash flow statement dealt with by this report
comply with the accounting standards referred to in sub-section
(3C) of section 211 of the Companies Act, 1956 read with General
circular dated 13th September 2013 of Ministry of Corporate
Affairs in respect of section 133 of the companies act 2013.

e. On the basis of written representations received from the


directors, as on 31st March 2014 and taken on record by the
Board of Directors, we report that none of the directors of the
Company are disqualified as on 31st March, 2014 from being
appointed as a director, in terms of clause (g) of sub-section
(1) of section 274 of the Companies Act, 1956;
f.
Since the Central government has not issued any notification
as to the rate at which the cess is to paid under section 441A of
the companies act, 1956 nor has it issued under any rules under
the said section, prescribing the manner in which such cess is to
be paid, no cess is due and payable by the company.

In our opinion and to the best of our information and according


to the explanations given to us, the financial statements give
the information required by the Act in the manner so required
and give a true and fair view in conformity with the accounting
principles generally accepted in India:

K.S.AIYAR & CO.


Chartered Accountants
(Firm Regn No: 100186W)

Place : Chennai - 16
Date : May 7, 2014

(S.Kalyanaraman)
Partner
(M No: 200565)

44
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14


Annexure to the Auditors Report
Of M/s. Accel Frontline Limited, Chennai

nature of its business with regard to purchases of inventory, fixed


assets and sale of goods and services. During the course of our audit,
no major weakness has been noticed in the internal controls.

Referred to in paragraph 2 of our report of even date,


(i)(a) The company has maintained proper records showing
full particulars including quantitative details and situation of
fixed assets.
(i)(b) The company has a phased programme of physical verification of
fixed assets which in our opinion is reasonable having regard to the
size of the company and the nature of its business. No material
discrepancies were noticed on such verification.

(i)(c) The fixed assets disposed off during the year were not
substantial, According to the information and explanation given to
us; we are of the opinion that the disposal of the fixed assets has
not affected the going concern status of the company.

(ii)(a) The inventory has been physically verified during the


year by the management. In our opinion, the frequency of
verification is reasonable.
(ii)(b) The procedures of physical verification of inventories
followed by the management are reasonable and adequate in
relation to the size of the company and the nature of its business.

(ii)(c) In our opinion and according to the explanations given


to us, the company is maintaining proper records of inventory.
The discrepancies noticed on verification between the
physical stocks and the book stock has been properly dealt
with in the books of account.
(iii)(a) The company has not granted any loans secured/unsecured
to companies, firms or other parties covered under the register
maintained under sec.301 of the Companies Act, 1956. Hence
comments on clause (b),(c) & (d) are not applicable.

(e) The company has taken unsecured loan for Rs.13.66/crores from a company which is covered under section 301 of
companies act, 1956.
(f) As per the books of accounts produced to us, the rate of
interest and other terms and conditions of unsecured loan
taken by the company is prima facie not prejudicial to the
interest of the company.
(g) Payment of the interest is regular however principal
repayment is not due in the current year.
(iv) In our opinion and according to the information and
explanations given to us, there are adequate internal control
procedures commensurate with the size of the company and the

(v)(a) According to the information and explanations provided


by the management, we are of the opinion that the particulars
of contracts or arrangements referred to in sec.301 of the
Companies Act, 1956 that need to be entered into the register
maintained under sec.301 have been so entered.
(v)(b) In our opinion and according to the information and
explanations given to us, the transactions made in pursuance
of such contracts or arrangements exceeding value of Rs.5/lakhs have been entered into during the financial year at
prices which are reasonable having regard to prevailing
market prices at the relevant time.
(vi) The company has not accepted any deposits from public
and hence the provisions of sec 58A and 58AA or any other
relevant provisions of the companies Act 1956 and the
Companies (Acceptance of deposits) Rules, 1975 with regard
to the deposits accepted from the public is not applicable.
(vii) In our opinion, the company has an internal audit system,
which is commensurate with the size and nature of its business.
(viii) The Maintenance of cost records under section 209 (1) (d) of
the Companies Act, 1956 is applicable to the Company and
provisions relating to the said provision has been complied with.
(ix)(a) Undisputed statutory dues including provident fund,
investor education and protection fund, employees state
insurance, sales tax, wealth tax, customs duty, excise duty has
NOT been regularly deposited with appropriate authorities.
(ix)(b) According to the records of the company, no undisputed
amounts payable in respect of provident fund, investor education
and protection fund, employees state insurance, wealth- tax,
sales-tax, customs duty, excise duty, cess and other undisputed
statutory dues were outstanding, at the year end, for a period of
more than six months from the date they became payable except
in the following cases, which was subsequently paid

Nature of Tax

Amount (Rs.)

Due Since

Tax Deducted at Source

3,48,940

July 2013

Tax Deducted at Source

26,78,136

August 2013

Tax Deducted at Source

48,09,093 September 2013

(ix)(c) According to the records of the company the dues


outstanding of income tax, sales tax, wealth tax, service tax,
customs duty, excise duty and cess on account of any dispute
are as follows:

45
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

Name of the
statute

Nature of Dispute

Amount
(Rs.)

Period to which
the amount
relates

Forum where the dispute is


pending

Income tax Assessment year 2007-08, in connection with


Capitalization of application software, IPO expenses,

42,418,700

depreciation of leasehold improvement, allowance of

FY 2006-07 Commissioner of Income


tax (Appeals), Chennai

STPI profits and allowance of goodwill


7,348,370

Income tax Appellate


FY 2005-06 Tribunal, Chennai Bench,
Chennai

Income Tax Assessment Year 2008-09 in connection with


depreciation on application software and allocation of
corporate expenses for STPI, Depreciation on goodwill, 3,88,10,980
temporary structure. Dividend income and IPO expenses

Commissioner of Income
FY 2007-08 tax (Appeals) Chennai

Income tax Assessment year 2006-07, in connection with


depreciation claimed on temporary wooden structures.

Income Tax

Disallowance of Capitalisation of application software,

Commissioner of Income
FY 2009-10 tax (Appeals), Chennai

IPO expenses, depreciation of leasehold improvement,


claim of STPI profits and claim of Goodwill

Nil

Disallowance of Capitalisation of application software,


IPO expenses, depreciation of leasehold improvement,
claim of STPI profits and claim of Goodwill

34,19,240

FY 2010-11 Commissioner of Income


tax (Appeals), Chennai

IPO expenses, depreciation of temporary partition, 1,17,10,110

FY 2011-12 Commissioner of Income

Disallowance of Capitalisation of application software,


Exemption u/s 10B, Interest on advance to Subsidiaries,

tax (Appeals), Chennai

Provision for Gratuity


Levy of Tax for non-production of Form F for Rs.406821/=
and Increase in taxable AMC Turnover from 10% to 20%.
Under WBST ACT.
Wrong imposition of Interest on late payment of

34,306

Assistant Commissioner
2003-04 Park Street Charge, Kolkata

Turnover Tax, Increase in Taxable AMC Turnover etc.


under WBST ACT.
The dispute relates to non-submission of Form F
for interstate branch movement of stock, which the
company has filed at the time of hearing with the
appellate authorities. The Tribunal has remanded back
the case to the assessing officer for fresh assessment

139,135

Assistant Commissioner
2004-05 Park Street Charge, Kolkata

149,787

2002-03 Trade Tax Tribunal, Lucknow


Trade Tax, Lucknow, UP

In the Assessment order 8% CST charged for nonsubmission of Form C and 4% CST charged on CVT &UPS
sales instead of 1%.

