ontrack systems limited · 1 ontrack systems limited (rs. in million) financial highlights...

1

ONTRACK SYSTEMS LIMITED(Rs. in million)

FINANCIAL HIGHLIGHTS

Particulars 2009-2010 2008-2009 2007–2008

Export Sales 84.52 147.84 195.80

Domestic Sales 271.31 94.09 86.07

Other Income 2.88 11.26 1.62

Total Revenue 358.71 253.19 283.49

Operating Profit (EBITDA) 40.42 (36.54) 44.65

Finance Expenses 23.46 18.00 16.46

Profit / (Loss) on sale of Assets — 0.38 —

Preliminary & Deferred Rev. Exp. W/O 0.28 0.28 0.28

Depreciation & Impairment Loss 12.90 18.99 24.78

Income Tax (Net) 2.12 0.78 1.14

Net Income/(Loss) after tax 1.66 (74.97) 1.99

Face Value per equity share Rs. 10/- Rs. 10/- Rs. 10/-

EPS-after tax (Rs.) 0.19 (9.43) 0.26

Dividend (%) Nil Nil Nil

Operating Income/(Loss) as % to Total Revenue (%) 11.19 (14.73) 15.75

Share Capital 91.42 79.50 79.50

Reserves & Surplus 66.37 54.46 77.29

Fixed Assets (Gross Block) 142.30 141.10 170.43

Turnover Operating Profit

(Rs. in million)

2007-08 2008-09 2009-10

400

350

300

250

200

150

100

50

0

- 50

Gross Block Net Block

(Rs. in million)

2007-08 2008-09 2009-10

180

160

140

120

100

80

60

40

20

0

283.49

44.65

(36.54)

253.19

358.71

40.42

(Rs. in million)170.43

103.10

141.10

93.90

142.30

82.21

Dear shareholders,

I am glad to share with you that your company has successfully managed to convert

adversity to opportunity in the year 2009-2010. Our operations in India and overseas

were badly affected in the previous two fiscals due to the global recession. Due to the

confidence that customers have in your company and the sheer patience, perseverance

and hard work of our committed employees, we have managed to reverse the down

trend and are well set to get the company “ONTRACK” once again.

The consolidated revenues of the company for the year 2009-10 was Rs 397.65 million and PAT of Rs 0.84 million.

Your company is now taking initiatives to grow our operations in India and in the overseas markets that we are present. We are looking

at investing and working with innovative companies in India such that we can bring in a significant change in the quality and quantum

of business that we are now doing. Comunet Info-systems Private limited is one such company in which your company has taken a

significant stake. The company is focussed in design and manufacture of transaction and information kiosks for the Indian market and

has managed to add a decent customer base for its products and services.

In order to create industry ready professionals who can be employed in our complex and diverse projects, your company has

sponsored “FirstJob College” in order to create a new breed of first time job seekers. FirstJob College is offering BBA and BCA degree

courses in arrangement with a leading government university. The first batch of students will commence their program from Sept 2010.

Your company has also inducted M/s R P Infosystems Private Limited as a co-promoter in the company. RP Infosystems is the

manufacturer of Chirag brand of PCs and has a pan India presence. This strategic partnership with RP Infosystems will benefit your

company in several ways and we are very confident and hopeful that this synergy will enhance share holder value significantly.

I take this opportunity to thank our members, directors, customers, vendors, employees, partners, bankers, advisers, government

agencies and all our well wishers for their continued support. I look forward to your continued guidance and support in the years

to come.

With warm regards,

B. HariCEO & Managing Director

Date: 13th August, 2010

Kolkata, India

2

OntraOntraOntraOntraOntrackckckckcks y s t e m s l i m i t e d

Winning Business Solutions

Operating GroupsSubsidiaries and

Associate Companies

Enterprise Solutions Group

Service & Support Division

tendertimes.com

ERP School

IndiaOneStop.com

FirstJob College Ontrack Systems (UAE) Ltd.*

Ontrack Systems (UK) Ltd.*

Ontrack Systems (Aus.) Pty. Ltd.*

Ontrack Global Services Ltd.*

Ontrack Systems BV., Netherlands**

Comunet Info-systems (P) Ltd.**

* 100% Subsidiary** Associate Company

3 ONTRACK SYSTEMS LIMITED

Ontrack Systems (UK) Ltd., UKOntrack Systems (UAE) Ltd., UAEOntrack Global Services Ltd., INDIAOntrack Systems (Aust.) Pty. Ltd.

Ontrack Systems BV., NETHERLANDSComunet Info-systems (P) Ltd.FirstJob College*

ORGANISATIONAL STRUCTUREAs of July, 2010

Enterprise Solutions Group Service & Support Division tendertimes.com Ontrack ERP School IndiaOneStop.com

CHENNAI Registered Office

KOLKATA Corporate Office Global Delivery Centre

* Sponsored by Ontrack

SHAREHOLDERS

BOARD OF DIRECTORS

MANAGING DIRECTOR

MANAGEMENT TEAM

ONTRACK GROUP AUDITORS

SUBSIDIARIES

OFFICES IN INDIAOPERATING GROUPS

ASSOCIATE COMPANIES


BOARD OF DIRECTORS

BOARD OF DIRECTORS

B. HariManaging Director

Robin GhoshIndependent Director

Vijay Kumar ChhinkwaniIndependent Director

AUDITORS

M/s. Goenka Shaw & Co., India

HAMT & Associates, UAE

H. Kroeze, Holland

Indian Bank, India

Axis Bank, India

HSBC Bank, UK & UAE

State Bank of India, India

ANZ Grindlays, Australia

Rabobank, Holland

BANKERS

LEGAL ADVISORS

Bidyut Kumar Banerjee, India

S. V. RamaniWhole-time Director & Secretary

Ramdevan V KrishnaswamyIndependent Director

5ONTRACK SYSTEMS LIMITED

Enterprise Solutions GroupEnterprise Solutions Group

The approach of ESG as specialists in providingend-to-end single window turnkey solutionshas been highly beneficial to existing and newcustomers in controlling their costs effectively.Building on the success achieved withapplication of offshore-onsite combo model incollaboration with Ontrack Australia and UK,ESG plans to expand their business overseasstar ting with Australia, UAE, UK and Holland.Focus on IT managed services is also to yieldadditional business oppor tunities in thesemarkets where Ontrack has subsidiarycompanies already in operation.