119,115

2001-02 Asst. Commissioner


Park Street Charge, Kolkata

Dispute with regard to tax rate on ATVM-KIOSK

8,68,281

Deputy Commissioner
2007-08 (appeals)

268,424

Joint Commissioner
2007-08 Park Street Charge, Kolkata

555,061

Joint Commissioner
2007-08 Park Street Charge, Kolkata

100,123

Joint Commissioner
2007-08 Jamshedpur Urban Circle,
Jamshedpur

Additional VAT liability due to increase in turnover,


Sales Tax

purchase tax liability, disallowance of Input Tax Credit,


imposition of interest and penalty under VAT Act.
CST liability on account of non-production of Form
F and consideration of High SEA Sale under CST Sale
&imposition tax on it.
Imposition of penalty for late submission of VAT Audit
Report.
Tax Liability increased due to enhancement of Gross
Turnover

46

Service Tax

39,283

Joint Commissioner
FY 2009-10 Park Street, Kolkata

Assessment order passed by the Sales Tax officer without


proper hearing

1,97,222

FY 2006-07 Appellate & Revisional


(VAT) Board, Kolkatta

Assessment order passed by the Sales Tax officer without


proper hearing

19,574

FY 2006-07 Appellate & Revisional


(CST) Board, Kolkatta

Tax Liability increased due to Non production of


declaration forms, Considering labour portion into
taxable CTP, Disallownace of ITC partially, Occurance of
clerical mistake at the end of CTO while computing tax
liability under CTP

62,50,277

Penalty for belated payment of service tax

584,433

FY 2010-11 Joint Commissioner


(VAT) Park Street, Kolkata

FY 2007-08 CESTAT, Chennai

Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14


(x) The company does not have any accumulated losses at
the end of the financial year and has not incurred any cash
losses during the financial year covered by our audit and in
the immediately preceding financial year.

(xvii) According to the information and explanations given to


us and on an overall examination of the utilization of funds,
we report that the no funds raised on short-term basis have
been used for long-term investment.

(xi) Based on our audit procedures and as per the information


and explanations given by the management the company has not
defaulted in repayment of dues to banks. However there has been
delay in honoring Letter of credits to the tune of Rs. 28.65 crores
which was converted as term loans.

(xviii) The company has not made any preferential allotment


of shares to parties and companies covered in the register
maintained under section 301 of the Companies Act 1956.
However the company has made a preferential allotment of
55 lakhs equity shares on preferential basis to M/s CAC
Corporation, Japan and the price at which it is issued is not
prejudicial to the interest of the company.

(xii) According to the information and explanations given to us


and based on the documents and records produced to us the
company has not granted loans and advances on the basis of
security by way of pledge of shares and other securities.
(xiii) In our opinion, the Company is not a chit fund or a
nidhi/ mutual benefit fund/society. Therefore, the provisions of
clause 4(xiii) of the Companies (Auditors Report) Order, 2003
are not applicable to the company.
(xiv) In our opinion and according to the information and
explanations given to us, the Company is not dealing in or trading
in shares, securities, debentures and other investments.
Accordingly the provisions of clause 4 (xiv) Companies (Auditors
Report) Order, 2003 are not applicable to the company.

(xix) The company did not have any outstanding debentures


during the year.
(xx) During the year the company has not raised any money
from public by way of issue of shares.
(xxi) According to the information and explanations given to
us, no fraud on or by the Company has been noticed or
reported during the course of our audit.

K.S.AIYAR & CO.


Chartered Accountants
(Firm Regn No: 100186W)

(xv) The company has not given any guarantee for loans taken
by others from bank or financial institutions.
(xvi) According to the records of the company, the company has

Place : Chennai - 16
Date : May 7, 2014

(S.Kalyanaraman)
Partner
(M No: 200565)

availed the term loans and used the same for the intended purpose.

47
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

Balance sheet as at
(hs, unless other
Notes

March 31,2014

March 31, 2013

Equity and liabilities


Shareholders funds
Share capital
Reserves and surplus

2.1
2.2

2,976
9,290
12,266

2,426
7,120
9,546

Non-current liabilities
Long-term borrowings
Deferred tax liability
Long-term provisions

2.3
2.4
2.5

3,041
371
251
3,663

1,031
326
369
1,726

Current liabilities
Short-term borrowings
Trade payables
Other current liabilities
Short-term provisions

2.6
2.7
2.8
2.9

8,599
5,770
3,287
82
17,738
33,667

9,131
8,859
2,962
120
21,072
32,344

2,120
2,099
4,219
20
2,498
1,155
595
8,487

1,939
2,212
4,151
60
2,181
959
763
8,114

4,066
13,329
814
1,480
5,491
25,180
33,667

4,313
12,538
1,642
1,974
3,763
24,230
32,344

TOTAL
Assets
Non-current assets
Fixed assets
Tangible assets - Net
Intangible assets - Net

2.10

Capital work-in-progress
Non-current investments
Long-term loans and advances
Long-term Trade receivables

2.11
2.12
2.13

Current assets
Inventories
Trade receivables
Cash and bank balances
Short-term loans and advances
Other current assets

2.14
2.15
2.16
2.17
2.18

TOTAL
Significant Accounting Policies
Notes to the Balance Sheet
Other Notes

As per our report of even date


For K.S.AIYAR AND CO
Chartered Accountants
Firm Registration No. 100186W
S.KALYANARAMAN
Partner
Membership No. 200565

1
2
4

For and on behalf of the Board of Directors of


Accel Frontline Limited
N.R. Panicker
Executive Chairman

R. Ramaraj
Director

K.R. Chandrasekaran
Chief Finance Officer

Sweena Nair
Company Secretary

Place : Chennai
Date : May 7, 2014

48
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

Statement of profit and loss account for the year ended


(hs, unless other

Notes
Continuing operations
Income
Revenue from operations
Other income
Total revenue (I)
Expenses

March 31,2014

March 31, 2013

29,680
234
29,914

32,607
315
32,922

3.1
3.2

Cost of raw material and components

3.3

72

167

consumed Purchase of traded goods

3.4

12,185

14,462

(Increase)/ decrease in inventories of finished


goods, work-in-progress and traded goods

3.5

175

(410)

3.6
3.7

6,135
7,753
26,320

6,101
9,255
29,575

3,594

3,347

Employee benefit
expenses Other expenses

Total (II)
Earnings before interest, tax, depreciation
and amortization (EBITDA) (I) (II)
Depreciation and amortization expense

3.8

972

969

Finance costs (Net)


Profit/(loss) before tax

3.9

2,327
295

1,954
424

59
(55)

115
-

Reversal of MAT credit entitlement

41

Excess provision of earlier years reversed

(10)

46
50

(2)
144

Profit/(loss) for the year from continuing operations

245

280

Earnings per equity share:


(1) Basic
(2) Diluted

0.96
0.96

1.15
1.15

Tax expenses
Current tax
MAT credit entitlement

Deferred tax
Total tax expense

Significant Accounting Policies

Notes to the Statement of Profit and Loss Account

Other Notes

As per our report of even date


For K.S.AIYAR AND CO
Chartered Accountants
Firm Registration No. 100186W
S.KALYANARAMAN
Partner
Membership No. 200565

For and on behalf of the Board of Directors of


Accel Frontline Limited
N.R. Panicker
Executive Chairman

R. Ramaraj
Director

K.R. Chandrasekaran
Chief Finance Officer

Sweena Nair
Company Secretary

Place : Chennai
Date : May 7, 2014

49
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

Cash flow statement for the year ended


(hs, unless other
March 31,2014
March 31,2013
A. Cash flow from operating activities
Profit before tax
295
424
Adjustments for :
Depreciation/ amortization on continuing operation
972
969
Loss/ (profit) on sale of fixed assets
0
Interest expenses
2,327
1,666
Operating profit before working capital changes
3,594
3,059
Changes in working capital
Increase / (decrease) in trade payables
(3,088)
(668)
Increase / (decrease) in long-term provisions
(72)
128
Increase / (decrease) in short-term provisions
(89)
(27)
Increase / (decrease) in other current liabilities
324
413
Decrease / (increase) in trade receivables
(623)
2,636
Decrease / (increase) in inventories
247
(408)
Decrease / (increase) in long-term loans and advances
(823)
(7)
Decrease / (increase) in short-term loans and advances
1,122
(764)
Decrease / (increase) in other current assets
(1,728)
(451)
Cash generated from /(used in) operations
(4,730)
852
Net cash flow from/ (used in) operating activities (A)
(1,136)
3,911
B. Cash flows from investing activities
Purchase of fixed assets, including CWIP and capital advances
(1,013)
(967)
Proceeds from sale of fixed assets
12
5
Purchase of non-current investments
(317)
(703)
Interest received
213
Net cash flow from/ (used in) investing activities (B)
(1,318)
(1,452)
C. Cash flows from financing activities
Proceeds from issuance of equity share capital
550
Proceeds from long-term borrowings
644
83
Proceeds from short-term borrowings
834
480
Interest paid
(2,327)
(1,954)
Dividend paid on equity shares
(364)
Security Premium
1,925
Net cash flow from/ (used in) in financing activities (C)
1,626
(1,755)
Net increase/(decrease) in cash and cash equivalents (A + B + C)
(828)
704
Cash and cash equivalents at the beginning of the year
1,642
938
Cash and cash equivalents at the end of the year
814
1,642
Components of cash and cash equivalents
Cash on hand
8
14
With banks- on current account
109
936
- on deposit account
690
685
- unpaid dividend accounts*
7
7
Total cash and cash equivalents (note 18)
814
1,642
* The company can utilize these balances only towards settlement of the respective unpaid dividend and unpaid matured deposits.

As per our report of even date


For K.S.AIYAR AND CO
Chartered Accountants
Firm Registration No. 100186W
S.KALYANARAMAN
Partner
Membership No. 200565

For and on behalf of the Board of Directors of


Accel Frontline Limited
N.R. Panicker
Executive Chairman

R. Ramaraj
Director

K.R. Chandrasekaran
Chief Finance Officer

Sweena Nair
Company Secretary

Place : Chennai
Date : May 7, 2014

50
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

Significant accounting policies forming part of the


financial statements

and the carrying amount of the asset and are recognized in the
statement of profit and loss when the asset is derecognized.

1.01 Background

Depreciation on tangible assets

Accel Frontline Limited (Accel or the Company) was incorporated


in Chennai in 1995. The Companys principal lines of business in
IT services includes, providing system integration solutions
comprising network design, hardware and software, IT
Infrastructure management solutions, warranty management
solutions for imported and indigenous equipments, development,
implementation and maintenance of software applications.

Depreciation on fixed assets is calculated for on a straight-line basis


using the rates arrived at based on the useful lives estimated by the
management, or those prescribed under the Schedule XIV to the
Companies Act, 1956, whichever is higher. The company has used the
following rates to provide depreciation on its fixed assets.,

Asset
1.02 Statement of significant accounting policies
(a) Basis of preparation of financial statements
The financial statements have been prepared and presented in
accordance with generally accepted accounting principles (GAAP)
in India. The company has prepared these financial statements to
comply in all material respects with the accounting standards
notified under the Companies (Accounting Standards) Rule, 2006,
(as amended) and the relevant provisions of the Companies Act,
1956. The financial statements have been prepared on a accrual
basis and under the historical cost convention.

Rate of depreciation /
amortization (%)

Plant and machinery

4.75

Office equipment

4.75

Furniture and fixtures

6.33

Computer hardware (except


computers on lease)

16.21

Vehicles
Lease hold improvements

9.5
Over the lower of estimated
useful lives of the assets or the
primary period of the lease.

The accounting policies adopted in the preparation of financial


statements are consistent with those of previous year.

Fixed assets individually costing Rs 5,000 or less are fully


depreciated on purchase during the relevant year.

All assets and liabilities have been classified as current or noncurrent as per the companys normal operating cycle and other
criteria set out in the Revised Schedule VI to the Companies Act,
1956. Based on the nature of products and time between the
acquisition of assets for processing and their realization in cash
and cash equivalents, the company has ascertained its operating
cycle as 12 months for the purpose of current or non-current
classification of assets and liabilities.

Intangible assets

Use of estimates
The preparation of financial statements requires management to
make certain estimates and assumptions that affects the reported
amounts of assets and liabilities, disclosure of contingent assets
and liabilities on the date of financial statements and the reported
amount of revenues and expenses during the reporting period.
Management believes the estimates are prudent and reasonable.
Future results could differ from these estimates.

(b) Non Current - Tangible assets


Fixed assets are stated at cost less accumulated depreciation.
The cost comprises purchase price, borrowing costs if
capitalization criteria are met as per Accounting standards 16
and directly attributable cost of bringing the asset to its
working condition for the intended use. Any trade discounts
and rebates are deducted in arriving at the purchase price.
Cost includes all expenses attributable to bringing the asset to
its working condition for its intended use.
Subsequent expenditure related to an item of fixed asset is added
to its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of
performance. All other expenses on existing fixed assets,
including day-to-day repair and maintenance expenditure and cost
of replacing parts, are changed to the statement of profit and loss
for the period during which such expenses are incurred.
Gains or losses arising from de-recognition of fixed assets are
measured as the difference between the net disposal proceeds

Intangible assets acquired separately, are measured on initial


recognition at cost. The cost of intangible assets acquired as
a consequence of amalgamation in the nature of purchase is
their fair value as at the date of amalgamation. Measurement
subsequent to initial recognition, intangible assets are carried
at cost less accumulated amortization and accumulated
impairment losses, if any. Internally generated intangible
assets, excluding capitalized development costs, are not
capitalized and expenditure is reflected in the statement of
profit and loss in the year in which the expenditure is incurred.
Intangible assets are amortized on a straight line basis over the
estimated useful economic life. The company uses a rebuttable
presumption that the useful life of an intangible asset will not
exceed ten years from the date when the asset is available for
use. If the persuasive evidence exists to the effect that useful life
of an intangible asset exceeds ten years, the company amortizes
the intangible asset over the best estimate of its useful life. Such
intangible assets and intangible assets not yet available for use
are tested for impairment annually, either individually or at the
cash-generating unit level. All other intangible assets are
assessed for impairment whenever there is an indication that the
intangible asset may be impaired.
The amortization period and the amortization method are
reviewed at least at each financial year end. If the expected useful
life of the asset is significantly different from previous estimates,
the amortization period is changed accordingly. If there has been
a significant change in the expected pattern of economic benefits
from the asset, the amortization method is changed to reflect the
changed pattern. Such changes are accounted for in accordance
with AS 5 Net Profit or Loss for the Period, Prior Period Items and
Changes in Accounting Policies.
Gains or losses arising from de-recognition of an intangible asset are
measured as the difference between the net disposal proceeds and
the carrying amount of the asset and are recognized in the statement
of profit and loss when the asset is derecognized.

51
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14


A summary of amortization rates applied to the companys
intangible assets is as below:
Rates (SLM)
Goodwill
10%
Brands/trademarks
10%
Patents and intellectual property rights (IPR)
10%
Technical know how
10%
Computer software
14.30%

Current investments are carried in the financial statements at


lower of cost and fair value determined on an individual
investment basis. Long-term investments are carried at cost.
However, provision for diminution in value is made to recognize a
decline other than temporary in the value of the investments.

On disposal of an investment, the difference between its


carrying amount and net disposal proceeds is charged or
credited to the statement of profit and loss.

(c) Leases
(f) Inventories
Where the company is lessee
Finance leases, which effectively transfer to the company substantially
all the risks and benefits incidental to ownership of the leased item, are
capitalized at the inception of the lease term at the lower of the fair
value of the leased property and present value of minimum lease
payments. Lease payments are apportioned between the finance
charges and reduction of the lease liability so as to achieve a constant
rate of interest on the remaining balance of the liability. Finance
charges are recognized as finance costs in the statement of profit and
loss. Lease management fees, legal charges and other initial direct
costs of leases are capitalized.

A leased asset is depreciated on a straight line basis over the


useful life of the asset or the useful life envisaged in the Schedule
XIV to the Companies Act, 1956, whichever is higher. However if
there is no reasonable certainty that the company will obtain the
ownership by the end of the lease term, the capitalized asset is
depreciated on a straight line basis over the shorter of the
estimated useful life of the asset, the lease term or the useful life
envisaged in Schedule XIV to the Companies Act, 1956.

Inventories include raw materials, components, stock in trade,


finished goods, stores and spares and work-in progress.
Inventories of raw material, stock-in-trade are valued at the lower of
cost and the net realisable value after providing for obsolescence and
other losses, where considered necessary. However, materials and
other items held for use in the production of inventories are not written
down below cost if the finished products in which they will be
incorporated are expected to be sold at or above cost. Cost includes
all charges in bringing the goods to the point of sale.