Enterprise Solutions Group (ESG) received orderfor MS-Navision and Infrastructure from WEBELIndia, the nodal agency of the Govt. of WestBengal for developing Information Technologyand ITeS industries in the state. A renownedgroup in the Die-Casting Tool and Equipmentmanufacturer signed up with OSL forimplementation of SAP B1 solution for their 3plant locations and bringing the entire businessunder one roof. ESG team has successfullyimplemented Microsoft Dynamics (Axapta &Navision) and SAP B1 for several customersacross industry ver ticals - ProcessManufacturing, Logistic Service Provider,Wholesale & Distribution, Trading, Multi-LevelMarketing, Project Management, andEngineering Industries.

Microsoft Enterprise Agreementsigned with three majorcustomers

MS Dynamics Nav signed withWebel in the GovernmentSector

Implemented ERP solutionsacross industry verticals

TWELVE new Customers

SAP B1 implementation forseveral mid market customers

Special focus on Backup andStorage solutions in partnershipwith EMC2

OCS implementation for in fewclients

With the global recession behind us, the ITmarket in both domestic and international isshowing signs of improvement. Our focus one-governance solutions for Govt. organizationsalong with Enterprise wide solutions and theoff-shore on-site services for the overseasmarket has already received good response from

Outlook for fiscal 2010-11

customers. Special focus on Backup andStorage solutions in partnership with EMC2 isexpected to contribute substantial revenue tothe division. Successful implementation ofMicrosoft OCS (Office Communications Server)at few client locations has led to enquiry fromother major clients.

Highlights Strategy and Direction Review of Activities


Our courses provide an opportunity for fresh

as well as working executives to get a flying

star t as an ERP professional including special

packages for Companies, Universities, Colleges,

and educational institutes. Tailor made training

sessions also offered to suit the working

professionals or students at Ontrack’s facility

at GDC Salt Lake. Fast track modular courses

on selected domains are also on offer to bridge

the demand supply gap in specific skill areas.

A Memorandum of Understanding was signedbetween West Bengal Industry Development

Corporation Ltd. (Webel - a nodal agency ofthe Govt. of West Bengal for the development

of IT & ITES Industries in the state) and OntrackSystems Limited to launch Six months’

Cer tificate course on Training in ERP &Management Practice in NAV and AXAPTA.Under the agreement a Training Facility named

as ‘Webel – Ontrack ERP School’ for ERPtraining has been set up jointly to impar t

high quality training in ERP and other soft skillsto the students at various locations in

West Bengal.

Training sessions were carried out on functionalmodules of Microsoft Dynamics NAV at the

Webel campus at Taratala , Kolkata. Promotionalactivities included regular counseling of

candidates responding to newspaperadver tisements and active par ticipation in

Exhibitions - Industrial India Trade Fair, Infocom,Kolkata Book Fair and Career Fair jointly with

Webel.

MoU signed with Webel

‘Webel – Ontrack ERP School’launched with SIX monthCertificate Course

Microsoft Dynamics NAVtraining at Webel campus

Part-time classes for employedprofessionals

Participation in Exhibitions &Fairs

With the growing awareness of ERP and the

need for skillful manpower the task of Ontrack

ERP School is to provide industry ready

professionals with the right attitude not only for

our own requirement but also for our clients

and competitors. Recognizing the potential of

ERP training, professionals from as diverse

streams as sales and marketing to human

resources to production planning and supply

chain management, are ready to invest to get

themselves trained and certified for a much

sought after global career.




Ontrack ERP SchoolOntrack ERP School

O N T R AO N T R AO N T R AO N T R AO N T R A C KC KC KC KC KSYSTEMS (ASYSTEMS (ASYSTEMS (ASYSTEMS (ASYSTEMS (AUSTUSTUSTUSTUST.) PTY.) PTY.) PTY.) PTY.) PTY. L. L. L. L. LTDTDTDTDTD.....


End-to-end Process Consultancy services

helping companies in streamlining business

operations. Providing customers with out of

the box solution for Wholesale & Distribution

and Manufacturing Industry Ver tical and

offering cost-effective IT solution for SME

organization through offshore-onshore combo

model of Project Development and deployment

thereby enabling SME organizations in cutting

down IT Managed costs.

Ontrack Australia signed up Par tnership

Agreement with SAP Australia for selling and

implementation of SAP B1 in various industries

vertical especially in the SMB industry segment.

A large SAP Business One deal was signed and

implemented successfully with a leading

Japanese multinational enhancing productivity

of their Sales Order processing by 5 times;

The company also signed up for IT Managed

Service contract. Implementation of SAP B1 at

a leading lighting company brought all

departments under one roof and streamlined

their business & information flow across all

departments in their organization. Design and

development of a B2C website enabled BCDS

to control the distributor and end customer

stock and establish improved logistics and

inventory management.

Partnership with SAP Australiafor SAP B1

SAP Implementation at leadingJapanese multinational

SAP implementation at leadinglighting company

Focus on offshore-onshorecombo model

New IT Managed Service con-tracts signed

Construction of new B2C portal

Business is expected to improve substantially

as the pressure due to the Global financial

crunch has waned the general market which is

gradually picking up. Most of the SMEs who

put their projects on hold have started reviewing

and go for replacing their legacy software. Based

on the success achieved during the past year

Ontrack Australia portfolio now includes pre-

configured solution for logistics, end-to-end

singlewindow service IT consultancy besides

extending SAP R/3 through cost effective SAP

remote support



tendertimesT M

India’s first tender web daily .com

Encouraged by the confidence shown byEastern India based PSUs in ‘Secure-T’ TenderManagement Solution our suite on e-procurement with e-auction & e-Reverseauction would now be offered to other regionsof the country.

e-Procurement has been universally recognizedas an accepted method to reduce and manageenterprise costs. Analyst research has portrayede-Procurement as an effective method to lowerprices paid for goods and services, reduceadministrative costs, shor ten acquisitioncycles, increase the use of preferred suppliers,reduce off-contract spending, and improveinventory management.

Based on market requirement our e-tenderingsuite Secure-T has been upgraded with Pre-tendering and Post-Tendering modules. Thecutting edge service being provided is highlysecured facility and introduction of online end-to-end tender management solution keeping inmind the market demands for such costeffective technology and transparency intendering.

The web service got off to a flying star t bybagging two orders for e-Procurement fromreputed Organisations: (1) Paradip Por t Trust,Paradip in Orissa, and (2) the state-controlledHeavy Engineering Corporation, Ranchi,Jharkhand. The orders were procured againststiff competition from big companies in theindustry par ticipating through tender. Neworders were closed for tender hosting andpublishing services along with bid documentsfrom (1) Eastern Railway, ConstructionDepar tment, Kolkata for a period of 18(eighteen) months till December 2010 and (2)Hindustan Paper Corporation Limited for aperiod of 3 (three) years till 30th June 2012.Theongoing training sessions and accompanimentcalls with (Ananda Bazar Patrika) ABPrepresentatives has improved considerablemarket penetration and visibility.

With all-round enquiries on e-Tenderingsolutions from all parts of the country newermarkets outside Eastern India would beaddressed by strengthening marketing anddelivery teams. Promotional activities would bemultiplied with support from ABP marketingteam to spread awareness about benefits andcost-effectiveness of electronic tendering

Highlights Review of ActivitiesStrategy and Direction

Strong order book position

Two major orders for e-Procurement solution

Commissioned to provide e-Procurement platform for ParadipPort Trust

Work Order to implement e-Procurement platform for HEC

Repeat orders from EasternRailway and Hindustan PaperCorporation

ABP tie-up gives more marketpenetration & visibility


across the country. With the advantage of astrong order book position venturing into newgeographical areas using client referrals on thestrength of per formance and satisfactoryservice credentials. Tender times.com willcontinue to add more value to its brand equityand enjoy its premium and leadership positionin the e-tendering domain.


O N T R AO N T R AO N T R AO N T R AO N T R A C KC KC KC KC KSYSTEMS (UAE) LIMITEDSYSTEMS (UAE) LIMITEDSYSTEMS (UAE) LIMITEDSYSTEMS (UAE) LIMITEDSYSTEMS (UAE) LIMITED

After a difficult fiscal in 2008 – 09 the focus for2009 – 10 was consolidation, and retention ofclients. Strategically the approach was to reachthe market through existing clients, and inleveraging references to acquire new clients andprojects.

The initiatives for the fiscal were: -

ERP solutions marketing efforts

Google Apps Reseller program

Infrastructure solutions through referentialcustomers and projects

Positioning SMS Xprez as Business Solution

New clients in the Government sectors, fromdifferent Emirates, were acquired. Ontrackproved itself as a solution par tner offeringdifferent infrastructure implementation andsupport solutions. 4 different projects in thatsphere contributed to the majority ofengagement and revenue.SoftwareDevelopment initiatives from UAE were revivedand projects were executed from UAE both forlocal and overseas projects.

New projects necessitated the need to growand bring in more resources for projectexecution. This led to the doubling of ourFujairah offices both in terms of floor spaceand resources.

An Emiratization project, which has beensuccessfully supported for more than 3 yearswas further enhanced, with new feature roll-outs. The initiative continues with the option ofhandover. New clients were acquired for GoogleApps.

Highlights Review of ActivitiesStrategy and Direction

Continued Focus on GovernmentProjects

Long term onsite supportcontracts

Google Apps Reseller initiativesin UAE and the GCC

opportunities for ERP marketing. However, thenext fiscal would have a dedicated effort onboth ERP and Google Apps solutions.

Expansion initiatives to other GCC countries isunder consideration, with interests ofpartnerships from entities in Saudi Arabia andBahrain. A foray in to either market place forsolution offerings is expected by the end of thecurrent fiscal.


Increased focus will be given in Abu Dhabiprimarily in the Government Sector. greaterefforts will be given to bag more Governmentbased projects in Dubai by captialising onsuccessful execution of current projects. Thecompany looks to renew existing infrastructureprojects, for onsite support.

The previous fiscal did not provide adequate


O N T R AO N T R AO N T R AO N T R AO N T R A C KC KC KC KC KSYSTEMS (UKSYSTEMS (UKSYSTEMS (UKSYSTEMS (UKSYSTEMS (UK) L IMITED) L IMITED) L IMITED) L IMITED) L IMITED

Ontrack UK will be launching its MicrosoftDynamics offshore support practice in the UK.Ontrack is also discussing with the one of its

The UK market is looking at matured companies

with focused offering. The Managed Services

space and the area of Application Development

& Maintenance (ADM) especially in the mid

market are expanding rapidly. There is a general

slowdown in the market over the last 2 financial

years but onshore with offshore suppor t

activities have shown significant progress.

Ontrack UK bagged a software development

order from a UK based Pharmacy chain for

developing a POS and back office software

tailored for pharmacies in UK. The application

is being developed by the offshore software

development team in Kolkata, India and will be

deployed soon.

With the UK market shrinking and passing

through a recession it is a great opportunity for

Ontrack to market its matured offshore facility

in India offering dedicated 24 x 7 services

offshore along with onsite services to clients in

UK business.

Clients are looking at cost saving activities

without diluting its performance. The onsite/

offshore practice will ensure that clients in UK

have the comfort of a local specialist’s presence

for its core time of operation and offshore

support during the non-core time. Clients are

also looking at hosted solutions and this could

be an area for us to look into.



Projects and support projectswith Manchester MetropolitanUniversity

Software development anddeployment for a UK basedPharmacy chain

Healthy pipeline of leads in thecurrent fiscal

clients for setting up an onsite / offshoresupport for Oracle E Business Suite with multilanguage capability.


india TM

.comNetworking Global BusinessNetworking Global BusinessNetworking Global BusinessNetworking Global BusinessNetworking Global Business

OneStop

India proved it once again. Like East Asianfinancial crisis or Russian debt crisis in 80s or1997 Asian financial crisis in 1997, thegovernment has very ably handled the crisistriggered by global financial meltdown thatsurfaced in mid 2008. Even the current Greececrisis, India’s suggestion has been acceptedby the G20 nations that have come up with amassive financial package to bail out the country.India, despite fall in exports and a seriousdrought situation, clocked 7.4 percent GDP infiscal 2009-10. India remains ratherstrengthened, its position as one of the mostattractive foreign investment destinations in theworld. "India is a leader in Asia and around theworld. It’s a rising power and a responsibleglobal power”, said the US President BarackObama at US India Strategic Dialogue receptionin Washington early this year.