Inventories of stores and spares are valued at cost, net of


provision for diminution in the value. Cost is determined on
weighted average cost basis.
Work-in-progress and finished goods are valued at lower of
cost and net realizable value. Cost includes direct material
and labour and a portion of the manufacturing overheads.
Cost of finished goods includes excise duty and is determined
on a weighted average basis.

Leases, where the lessor effectively retains substantially all


the risks and benefits of ownership of the leased item, are
classified as operating leases. Operating lease payments are
recognized as an expense in the statement of profit and loss
on a straight-line basis over the lease term.

Net realizable value is the estimated selling price in the


ordinary course of the business, less estimated costs of
completion and estimated cost necessary to make the sale.

(d) Borrowing costs

Revenue is recognized to the extent that it is probable that the


economic benefits will flow to the company and the revenue
can be reliably measured. The following specific recognition
criteria must also be met before revenue is recognized:

Borrowing cost includes interest, amortization of ancillary costs


incurred in connection with the arrangement of borrowings and
exchange differences arising from foreign currency borrowings to
the extent they are regarded as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale
are capitalized as part of the cost of the respective asset. All other
borrowing costs are expensed in the period they occur.

(e) Investments
Investments, which are readily realizable and intended to be
held for not more than one year from the date on which such
investments are made, are classified as current investments.
All other investments are classified as non current long-term
investments.
On initial recognition, all investments are measured at cost. The
cost comprises purchase price and directly attributable acquisition
charges such as brokerage, fees and duties. If an investment is
acquired, or partly acquired, by the issue of shares or other
securities, the acquisition cost is the fair value of the securities
issued. If an investment is acquired in exchange for another asset,
the acquisition is determined by reference to the fair value of the
asset given up or by reference to the fair value of the investment
acquired, whichever is more clearly evident.

(g) Revenue recognition

Sale of goods
Revenue from sale of goods is recognized when all the significant
risks and rewards of ownership of the goods have been passed to
the buyer, usually on delivery of the goods. The company collects
sales taxes and value added taxes (VAT) on behalf of the
government and, therefore, these are not economic benefits
flowing to the company. Hence, they are excluded from revenue.
Excise duty deducted from revenue (gross) is the amount that is
included in the revenue (gross) and not the entire amount of
liability arising during the year.

Income from services


Income from Annual maintenance contracts is recognized
proportionately over the period of the respective contracts.
Accrued income shown under Other current assets
represents amount recognized based on services performed
in advance of billing in accordance with contractual terms.
Revenues from maintenance contracts are usually recognized
as the service is performed, by the proportionate completion
method. pro-rata over the period of the service as and when
services are rendered. The company collects service tax on
behalf of the government and remit the same to the
government, therefore, it is not an economic benefit flowing to
the company. Hence, it is excluded from revenue.

52
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

Software Services
Software services are either provided on a time & material basis or
on a fixed price basis. IT Services provided on a time & material
basis are recognized in the period in which the services are
performed. IT Services provided on a fixed price basis are
recognized based on the milestones as specified in the contracts.
Unbilled revenue included under Other Current Assets represents
amount recognized based on services performed in advance of
billing in accordance with contractual terms.

Interest
Interest income is recognized on a time proportion basis
taking into account the amount outstanding and the applicable
interest rate. Interest income is included under the head
Other income in the statement of profit and loss.

valuation carried out in accordance with revised Accounting


Standard AS -15 as at the end of the year.
The Companys policy towards leave for their employees stipulates
that the employees can only carry forward their earned leave to the
extent allowed as per policy from time to time, without any encashment
options. As per revised Accounting Standard AS 15, the Company has
provided for compensated absences that are expected to be availed.
The liability for compensated absences is determined on the basis of
actuarial valuation at the end of the financial year. Any gain or loss
arising out of such valuation is recognized in the Profit and Loss
Account, as the case may be.

(j) Taxation
Provision for income tax is made for both current and deferred
taxes. Provision for current income tax is made at current tax
rates based on assessable income.

Dividends
The company recognizes dividend as income only when the
right to receive the same is established by the reporting date.
(h) Foreign currency transactions
A foreign currency transaction recorded, on initial recognition
in the reporting currency, by applying to the foreign currency
amount the exchange rate between the reporting currency
and the foreign currency at the date of the transaction.
For practical reasons, a rate that approximates the actual rate at
the date of the transaction is often used, for example, an average
rate for a week or a month might be used for all transactions in
each foreign currency occurring during that period.
Transactions denominated in foreign currencies are recorded at
the exchange rate specified by customs authorities on a monthly
basis. Current assets and liabilities denominated in foreign
currencies are translated at the exchange rate prevailing on the
date of the balance sheet. All exchange differences arising on the
Conversion/ settlement of foreign currency transactions are
accounted for in the profit and loss account, except in the cases
where they relate to the acquisition of fixed assets, in which case
they are adjusted to the cost of the corresponding asset.

Forward contracts are entered into to hedge the foreign


currency risk of the underlying outstanding periodically. The
premium or discount on all such contracts arising at the
inception of the contract is amortised as income or expense
over the life of the contract. Any profit or loss arising on the
cancellation or renewal of forward contracts is recognized as
income or as expense for the year. The exchange difference
is calculated and recorded in accordance with AS-11
(i) Retirement and employee benefits
Retirement benefit in the form of provident fund is a defined
contribution scheme. The companys contribution towards the
Provident Fund is charged to the Profit and Loss Account. The
interest rate payable to the members of the Trust formed by
the company for managing the provident fund shall not be
lower than the statutory rate of interest declared by the
Central Government under the Employees Provident Funds
and Miscellaneous Provisions Act, 1952 and the short fall, if
any, shall be made good by the Company.
The Company also provides for retirement benefits in the form of
gratuity as per the provisions of The Payment of Gratuity Act,
1972, which is a defined benefit plan. The Liability in respect of
contribution to the gratuity fund is provided for based on actuarial

Minimum alternate tax (MAT) paid in a year is charged to the


statement of profit and loss as current tax. The company recognizes
MAT credit available as an asset only to the extent that there is
convincing evidence that the company will pay normal income tax
during the specific period, i.e., the period for which MAT credit is
allowed to be carried forward. In the year in which the company
recognizes MAT credit as an asset in accordance with the Guidance
Note on Accounting for Credit Available in respect of Minimum
Alternative Tax under the Income tax Act 1961, the said asset is
created by way of credit to the statement of profit and loss and shown
as MAT Credit Entitlement. The company reviews the MAT credit
entitlement asset at each reporting date and wrties down the asset to
the extent the company does not have convincing evidence that it will
pay normal tax during the specified period.
Deferred income taxes are recognized for the future tax consequences
attributable to timing differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized 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
realized. Deferred tax assets are recognized on carry forward of
unabsorbed depreciation and tax losses only if there is virtual certainty
that such deferred tax assets can be realized against future taxable
profits.

(k) Earnings per share


The earnings considered in ascertaining the companys basic and
diluted earnings per share comprise of the net profit/loss after tax. The
number of shares used in computing basic earnings per share is the
weighted average number of shares outstanding during the year. The
number of shares used in computing diluted earnings per share
comprises the weighted average shares considered for deriving basic
earnings per share and also the weighted average number of shares, if
any, which would have been issued on the conversion of all dilutive
potential equity shares.

(l) Impairment
i. The carrying amounts of assets are reviewed at each balance sheet
date if there is any indication of impairment based on internal/ external
factors. An impairment loss is recognized wherever the carrying
amount of an asset exceed its recoverable amount. The recoverable
amount is the greater of the assets net selling price and value in use.
In assessing value in use, the estimated future cash flows are
discounted to their present value at the weighted average

cost of capital.

53
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14


ii. After impairment, depreciation is provided on the revised
carrying amount of the assets over its remaining useful life.
(m) Provisions
A provision is recognized when an enterprise has a present
obligation as a result of past event and 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
management 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 management estimates.