One of major objectives of IndiaOneStop.comis to help its visitors share views of global leadersin different segments of industry and economythrough the Face-to-Face section. Globalmeltdown notwithstanding, India remains oneof the most attractive investment destinations.The FDI section that was star ted with main

The Indian economy is bouncing back asreflected in the GDP. There is evidence of furtherrelaxation in foreign investment in differentsegments of the economy; the investors arenow increasingly focusing on sector-specificprojects. With increasing focus on SME and

infrastructure sectors, the Project Report wingis expected to witness significant growth inbusiness during fiscal 2010-11. The share ofGoogle AdSense in total revenue earnings infiscal 2010-11 is expected to improvemoderately.


Records over 4.7 million visitortraffic monthly from over 80countries

Google AdSense – Growth inrevenue maintained

Project Report – Acquires moreclients from overseas market

Overseas clients from Germany,Libya, UAE, Saudi Arabia,Bahrain, Pakistan, USA, Egypt,Sultanate of Oman, Venezuela


focus on Indian infrastructure sector is beingenriched further encompassing other sectorsof country’s economy. Arrangements are beingmade to interview leading personalities in variousregional trade blocks like BRIC, BIMSTEC,ASEAN etc. These have been planned keepingin view India’s Look East policy in particular.Steps are being taken to add greater value tothe existing 2500 plus content-rich pages.During the year under review the portal registeredaround 4.5 million hits/ Month from over 80countries.

The Global recession that slowed down newinvestments in industry in previous fiscal yearcontinued through large part of fiscal 2009-10. It continued to impact revenue generationfrom our Projects Reports wing. While earningsfrom Project Reports continued to dominatethe overall revenue generation, the portal isgetting encouraging response from the newrevenue-generating source, namely, GoogleAdSense Program.


The division is making inroads into strategic

accounts as a dependable services partner in

the ICT domain . Service delivery as per agreed

SLA’s and high FTR (First Time Resolution ) of

service tickets are the key drivers for the

operations. Participation in high value contracts

for services in both private and the government

sector has started yielding results. Geographical

spread of operations in various districts of West

Bengal has been commenced to execute

contracts under various e-Governance

projects.

We intend to consolidate our service revenuesby focussing and par tnering with leadingsvendors of eGovernance projects. We have afocussed sales team now and we expect to

grow our business in both the private andgovernment accounts. We will also increaseour service coverage by expanding into tier IIand tier III cities.


Sales & Service operationsrestructured as profit center

Order from Tier I IT vendor fornEPG project implementation

99% client retention

30 new clients added


The year under review was the year of transition

and team building. The division registered 25%

growth in service revenues. Customer

Satisfaction being the key differentiator at SSD,

the unit retained 99% of its clients from previous

year. Amidst tough local competition the

division also managed to add 30 new clients

during the fiscal.

Service & Support DivisionService & Support Division


The vision of FirstJob College is to be recognised

as a leader in creating industry ready

professionals through education, mentoring

and practical exposure in work places.

The College aims at spurring growth and

development of students who are interested in

getting into a job after their graduation in FirstJob

College. The purpose of FirstJob College is to

nurture and encourage the current generation

of students and prepare them in line with

industry needs from today's graduates.

The College has been launched with view to

preparing industry-ready students for Ontrack’s

national & global requirement. Few 10+2 passed

out students to be admitted through

psychometric & aptitude test. The college will

teach 3 years full time BBA & BCA courses

along with special corporate training as

designed by our experts. The BBA & BCA degree

will be awarded by a UGC recognised Govt.

University under University – Industry

collaborative programme. All courses will be

conducted at our Global Delivery Centre,

Salt Lake, Sector V, Kolkata.

The lead time available for the first year being

short the enrollment is expected to be much

more from the following year. There is a definite


Website www.firstjobcollege.netlaunched

3 Year BBA& BCA courses for10+2 passed announced

College under UGC recognizedUniversity

University-Industry collaborationinitiative

Classes to start from September2010


Being the first year (academic year 2010-11) of

operation thrust is on marketing through

adver tisement in Print and Television medium

and active participation in Exhibitions and create

awareness in the student community. These

marketing activities are followed up with

counseling sessions both individually and in

groups.

The initial response has been encouraging and

the Admission process for the academic year

2010-11 would continue till September 15,

2010.The process for shor t-listing and

recruitment of handpicked faculty and trainers

has also been star ted.

need for Industry-backed Educational Institution

and FirstJob College targets a full batch of

50 students from its second year 2011-12.


Dr. S S Badrinath, Chairman Emeritus and delegates fromSankara Nethralaya at GDC

Overseas visitors at Global Delivery Centre

Photo Gallery

Guest lecture in progress @ ERP School Ontrack pavilion at “National Growth Seminar”; SydneyConventional Center, Australia.

Mr. B. Hari receiving ‘Personality of the Year’ awardfor 2009 from COMPASS

Employees planting saplings at Global Delivery Centre


Mr. B. Hari at Ontrack pavilion @ IndiaSoft 2009 Visitor at Ontrack pavilion @ IndiaSoft 2009

Photo Gallery

ISO Audit session @ tender times.com UK client meets Software Development team at GDC

Ontrack team in All Spor ts ‘Go for Goal’Football Penalty Shoot competition

Comunet Information & Transaction Kiosk



DIRECTORS’ REPORT


DIRECTORS’ REPORT

RESULTS OF OPERATIONS

There has been significant improvement in the financial positionof the Company during year under review principally due toimprovement in the business scenario globally. The company’sfocus on domestic business has also contributed significantlyto the improved financial position

The Company’s total revenue increased to Rs. 3587.09 lacs fromRs.2535.73 lacs in the previous year at a growth rate of 41.46 %.