(o) Amalgamation accounting


The company accounts for all amalgamations in the nature of merger
using the pooling of interest method. The application of this method
requires the company to recognize any non-cash element of the
consideration at fair value. The company recognizes assets, liabilities
and reserves, whether capital or revenue, of the transferor company at
their existing carrying amounts and in the same form as at the date of
the amalgamation. The balance in the statement of profit and loss of
the transferor company is transferred to the general reserve. The
difference between the amount recorded as share capital issued, plus
any additional consideration in the form of cash or other assets, and
the amount of share capital of the transferor company is adjusted in
reserves.

(n) Contingent liabilities


(p)
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not
recognized because it is not probable that an outflow of resources
will be required to settle the obligation. A contingent liability also
arises in extremely rare cases where there is a liability that cannot
be recognized because it cannot be measured reliably. The
company does not recognize a contingent liability but discloses its
existence in the financial statements.

Measurement of EBITDA

As permitted by the Guidance Note on the Revised Schedule VI to


the Companies Act, 1956, the company has elected to present
earnings before interest, tax, depreciation and amortization
(EBITDA) as a separate line item on the face of the statement of
profit and loss. The company measures EBITDA on the basis of
profit/ (loss) from continuing operations. In its measurement, the
company does not include depreciation and amortization
expense, finance costs and tax expense.

2. Notes to the balance sheet


(hs, unless other
2.1. Share capital
Authorised capital
33,000,000 (March 31, 2013: 33,000,000) equity shares of 10/- each
Issued, Subscribed & Paid up
29,761,873 (March 31, 2013: 24,261,873) equity shares of 10/- each

As at March 31, 2014

As at March 31, 2013

3,300

3,300

2,976

2,426

2,976

2,426

Total

2.1.1 Reconciliation of the equity shares outstanding at the beginning and at the end of the reporting period:-

Equity Shares
Balance at the beginning of the year
Shares Issued during the year
Shares cancelled during the year
Balance at the end of the year

As at March 31, 2014


Number
Amount
24,261,873
2,426.19
5,500,000
550.00
29,761,873
2,976.19

As at March 31, 2013


Number
Amount
24,261,873
2,426.19
24,261,873
2,426.19

2.1.2 Rights, preferences and restrictions attached to shares


The Company has one class of equity shares having a par value of Rs.10 per share. Each share holder is eligible for one vote
per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company
after distribution of all preferential amounts in proportion to their share holding. During the year the company has issued
5,500,000 equity shares on preferential basis to M/s CAC Holdings Corporation ( Formerly CAC Corporation ), upon the
approval from the shareholders of the company in its EGM held on 08.01.2014 and the shares were issued on 10.01.2014
2.1.3 Shares held by holding company and subsidiary / associates of holding company
Equity Shares
CAC Holding Corporation, Tokyo Japan - Holding Company
Accel Limited, Promoter Company
N.R. Panicker (Promoter Group)
Accel Systems Group Inc, (Promoter Group)

As at March 31, 2014


18,141,175
7,797,191
372,500
183,085

As at March 31, 2013


14,550,166
1,072,500
483,085

54
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

2. Notes to the balance sheet


(hs, unless other
2.1.4 Details of shares held by shareholders holding more than 5% of the aggregate shares in the company:-

As at March 31, 2014

Name of Shareholder

No. of Shares held

CAC Corporation, Tokyo, Japan

As at March 31, 2013

% of Holding

No. of Shares held

% of Holding

18,141,175

60.95%

0.00%

Accel Limited

7,797,191

26.20%

14,550,166

59.97%

N.R. Panicker

372,500

1.25%

1,072,500

4.42%

Accel Systems Group Inc

183,085

0.62%

483,085

1.99%

Mega Resources Limited

0.00%

1,377,178

5.68%

2.2 Reserves & surplus


A Securities premium account
Balance as at the beginning of the year
Add : Securities premium credited on Share issue
Balance as at the end of the year
B General reserve
Balance as at the beginning of the year
Add : Amount transferred from surplus balance in profit and loss
account
Balance as at the end of the year
C Surplus / (deficit) in the profit and loss account
Balance as at the beginning of the year
Profit /(Loss) For The Year
Less: Appropriations
Proposed final equity dividend
(Previous year : amount per share Rs.Nil )
Tax on proposed equity dividend
Transfer to general reserve
Total appropriations
Balance as at the end of the year

As at March 31, 2014

As at March 31, 2013

4,932
1,925
6,857

4,932
4,932

859
-

859
-

859

859

1,329
245

1,049
280

1,574

1,329

9,290

7,120

As at March 31, 2014


1,530
37
108
1,366
3,041

As at March 31, 2013


400
473
65
93
1,031

Total
2.3 Long term borrowings
Term loan from banks (refer note 2.3.1)
Term loan from financial institutions (refer note 2.3.2)
Hire purchase/hypothecation loans (refer note 2.3.2)
Loan against keyman insurance policy (refer note 2.3.3)
Loan from promoters (refer note 2.3.4)
Total

2.3.1 The term loan from one bank is secured by a pari passu charge by way of hypothecation of current assets and the
moveable assets of the company and personal guarantee of the Executive Chairman and Shares held by promoter company
and the immoveable property owned by the Executive Chairman and his personal guarantee in the case of another bank.The
loan carries an interest rate of 14.50%( SBI) & 13.50% (DLB) per annum.The loan is repayable over a period of Three & Five
years (including current maturities) in the below mentioned repayment pattern
Year >> Repayment in Rs. Lacs

State Bank of India

State Bank of India

Dhanlaxmi Bank

2014-15

25.00*4

1000*1 + 25.00*3

13.33 *12

2015-16

60.00*4

84.50*4

13.33 *12

2016-17

71.25*4

13.33 *12

2017-18

13.33 *12

2018-19

13.33 *7

55
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

2. Notes to the balance sheet


(hs, unless other
2.3.2 The loans have been availed for acquiring certain business assets and are secured by hypothecation of specific assets purchased
out of such loans. The loans are repaid in accordance to the repayment schedule agreed with the lenders.
2.3.3 This loan is availed from Life Insurance Corporation of India and is secured against the keyman insurance policy taken and placed
with them, which is fully paid up except the interest.
2.3.4 During the year as per the share holder aggrement, the promoter company Accel Limited has lent Rs. 1,366 lakhs to the company
for a period of 5 years at an interest rate of 11% p.a.

2.4. Deferred Tax Liability

As at March 31, 2014

As at March 31, 2013

(155)

(179)

On difference between book balance and tax balance of fixed assets

526

505

Closing Deferred Liability / (Asset) Net

371

326

As at March 31, 2014

As at March 31, 2013

177
74
251

263
106
369

Breakup for Deferred Tax Asset/Liability as at the year end is as follows

Deferred Tax (Asset)


On impact of expenditure charged to the statement of profit and
loss account in the current year but allowed for tax purpose on
payment basis
Deferred Tax Liability

2.5. Long-term provisions


Provision For Employee Benefits
Provision for gratuity
Provision for compensated absences
Total

2.5.1 The non-current portion of Provision for Gratuity and Leave benefits are based on information certified by an
independent actuary and relied upon by the auditors
2.6. Short term borrowings
Secured
Cash credit facility from banks (refer note 2.6.1)
Working capital demand Loan from Banks
Unsecured
Inter corporate deposits (refer note 2.6.2)
Total

As at March 31, 2014

As at March 31, 2013

7,283
1,216

8,631

100
8,599

500
9,131

2.6.1. Nature of security and terms of repayment for short term secured borrowings
Nature of security

Type of Borrowing

SBI- First Charge on Pari Pasu basis on all the current assets & Moveable assets of the
company, including Book debts and Inventories. First and exclusive charge on the
Properties owned by promoter Company , Accel Limited. Personal Guarantee of The
Executive Chairman & Corporate guarantee of Accel Limited.