Profit before tax is Rs.37.80 lacs during the year as against loss ofRs.741.91 lacs in the previous year.

The Net profit after tax showed a positive figure of Rs.16.58 lacsagainst a loss of Rs.749.73 lacs in the previous year.

PERFORMANCE REVIEW OF BUSINESS UNITS

Enterprise Solution Group

Enterprise Solution Group provides end to end simple window turnkeysolution highly beneficial to existing and new customers. Building onthe success achieved with application of offshore –onsite combomodel in collaboration with Ontrack Australia and UK, ESG plans to

DIRECTORS’ REPORT

To

The Members of Ontrack Systems LimitedYour Directors are pleased to present the Twentysecond Annual Report together with the Audited Statement of Accounts and the Auditor’s Report of yourCompany for the Financial Year ended March 31, 2010. The financial highlights for the year under review are given below:

Amount AmountSl. No. Description for the year ended for the year ended

31.03.2010 31.03.2009

1. Total Income 3558.30 2419.332. Total Expenditure 3185.73 2907.733. Profit before interest, depreciation & tax 372.57 (488.40)4. Finance Charges 234.62 180.055. Depreciation & impairment loss 128.94 189.866. Other income 28.79 112.657. Profit/(Loss) on sale of Assets — 3.758. Profit before tax 37.80 (741.91)9. Provision for tax 12.00 —

10. Provision for Fringe Benefit Tax — 4.0011. Deferred Tax - Asset 9.22 3.8212. Profit after tax 16.58 (749.73)13. Distributable Profit

Appropriation: –Transfer to General Reserve — —

(Rs. in Lacs)

expand their business overseas through the wholly owned subsidiariesat UAE, Australia and UK.

The future focus would be venturing into end to end solutioncombining the strength on Internet Service Provider Also expandingthe Touch screen Information kiosks which finds ready application inRailways , Power and other core sectors including e-governanceprojects in various Government departments.

Tendertimes.comThe Company’s offering of Secure ‘T’ tender Management solutionhas been very widely received by the customers. E-procurementswith e-auction and e-reverse auction suits are now being offered toclients on a trial basis.

E-procurement has been universally recognized as a method to reduceand manage enterprise costs.

The Company has now embarked on offering on-line end to endtender management solutions keeping in mind the market demandsfor such cost effective technology for transparent tendering process.

tendertimes will continue to add more value to its brand equity andenjoy its premium and leadership position in the e-tendering domain.


DIRECTORS’ REPORT

Indiaonestop.com

Indiaonestop.com is continuing its efforts to strengthen its e-platformin providing more and more valuable and updated information for itsIndian business and industry helping exchange of information, viewsbetween India and other countries. During the year under review theportal registered over 4.5 million visits from over 90 countries. Therevenue from Sales of Project reports maintained a healthy upwardtrend. Overseas clients were added from as far as Germany, Libya,UAE, USA, Egypt, Venezuela, Bahrain, Saudi Arabia and Pakistan.

ERP Solutions and Training

MS Dynamics practice has expanded providing solution to clients’ indifferent par ts of the country. SME segment have been targeteddifferent suits depending on the clients needs. A Memorandum ofUnderstanding was signed between West Bengal Industry DevelopmentCorporation Ltd. (Webel – a nodal agency for development of IT andITES industry in West Bengal) and our Company by offering a sixmonths certificate course for training in ERP and Management practicein Microsoft Dynamics NAV and Axapta. The response has beenencouraging. Some of the training personnel are absorbed in theCompany for execution of various projects in hand.

Subsidiary Companies

UK: market continues to reel under recession. It is a great opportunityfor us to offer natural offshore facilities from India. The Managedservice space Application development and Maintenance especiallyin the Small and Medium segment will be continued focus in UK.Ontrack UK bagged a prestigious offshore development order from aUK based pharmacy chain for developing POS and back end softwaresupport from India.

UAE: New clients in the Government section from different Emirateswere acquired.As a solution par tner, UAE subsidiary has beenimplementing Remote Infrastructure and Solution support to variousclients both in the Govt. and the private sector.

An Emiratization Project which has been successfully supported formore than 3 years was further enhanced with new feature rollouts.Expansion initiatives to other GCC countries is being pursued withinterest of Par tnership from entities in Saudi Arabia and Bahrain.

The focus will remain in Long term onsite support contacts and largegovernment projects.

Australia: Oz subsidiary signed Partner agreement with SAP Australiafor selling and implementing SAP Business One in various industryvertical especially in the SMB industry segment. The focus would beoffshore- onshore combo model including getting new IT Managedservice contracts.

Business outlook is improved substantially after the general financialpressure eased a little and business has started picking up. Based onthe success achieved during past year , Australia subsidiary portfolionow includes pre-configured solutions for logistics, end to end singlewindow service IT consultancy besides extended SAP R/3 throughcost effective SAP remote support.

Subsidiary companies Consolidated Financial StatementIn terms of Section 212 of the company Act 1956 we are required toattach to the Director’s Report, Balance Sheet and Profit & Loss

account of our subsidiaries. We had applied to the Government ofIndia for an exemption from such an attachment as we present theaudited consolidated financial statement in the Annual Report. TheGovt. of India has granted us an exemption from complying withsection 212 vide the approval letter No.: 47/679/2010-CL-III.Accordingly the annual report does not contain the financial statementof subsidiaries. However the consolidated financial statements of thesubsidiaries are separately published.

Increase in Share CapitalDuring the year under review the equity capital of the Company wasaugmented by fresh infusion of equity by roping in strategic investorvalued at Rs. 1,19,17,050/-.

Corporate Social ResponsibilityThe Company has taken initiatives in sponsoring building roadconnecting two small villages to the nearest Block level offices in theNadia district of West Bengal. The Company through its EducationalSociety proposes to impart skill development to atlest 50 students sothat they are made industry ready and employable.

HUMAN RESOURCE DEVELOPMENTThe Company’s recruitment policy ensures suitable candidateswith merit are selected from campus. Your Company constantlystrives on improvement in the project management competencyof its associates and personnel by continuous upgradation oftheir skills by training and development. The Company’s expansionglobally has resulted in global cultural integration since the Companyemploys people from various foreign countries. The Company’sHR policies and processes are aligned to effectively drive itsexpanding business and emerging opportunities. Attrition duringthe fiscal remained within reasonable proportion.