Cash credit facility


from banks repayable on
demand

Interest Rate
SBI - 14.50%
IDBI - 14% & 16%
AXIS - 13.50%
DLB - 13.50%

IDBI - Pari Pasu Charge on all the current assets & Moveable assets of the company,
including Book debts and Inventories. Personal Guarantee of The Executive Chairman &
Corporate guarantee of Accel Limited.
AXIS Bank - Pari Pasu Charge on all the current assets & Moveable assets of the
company, including Book debts and Inventories.
Dhanlaxmi Bank - Pari Pasu Charge on all the current assets & Moveable assets of
the company, including Book debts and Inventories. Hypothecation of the residential
propery of the Executive Chairman. Personal Guarantee of The Executive Chairman and
pledge of 20 Lakh shares of the company held by the promoter Company Accel Limited
& Corporate guarantee of Accel Limited.
2.6.2 This loan is secured by way of pledge against 12 lakhs equity shares of the company and held by the promoter company
M/s.Accel Limited

56
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

2. Notes to the balance sheet


(hs, unless other
2.7. Trade payables
Outstanding dues to micro & small enterprises (Refer Note 2.7.1)
Outstanding dues other than above
Advances refundable
Total

As at March 31, 2014


5,752
18
5,770

As at March 31, 2013


8,841
18
8,859

2.7.1 Dues to micro and small enterprises


The company has received intimation from Suppliers regarding their status under the Micro, Small and Medium Enterprises
Development Act, 2006 and hence disclosures if any, relating to amounts unpaid for the year ended together with interest paid
/ payable as required under the said Act have been furnished as stated above.
2.8 Other current liabilities
(a) Current maturities of long-term debt:Term Loans from banks (Refer Note No.2.3.1)
Term Loans from financial institutions (Refer Note No.2.3.2)
Hire purchase/hypothecation loans (Refer note no.2.3.3)
(b) Unearned service revenue
(c) Unpaid dividends
(d) Statutory dues payable
(e) Liability for expenses
Total

As at March 31, 2014

As at March 31, 2013

1,235
130
341
7
636
938
3,287

300
78
84
247
7
1,252
994
2,962

2.9 Short term provisions


Provision for employee benefits
Provision for tax on proposed equity dividend
Total

As at March 31, 2014


82
82

As at March 31, 2013


61
59
120

57
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

ance sheet
(hs, unless other
2.10 Fixed Assets
Gross Block At Cost
Sl No

Particulars

Cost as at
Apr 01,2013

Depreciation

Deletion/
Adjustment

Addition

As at Mar
31,2014

As at Apr
01,2013

Deletion/
Adjustments

For the year

Tangible Assets (A)

Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

1
2
3
4
5
6

Office Equipment
Computers
Furniture and Fixtures
Plant and machinery
Leasehold improvements
Vehicles

Total of Tangible Assets

318

13

15

316

109

15

15

(309)

(10)

(1)

(318)

(93)

(17)

(0)

1,544

580

225

1,899

574

285

217

(1,208)

(488)

(152)

(1,544)

(491)

(235)

(152)

318

10

312

200

20

10

(320)

(7)

(9)

(318)

(189)

(20)

(9)

261

262

88

13

(230)

(31)

(0)

(261)

(76)

(12)

(0)

635

38

603

295

96

38

(803)

(100)

(268)

(635)

(455)

(111)

(271)

216

38

17

237

87

23

13

(240)

(24)

(216)

(85)

(21)

(19)

3,292

645

307

3,629

1,353

452

296

(3,111)

(636)

(454)

(3,292)

(1,388)

(417)

(452)

1,609

1,609

218

187

(1,659)

(50)

(1,609)

(107)

(161)

(50)

Intangible Assets (B)


7
8
9

Goodwill
Computer Software
Copy Rights/Technical Knowhow

Total of Intangible Assets

GRAND TOTAL (A) + (B)

2,584

407

2,991

1,814

325

(2,343)

(432)

(191)

(2,584)

(1,649)

(357)

(191)
0

172

172

120

(172)

(172)

(86)

(34)

4,365

407

4,772

2,152

520

(4,173)

(432)

(241)

(4,364)

(1,842)

(552)

(241)

7,657

1,052

307

8,401

3,505

972

296

(7,284)

(1,068)

(695)

(7,657)

(3,230)

(969)

(693)

Note: Previous Year Figures are given in brackets & italics.


Capital work in progress of Rs.20 lakhs (Previous year : Rs.59.40 lakhs) as appearing in the balance sheet represents capital assets which are pending completion/installation

58

2
.
N
o
t
e
s
t
o
t
h
e
b
a
l

Annual Report 2013 - 14

2. Notes to the balance sheet


(hs, unless other
2.11 Non current investments
(i) Investments in subsidiaries (refer note 4.1)
Accel Systems & Technologies Pte Limited
11,730,000 shares of Singapore 10 cents each fully paid
(Previous year 11,730,000 shares of Singapore $ 1 each)
Accel Frontline JLT,Dubai
1 share of AED 300,000 fully paid up
(Previous year - 1 share of AED 1,000,000)
Accel Japan KK
(212 ordinary shares of JPY 50,000 each and JPY 15,855,000
share application money pending allotment)
(Previous year: 212 ordinary shares of JPY 50,000 each and JPY 15,855,000
share application money pending allotment)
Network Programs (Japan), Inc. USA
(1000 shares fully paid )
(Previous year: 1000 shares fully paid)
Network Programs (USA) Inc., USA
(1500 shares fully paid )
(Previous year: 1500 shares fully paid)
Accel North America Inc
(655,000 shares of $1 each)
(Previous year: 155,000 shares)
Accel IT Resources Limited
(3,000,000 shares of Rs.10 each)
(Previous year: 1,000,000 shares)
Accel Technologies Ltd, UK
(19,500 equity shares of GBP.1/- each)
(Previous year: GBP 10,000 equity shares of GBP 1/- each)
(ii) Other investments
Investment in equity instruments
Unquoted
Telesis Global Solutions Limited
96,374 shares of Rs.10/- each fully paid
(Previous year: 96,374 shares of Rs.10 each)
Total
2.12 Long term loans and advances
Security deposits
Rental Deposit
Deposits with statutory/government authorities
Total
2.13 Long-term trade receivables
Unsecured, considered good
Considered doubtful
Less:Provision for doubtful receivables
Total
2.14 Inventories
Raw materials and components
Finished goods
Traded goods
Stores and spares
Total

As at March 31, 2014

As at March 31, 2013

775

775

120

120

118

118

224

224

51

51

373

64

790

790

17

30

30

2,498

2,181

As at March 31, 2014


352
684

As at March 31, 2013


238
628

119
1,155
As at March 31, 2014
595

93
959
As at March 31, 2013
763

121
716

89
852

(121)
595

(89)
763

As at March 31, 2014


82
330
1,223

As at March 31, 2013


155
492
1,295

2,431
4,066

2,371
4,313

59
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

2. Notes to the balance sheet


(hs, unless other
2.15 Trade receivables
Trade receivables
Other receivables
Total
2.16 Cash and Cash equivalents
Cash on Hand
Balances with Banks
- on current accounts

As at March 31, 2014


11,325

As at March 31, 2013


11,488

2,004
13,329

1,050
12,538

As at March 31, 2014

As at March 31, 2013

14

109

936

- on unpaid dividend accounts


Total
Other bank balances

7
124

7
957

- on margin money deposits


Total

690
814

685
1,642

2.17 Short term loans and advances


Advances to Associate / Subsidiary companies
Other deposits
Other loans and advances
Total
2.18 Other current assets

As at March 31, 2014


562
395

As at March 31, 2013


1,241
173

523
1,480

560
1,974

As at March 31, 2014

As at March 31, 2013

Advance income tax, net of tax provisions (Refer note no.2.18.1)


MAT credit entitlement

3,816
54

2,784
-

Prepaid expenses
Total

1,621
5,491

979
3,763

2.18.1 Advance income tax represents tax deducted at source by customers out of the income net of tax provisions.
Assessments and Appeals are pending and the amounts are expected to be received/adjusted after the income tax
assessments/appeal proceedings are completed by the income tax authorities.

3. Notes to the Statement of Profit and Loss account for year ended
(hs, unless other
3.1 Revenue from operations

March 31,2014

March 31,2013

Traded goods
Sale of services
Other operating revenue
Scrap sales
Other
Revenue from operations (gross)

13,070
16,638

15,252
17,203

(0)
29,708

9
181
32,645

Less: Excise duty


Revenue from operations (net)

28
29,680

38
32,607

March 31,2014

March 31,2013

50
238

234
234

27
315

3.2. Other income


Interest income on
Bank deposits
Others
Other non-operating income
Total

60
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

3. Notes to the Statement of Profit and Loss account for year ended
(hs, unless other
3.3. Cost of raw material and components consumed
Inventory at the beginning of the year

March 31,2014
154

March 31,2013
157

154

165
322

82
72

155
167

March 31,2014

March 31,2013

12,185
12,185

14,462
14,462

March 31,2014

March 31,2013

2,431
1,223

2,371
1,295

Stock in Trade
Total
Inventories at the beginning of the year
Stores and spares
Traded goods

330
3,984

493
4,159

2,371
1,295

2,162
1,199

Stock in Trade
Total

493
4,159

388
3,749

175

(410)

March 31,2014
5,797
341
(85)
(32)

March 31,2013
5,510
342
117
12

114
6,135

120
6,101

March 31,2014

March 31,2013

238
62

271
54

March 31,2014
8.00%
5.00%
1-3%

March 31,2013
8.00%
5.00%
1-3%

Add: Purchases
Less: inventory at the end of the year
Cost of raw material and components consumed
3.4. Purchase of traded goods
Traded purchases less returns
Total
3.5. (Increase)/decrease in inventories
Inventories at the end of the year
Stores and spares
Traded goods

Net (Increase) / decrease in Inventories


3.6. Employee benefits expense
Salaries, wages and bonus
Contribution to provident and other funds
Gratuity expense
Compensated absence
Staff welfare expenses
Total
Disclosure required under AS 15 (Revised) Employee Benefits
i. DEFINED CONTRIBUTION PLAN
Defined Contribution Plan, recognized as expenses for the year as under:
Particulars
Employers Contribution to Provident fund
Employers contribution to Employee State Insurance Corporation
ii. DEFINED BENEFIT PLANS
Gratuity Funded Obligation
a) Actuarial Assumption for the year
Particulars
Discount Rate (per annum)
Salary Escalation Rate*
Attrition rate

*The assumption of future salary increases takes into account of inflation, seniority, promotions and other relevant factors such
as demand and supply in the employment market.

61
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

3. Notes to the Statement of Profit and Loss account for year ended
(hs, unless other
b) Reconciliation of present value of obligations
Particulars
Present Value of Obligation at the beginning of the year
Current Services Cost
Interest Cost
Actuarial (gain)/loss
Benefits Paid
Present Value of Obligation at the end of the year

March 31,2014
479
32
40
(157)
(52)
342

March 31,2013
270
136
27
122
(75)
479

Particulars
Fair Value of plan assets at beginning of year
Expected return on plan assets
Contributions
Benefits paid
Actuarial gain/(loss) on plan assets
Fair Value of plan assets at end of year

March 31,2014
205
16
11
(52)
(16)
164

March 31,2013
270
21
(75)
216

d) Net (Asset) / Liability recognized in the Balance Sheet as at year end


Particulars

March 31,2014

March 31,2013

342
164
177

479
216
263

March 31,2014

March 31,2013

c) Table showing changes in the fair value of plan assets

Present value of obligations at the end of the year


Fair Value of Plan Assets
Net (Asset) / Liability recognized in Balance Sheet
e) Expenses recognized in the Profit and Loss Account
Particulars

Current Service Cost


32
Interest Cost
40
Expected Return on Plan asset
(16)
Corrections effected to Assets, but not reflected in last years Disclosure Table
Actuarial (gain) / loss recognized in the period
(157)
Total expenses recognized in the Profit and Loss Account for the year
(85)
The above disclosures are based on information certified by an independent actuary, and relied on by the auditors

136
27
(21)
122
117

iii. LONG TERM EMPLOYEE BENEFITS


Compensated absences (Leave encashment) Unfunded
Obligation a) Actuarial Assumption for the year.
Particulars
Discount Rate (per annum)
Salary Escalation Rate
Expected average remaining lives of working employees (year)
b) Reconciliation of present value of obligations
Particulars
Present Value of Obligation at the beginning of the year
Current Services Cost
Interest Cost
Actuarial (gain)/loss
Benefits Paid
Present Value of Obligation at the end of the year

March 31,2014
8.00%
5.00%
24.62

March 31,2013
8.00%
5.00%
24.62

March 31,2014
106
380
24
(436)

March 31,2013
93
297
18
(303)

73

106

62
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

3. Notes to the Statement of Profit and Loss account for year ended
(hs, unless other
c) Net (Asset) / Liability recognized in the Balance Sheet as at year end
Particulars
Present value of obligations at the end of the year
Fair Value of Plan Assets
Net (Asset) / Liability recognized in Balance Sheet

March 31,2014
73
73

March 31,2013
106
106

d) Expenses recognized in the Profit and Loss Account


Particulars
Current Service Cost
Interest Cost
Actuarial (gain) / loss recognized in the period
Total expenses recognized in the Profit and Loss Account for the year

March 31,2014
380
24
(436)
(32)

March 31,2013
297
18
(303)
13

The above disclosures are based on information certified by an the independent actuary and relied on by the auditors.
3.7. Other expenses
Sub-contracting and outsourcing cost
Rent
Power and fuel
Repairs and maintenance
- Equipments
- Leased premises
- Others
Insurance
Rates and taxes
Communication costs
Travelling and conveyance
Printing and stationery
Freight and forwarding
Legal and professional fees
Directors sitting fees
Payment to auditor (Refer 3.7.1)
Advertising and sales promotion
Brokerage and discounts
Sales Commission
Exchange differences (net)
Bad debts written off
Provision for doubtful debts and advances
Loss on sale of fixed assets (net)
Miscellaneous expenses
Total

3.7.1. Payment to auditors


As auditor:
Audit fee
Limited review
Other services (certification fees)
Reimbursement of expenses
Total

March 31,2014
3,173
981
245
16
237
85
84
173
487
921
63
342
214
8
31
82
2
231
33
-

March 31,2013
4,467
1,053
232
24
250
66
69
252
410
983
93
449
188
8
23
56
16
3
134
131
41
1

345
7,753

306
9,255

March 31,2014

March 31,2013

20
3
6

18
3
1

2
31

1
23

The audit fee includes foreign branch auditor fees of Rs.2.42 lakhs (Previous year Rs.2.19 lakhs)

63
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

3. Notes to the Statement of Profit and Loss account for year ended
(hs, unless other

3.8. Depreciation and amortization expense


Depreciation of tangible assets

March 31,2014
452

March 31,2013
417

520
972

552
969

March 31,2014
1,972
355

March 31,2013
1,620
333

2,327

1
1,954

Amortization of intangible assets


Total

3.9. Finance costs


Interest
Bank charges & Commission
Exchange Fluctuation in Foreign exchange
Total

4. Other notes forming part of the financial statemnets


(hs, unless other
4.1 Investments in subsidiaries
As at March 31, 2014, the Company had an aggregate investment
of Rs.246,843,057/- in its subsidiaries. During the current year, the
company increased its investment in Accel North America Inc by
Rs.30,865,535 an amount equivalent to USD 0.50 million by way
of conversion of the companies receivables into equity shares
upon a board approval dated 07th February 2014 . The Company
also invested an additional amount of Rs.870,181 in Accel
Technologies Limited, United Kingdom.
4.2 Sundry debtors / Sundry creditors / Loans & advances

a)

b)

The company has sought for confirmation from


concerned parties in respect of major balances
stated at their values shown under sundry debtors,
sundry creditors and loans & advances outstanding
as at the year end, which is subject to confirmation.
During the year, a provision for doubtful debts was created
for Rs.33,12,576./- (previous year Rs.41,09,530). A sum of
Rs.23,062,528/- (previous year Rs.13,050,409) was written
off as bad debts as the management felt that these are
doubtful of recovery / irrecoverable.

c)

In the opinion of the management, the current


assets, loans and advances have the value in which
they are stated in the balance sheet, if realized in
the ordinary course of business.