QUALITYThe ISO 9001-2008 certification includes Company’s state-of-the-art Global Delivery Centre at Salt Lake, Kolkata. ISO internal auditchecks are conducted once every quarter for all divisions includingaccounts department that was brought under the purview of ISOAudit last year. The Company has taken initiatives to become CMMlevel 4/5 compliant and to implement ISMS (Information SecurityManagement System).

CORPORATE GOVERNANCEThe Company has complied with the requirement of CorporateGovernance as stipulated under clause 49 of the Equity listing agreementwith the Stock Exchanges and accordingly, the Report on CorporateGovernance forms part of the Annual Report.

The requisite certificate from the Auditors of the Company, M/s.Goenka, Shaw & CO, regarding compliances with the conditions ofthe Corporate Governance is annexed to this Report as also theManagement Discussion and Analysis which is given as Annexure tothis Report.

TECHNOLOGY, R & D AND FOREIGN EXCHANGEThe Company operates in various state-of-art technology areas andhas developed the necessary related skills.

20 ONTRACK SYSTEMS LIMITEDONTRACK SYSTEMS LIMITED20

DIRECTORS’ REPORT

The Technology Change Management Group of the Companycontinuously scans the market for new technologies, design systemsand processes to induct such new technologies.

The foreign exchange earnings and outgoes for the year ended 31stMarch, 2010

(Amount in Rs.)

2010 2009

Earnings 8,45,16,251 14,78,41,514

Outgoes 6,68,763 6,72,627

PERSONNEL

The Par ticulars of Employees, as per Section 217(2A) of The

Companies Act, 1956 read with The Companies (Par ticulars of

Employees) Rules, 1975 is Nil.

DIRECTOR’S RESPONSIBILITY

Pursuant to Section 217(2AA) of the Companies (Amendment) Act,2000, the Directors confirm that in preparation of the annual accounts,the applicable accounting standards have been followed. Appropriateaccounting policies have been selected and applied consistently andjudgment and estimates made are reasonable and prudent so as togive true and fair view of the affairs of the Company as on 31st March,2010, and of the profit of the Company for the period 1st April 2009to 31st March, 2010. Proper and sufficient care has been taken forthe maintenance of adequate accounting records in accordance withthe provisions of the Companies Act, 1956, for safeguarding theassets of the Company and for preventing and detecting fraud andother irregularities and the annual accounts have been prepared on a

going concern basis.

FIXED DEPOSITS

The Company has not accepted any fixed deposit during the yearunder review pursuant to Rule – 4A of the Companies (Acceptance

of deposits) Rules, 1975.

DIRECTORS

In accordance with the requirements of the Companies Act 1956read with the provisions of the Articles of Association of the Company,Shri Robin Ghosh and Shri Ramadevan Krishnaswamy retire by rotationand being eligible offer themselves for re-appointment.

AUDITORS

M/s. Goenka Shaw & Co., Chartered Accountants, the auditor of thecompany retire at the ensuing AGM and have expressed their willingness

to continue till conclusion of next AGM of the company, if re-appointed.

ACKNOWLEDGEMENT

Your Directors take this opportunity to thank its customers both inIndia and abroad, investors, business partners, bankers, financialinstitutions, business associates and advisors for their consistentsupport to the Company. Your Directors place on record theirappreciation of the contributions made by employees at all level throughhard work, cooperation and dedication, which has enabled theCompany to move forward. Your Directors once again take thisopportunity to thank the Governments of India, UK, UAE, Holland,Australia & USA for their cooperation and assistance in enabling yourCompany to enter the global marketplace.

For and on behalf of the Board of Directors

Sd/- Sd/-Place : Kolkata, India S. V. Ramani B. HariDate : 29th May, 2010 Whole-time Director Managing Director

and Secretary


MANAGEMENT DISCUSSION AND ANALYSIS


OVERVIEW

ECONOMIC OVERVIEW

According to NASSCOM Statistic Economic Repor t 2010 theeconomic downturn contributed to substantial reduction inTechnological spending in the first half of the year 2009. This startedto gradually picking up by the second half of the year 2009. Companieshad reduced IT spending either by delaying or putting hold all new ITpayments. The Global financial downturn had severely affected theUS & Europe which are large markets for Indian IT industry. Howeverthis downturn could also act as opportunities for Indian companiesto chip-in with offshore, technological support by reducing costand increasing operational efficiency.

Outsourcing the development, management and ongoingmaintenance of technology platform and solution has becomeurgently important. The effective use of offshore technology servicesoffers a variety of benefits including lower cost of ownership of ITInfrastructure, lower labour costs, improved quality and innovation,faster delivery and more flexibility in planning the work execution.

INDUSTRY OVERVIEW

As per Nasscom Strategic Review 2009 the analysis of the IT Servicesglobal sourcing market by the level of penetration in the variouscompanies of IT Services reveals that there is significant headroomfor growth.

The global technological spend is expected to increase from USD1.60trillion in 2008 to USD 1.90 trillion by 2013 at a Compounded AnnualGrowth Rate(CAGR) of 3.5 %. IT has become an integral businessoperation across all division and is seen by organization as a primarydriver of productivity improvement and business transformation thatlead to sustained competitive advantages in the market phase.

India is widely recognized as the prominent destination for offshoretechnology services. As per Nasscom Strategic Review 2010, ITServices expor t, hardware engineering design and productdevelopment from India are estimated to grow by 5.8 % in the fiscal2010 to record revenue of USD 27.3 billion. The review also estimatesBPO exports from India to have grown by 6 % in fiscal 2010 to recordrevenue of USD 12.4 billion. The key factors for the significant increasein service exports from India are high quality delivery, significant costbenefits and abundant skilled manpowers.

The Company’s major offering in the industry includes:

Enterprise Service Group – The Company provides services in thearea of Enterprise Resource Management, Supply Chain Management,Customer Relationship Management to integrate enterprise widefunctions with comprehensive solution.

E-tendering and reverse auction through flagship por taltendertimes.com

Online web based application for project repor t fromIndiaOneStop.com

Enterprise Mobile application through SMS Express.

Multimedia and web services.

Remote infrastructure management of IT services.

Industry vertical ERP implementation being business partners ofMicrosoft, SAP, Oracle and Open Bravo.

OPPORTUNITIES & THREATS

Opportunities :

Technology is becoming central to the well being of all industries ina growth path. The rapidly changing technology make it imperativeto get work done from different location often at remote locationfrom India. These trends present opportunity to our Company toservice its clients form offshore units in India. Our comprehensive,end to end technology based solution enables us to offer servicesthrough our broad network of relationship, increase our dialoguewith key decision makers within clients, and increase the points ofsales for new clients. By doing so, we believe we can capture agreater share of our clients technology budgets.

We operate in a highly competitive market with ever changing marketconditions. All the big Indian IT Companies and MultinationalCompanies are now offering consumers choice and price at rateoffered by small and medium companies like us. Hence not only wehave to be competitive but efficient also to serve the clients. Ourstrength lies in offering our clients quality services at competitiveprices.

Threats :

Long term contracts with only few important clients add a chunk ofoverseas revenue.

These contracts contain benchmark provision which if not fulfilledcould result in lower future revenue and profitability under the contract.The Sunset clause of the STPI which is likely to expire by 2011 as perthe present indication is quite likely to adversely affect the taximplication of the Company which may results in lower profits

Attrition as well as salary expectation are challenges. Currencyfluctuations may affect the consolidated profits of the Company.Pricing pressure are also increasing due to heightened competition

from Global and Indian IT companies.

FINANCIAL PERFORMANCE

The Company has earned total revenue of Rs.3587.09 lacs in fiscal

2010 compared to Rs. 2535.73 lacs in fiscal 2009.



NET WORTH

The Company’s total net worth stood at Rs.1101.99 lacs against Rs.

809.73 lacs in the previous year.

SEGMENT–WISE PERFORMANCE

Separately given

RISK & CONCERNS

The slow economic recovery in the western countries, may pose aserious risk in grabbing new clients who may think twice for ITspends.

The Company through its subsidiaries reaches out the clients intrying to convert Risk into an Opportunity by offering end to endservices combining offshore and onsite model for the convenient ofthe customers.

RISK MANAGEMENT

The Company believes that long standing clients work foropportunities for improving operational efficiency, innovation andtime to market, wherein , the Company’s end to end offshore modelwould benefit the clients. The Technical Expertise of the entireorganization is pooled together to bear on the customers requirement

and needs so that it can provide clients value added solution.

OUTLOOK

Mentioned in details for every operating in the section “Review by

Operating Groups”

DISASTER PREVENTION & RECOVERY

Your Company has developed a well laid-out disaster recovery andprevention plan. The Company can replicate any project within the

shortest possible time.

QUALITY

The ISO 9001-2000 certification includes Company’s state-of-the-ar t Global Delivery Centre at Salt Lake, Kolkata. ISO internal auditchecks are conducted once every quarter for all divisions includingaccounts department that was brought under the purview of ISOAudit since 2006. The Company has taken initiatives to becomeCMM level 4/5 compliant and to implement ISMS (Information

Security Management System).

MANPOWER & HRD

Our employees are our most important and valuable assets. The totalemployee strength as on 31st March, 2010 is 182. HR initiativesinclude competitive compensation commensurate with the size ofthe Company congenial work environments, empowering employeesat all levels, as well as well structured reward and recognitionmechanism , Training and development of the selective work force tokeep them abreast with the technological strides likely place around

the globe.


REPORT ON CORPORATE GOVERNANCE


COMPANY’S PHILOSOPHY

At Ontrack Systems Limited, our pursuit is to achieve good governance is an ongoing process, thereby ensuring truth, transparency, accountabilityand responsibility in all our dealings with our employees, shareholders, customers and community at large.

We at Ontrack Systems Limited believe that Corporate Governance is a systemic process by which companies are directed and controlled to enhancetheir wealth generating capacity. The Company believes that the governance process should ensure that management of the company should be insuch manner that meets stakeholders’ aspirations and societal expectations.

At Ontrack Systems Limited, we view corporate governance in its widest sense, almost like a trusteeship; it is a policy to be professed, a value to beimbibed and an ideology to be ingrained in corporate culture. Corporate governance goes much beyond mere compliance; it is not a simple matter ofcreating checks and balances. The Company aims to develop capabilities and identify opportunity that best serve the goal of value creation, therebycreating an outstanding organization.

In so far as compliance with requirements of Clause 49 of the listing Agreement with the Stock Exchanges are concerned, the Company is in full

compliance with the norms and disclosures that have to be made on Corporate Governance format.

BOARD OF DIRECTORS

A. Composition

The details of the Board of your Company for the year 2009–2010 are given below :-

Sl. No. Name of Director Category of Directorship Designation

1. Mr. B. Hari Promoter Managing Director

2. Mr. S. V. Ramani Executive Director Whole-time Director & Secretary

3. Mr. Vijay Kumar Chhinkwani Independent Non-executive Director Director

4. Mr. Robin Ghosh Independent Non-executive Director Director

5. Mr. Ramdevan V Krishnaswamy Independent Non-executive Director Director

Note: Independent Director means a director who, apart from receiving director’s remuneration, does not have any other material pecuniary or otherrelationship with the Company, its promoters, its management or its subsidiaries, which in the judgement of the Board may affect the independence ofjudgement of Directors.

EGM:

Extra Ordinary General Meeting held on 14.05.2010 on issue of preferential allotment of equity shares.

NO OF BOARD MEETINGS:

Six Board Meetings were held during the year ended 31st March 2010. The Board Meetings were held on 24th April 2009, 30th June 2009, 30th July2009, 30th October 2009, 11th November 2009 and 30th January 2010.

B. Attendance at each meeting of the Board

The attendance of the Directors at the Board Meetings held during the year are given below:-

Name of Directors No. of meetings No. of meetings No. of memberships Whether attendedheld during the attended on Board of last AGM

Year during the year other companies

Mr. B. Hari 6 6 6 Yes

Mr. S. V. Ramani 6 6 1 Yes

Mr. Vijay Kumar Chhinkwani 6 2 – No

Mr. Robin Ghosh 6 3 – Yes

Mr. Ramdevan V Krishnaswamy 6 3 – Yes



At the end of the year, none of the Directors were members in more than 10 committees or acted as Chairman of more then 5 such Committees, as requiredunder clause 49 of the Listing agreement.