4.3 Contingent liabilities

Sales tax

2014

2013

8,740,588

6,071,815

Service tax

584,433

4,428,905

Income tax

103,707,400

123,884,050

Bank Guarantees outstanding

257,960,823

297,344,600

Claims against the company


not acknowledged as debt

22,205,410

21,952,808

Note : The contingent liability with respect to Income tax


as mentioned above has been shown based on the various
assessment orders received by the company. However, part
of the disallowances as mentioned in the said orders has
already been allowed in the subsequent assessment years.
The adjustments (if any) will be made in the financials after
our appeals before appropriate authorities are disposed off.

64
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

4. Other notes forming part of the financial statemnets


(hs, unless other
4.4 Segment reporting
During the year under review, the companys segment information below.
Particulars

Year Ended

Revenue
Segment Result
Unallocable Expenses ( Net)
Operating Income
Other Income ( Net )
Interest Expense
Profit before tax
Tax Expense
Profit before minority interest
Profit for the Year

Segment Assets
Unallocable assets
Total assets
Segment Liabilities
Unallocable liabilities
Total liabilities

IMS

SS

Mar/14

12,136

SI

9,318

5,483

WMS
2,977

Others

29,914

Mar/13

13,641

10,698

4,767

3,501

32,607

Mar/14

323

1,611

1,417

243

3,594

Mar/13

50

2,178

1,036

489

3,753

Mar/14

Total

972

Mar/13

968

Mar/14

2,622

Mar/13

2,785

Mar/14

Mar/13

(407)

Mar/14

2,327

Mar/13

1,954

Mar/14

295

Mar/13

424

Mar/14

50

Mar/13

144

Mar/14

245

Mar/13

280

Mar/14

245

Mar/13

280

Mar/14

9,781

8,585

5,236

2,672

Mar/13

9,635

8,342

5,288

2,514

26,274
25,778

Mar/14

7,393

7,393

Mar/13

6,566

6,566

Mar/14

9,781

8,585

5,236

2,672

7,393

33,667

Mar/13

9,635

8,342

5,288

2,514

6,566

32,344

Mar/14

5,744

6,149

2,183

1,859

12,266

28,200

Mar/13

7,506

6,146

3,218

2,219

9,546

28,635

Mar/14

5,466

5,466

Mar/13

3,708

3,708

Mar/14

5,744

6,149

2,183

1,859

17,732

33,667

Mar/13

7,506

6,146

3,218

2,219

13,254

32,344

Mar/14

463

16

429

106

Other Information
Capital Expenditure

Mar/13
Depreciation & amortization

Mar/14

100

128

603

123

47

184

24

Mar/13
Other Significant non Cash Expenses (allocable )

Mar/14

38

1,052

1,068

1,068

18

972

969

969
257

Mar/13
Other Significant non Cash Expenses (unallocable )

Mar/14

33

33

Mar/13

172

172

SI - System Integration
IMS - Infrastructure Management Services
SS - Software Services
WMS - Warranty Management Services

65
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

4. Other notes forming part of the financial statemnets


(hs, unless other
4.5 Related party transactions
Related parties where control exists:
Name of the Party

Nature of relationship

CAC Holdings Corporation, Tokyo, Japan


Holding Company
Accel Limited, Chennai
Promoter Company
Accel Systems & Technologies PTE Limited, Singapore Subsidiary Company
Accel Frontline JLT, Dubai
Subsidiary Company
Accel North America, Inc
Subsidiary Company
Accel IT Resources Limited
Subsidiary Company
Network Programs USA Inc., USA
Subsidiary Company
Network Programs (Japan) Inc., USA
Subsidiary Company
Accel Japan KK, Japan
Subsidiary Company
Accel Technologies Limited, U.K
Subsidiary Company
Other related parties with whom transactions have taken place during the year:
Name of the Party
Nature of relationship
Accel Transmatic Limited.
Associate Company
Key Management Personnel
Mr. N R Panicker

Executive Chairman

Relative of Key Management Personnel


Mrs. Sreekumari Panicker

Wife of the Executive Chairman

Transactions with related parties

Particulars

Promoter company

Sales and other income


Share of Expenses
Purchases
Rent Paid

Subsidiaries

Associate Company

Key Management
personnel

197,506,380

310,140

182,819,127

4,560,137

3,467,341

5,357,026

85,561

1,250,588

3,730,644

1,950,000

2,352,500

7,673,040
9,759,804

Remuneration

5,210,098
6,949,092

Interest Paid

3,005,200

Interest Received

5,036,500

8,217,269

Balances outstanding as at the March 31, 2014


Investments

246,843,057

Loans received

215,107,541

136,600,000

Receivables
Loans and advances
Maximum amount outstanding at any time during the
year

157,952,099

2,083,782

103,685,021

(366,559)

52,194,315

4,333,764

8,202,558

41,460,446

38,759,052

63,878,005

57,570,489

61,310,703

65,628,986

44,405,630

48,215,327

63,878,005

Note: Numbers appearing in shaded block, represent previous year numbers

66
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

4. Other notes forming part of the financial statemnets


(hs, unless other
4.9
4.6

Amount remitted in foreign currencies towards dividend

Overseas branch operation

2014

During the year, the branch at Singapore in the name of Accel Frontline
Limited - Singapore Branch continued its operation. The revenue and
expenses of the said Branch have been included in the financials of the
company against each line item, translated into Indian rupees, as applicable.
The summary of the financials of the Branch is as follows:
2014
Rs.
Turnover

2013
US $

281,795,581 4,658,070

Rs.

5,917,302

124,763

7,622,075

140,333

Sundry Debtors

118,044,601 1,964,143

141,601,525

2,605,124

Sundry Creditors

108,205,904 1,800,437

131,102,965

2,411,976

751,383

13,834

7,547,689

Income Tax- Provision

279,916

4,627

4.7 Expenditure in foreign currency


2014
Foreign Travel

20,169,470

Dividend
for the
year)

2013

No of
equity
shares
held

Rupees

No of
Nonresident
shareholders

Nil

04

No of
equity
shares
held

Rupees

493,785

740,678

US $

321,393,540

Net Profit after tax

Particulars

No of
Nonresident
shareholders

2013
11,656,966

4.10 Earnings in foreign currency


2014
Income from services

2013

528,664,530

557,973,171

4.11 Comparative financial information

The previous years balances have been regrouped /


reclassified wherever necessary to conform to the current
years presentation in accordance with the Revised Schedule
VI of the Companies Act 1956.

4.8 CIF value of Imports


2014
Components

24,716,915

As per our report of even date


For K.S.AIYAR AND CO
Chartered Accountants
Firm Registration No. 100186W
S.KALYANARAMAN
Partner
Membership No. 200565

2013
290,615,278

For and on behalf of the Board of Directors of


Accel Frontline Limited
N.R. Panicker
Executive Chairman

R. Ramaraj
Director

K.R. Chandrasekaran
Chief Finance Officer

Sweena Nair
Company Secretary

Place : Chennai
Date : May 07, 2014

67
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

Annual Report 2013 - 14

Balance sheet abstract and companys general business profile


(All amounts arup, unless other

I.

II.

Registration details
Registration number

18-31736

Balance Sheet date

March 31, 2014

Capital raised during the year (Amount in Rs. Lakhs)


Public Issue

NIL

Rights Issue

Bonus Issue

NIL

Private Placement

Total Liabilities

24,277

Total Assets

NIL
5,500,000

24,277

Sources of funds
Paid up capital

2,976

Secured loans

10,274

Deferred tax liability

Reserves and surplus

9,290

Unsecured loans

1,366

Investments

2,498

371

Application of funds
Net fixed assets

4,239

Net current assets

17,540

Misc. expenditure

Total expenditure

29,619

IV Performance of company (Amount in Rs. Lakhs)


Sources of funds
Turnover

29,914

Profit / (loss) before tax

295

Profit / (loss) after tax

Earnings per share in Rs.

0.96

Dividend as %

Generic names of three principal products / services of company (as per monetary terms)

Item code no (ITC code)


Product description
Item code no (ITC code)
Product description

847100
Computers &
Periphearls
852490
Sofware
Development

68
Accel Frontline Limited, 75 Nelson Manickam Road, Aminjikarai, Chennai - 600 029.

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