INFORMATION SUPPLIED TO THE BOARD

Among others, these includes the following:

Review of annual operating plans of business, capital budgets, updates.

Quarterly results of the Company and its operating divisions or business segments.

Minutes of the meeting of audit committee and other committees.

Information on recruitment and remuneration of Officers just below the Board level.

Materially important show cause, demand, prosecution and penalty notices.

Any materially relevant default in financial obligations to and by the Company and substantial non payment for the goods and services provided by theCompany.

Any issues which involves potential public or product liability claims of a substantial nature.

Details of any Joint ventures or collaboration or acquisition or reconstruction by the Company.

Significant labour problems and their proposed solutions.

Significant development on the human resources and industrial relations fronts.

Sale or purchase of material nature, of investments, subsidiaries, assets which is not in normal course of business.

Quarterly results of foreign exchange exposure and the steps taken by management to limit the impact of adverse exchange rate movement.

Non compliance of any regulatory or statutory provision or listing requirements as well as shareholder services such as non payment of dividend and delayin share transfer.

The Board of Ontrack Systems is routinely presented with all the information under the above heads whenever applicable or materially significant. These aresubmitted either as part of agenda papers well in advance of the Board meetings or tabled in the course of Board meetings before the appropriate committeesof the Board.

MATERIALLY SIGNIFICANT RELATED PARTY TRANSACTIONS

There have been no materially significant related party transactions, pecuniary transactions or relationships between Ontrack Systems Limited and itsDirectors for the year ended 31st March, 2010 that may have the potential conflict with the interests of the Company at large.

All non material related party transactions in the normal course of business and conducted at the arms length are duly recorded in the Register of Contractsmaintained by the Company pursuant to Section 301 of the Companies Act, 1956.

COMMITTEES OF THE BOARD

Audit Committee

The Audit Committee of the Company performs the following functions:

Overseeing the Company’s financial reporting process and disclosure of the financial reports to ensure that the financial statement is correct,sufficient and credible.

Recommending the appointment of Statutory auditors of the Company.

Constitution and review of internal control and internal audit system.

Review of accounting and financial practice.

Advice on risk management policies.

COMPOSITION:The Audit Committee comprises of two Independent Non-executive Directors and one Executive Director. All the members including the Chairman haveadequate financial and accounting knowledge. The details of the Audit Committee of your Company for the year 2009–2010 are given below:-

Sl. No. Name of Member Position No. of Meetings held No. of Meetings attendedduring the year during the year

1. Mr. V. K. Chhinkwani Chairman 4 4

2. Mr. S. V. Ramani Member 4 4

3. Mr. Ramdevan V Krishnaswamy Member 4 3

4. Mr. S. Prasad Convenor 4 4

5. Mr. Saroj Swain (Statutory Auditor) Invitee 2 2



Remuneration Committee

(i) The Company has a full-fledged Remuneration Committee.

(ii) The broad terms of reference of the Remuneration Committee are as under:

a) To approve the Annual Remuneration Plan of the Company

b) To approve the remuneration and commission/incentive payable to the Managing Director for each financial year.

c) To approve the remuneration and annual performance bonus payable to the Whole-time Director and Chief Financial Officer.

d) Such other matters as the Board may from time to time request the Remuneration Committee to examine and recommend/approve.

(iii) The Composition of the Remuneration Committee and the details of meetings attended by the members of the Remuneration Committee are given below

:

(iv) A meeting of the Remuneration Committee was held on 20th Feb 2010.

(v) Remuneration Policy:

The Company’s remuneration policy is driven by performance of the employee and the Company. The Company follows a compensation mix of fixedpay, benefits and variable pay.

The Company pays remuneration by way of salary, benefits, perquisites and allowances (fixed component) to its Managing Director. Annual incrementsare decided by the Remuneration Committee within the salary scale approved by the Members and are effective from April 1, each year.

The Company provides benefits to the Employees by way of PF, ESI, Gratuity and Mediclaim Insurance.

The Company pays sitting fee of Rs. 5000/- per meeting to its Non-executive Directors (NEDs) for attending meetings of the Board and no fees is paidfor attending meetings of other committees.

(vi) Details of Remuneration for the year ended 31st March, 2010

(a) NON EXECUTIVE DIRECTORS:

(b) WHOLE – TIME DIRECTOR:

(c) CHIEF EXECUTIVE OFFICER & MANAGING DIRECTOR

Name CategoryNo. of Meetings during

the year 2009-10

Held Attended

Mr. Robin Ghosh Independent, Non executive Director 1 1

Mr. S. V. Ramani Whole-time Director 1 1

Ms. Simi Hari Head Corporate HR 1 1

Mr. Subhomoy Roychoudhury Convenor 1 1

Name Commission (Rs.) Sitting Fees (Rs.)

Name PF Contribution (Rs.) Stock OptionsCommission(Rs.)

Name PF Contribution (Rs.) Stock OptionsCommission(Rs.)

Mr. Ramdevan V Krishnaswamy Nil Nil

Mr. V. K. Chhinkwani Nil 10000

Mr. Robin Ghosh Nil 15000

Mr. B. Hari 2040000 122400 Nil Nil

Mr. S. V. Ramani 960000 57600 Nil Nil

Remuneration (Rs.)

Remuneration (Rs.)



(d) Period of Contract of MD & CEO: 5 years from August 04, 2010

(e) Period of Contract of Whole-time Director: 5 Years from August 04, 2010

(f) Details of the shares of the Company held by Directors as on 31st March, 2010 are given below:

SHARE TRANSFER & SHAREHOLDER GRIEVANCE COMMITTEE

The Shareholder / Investor grievance committee specially looks into redressing of shareholders and Investors’ complaints such as transfer of shares,

non-receipt of shares, non-receipt of declared dividends and to ensure expeditious share transfer process. The committee consists of Mr. Robin Ghosh

(Independent and Non Executive Director), Mr. Vijay Kumar Chhinkwani (Independent and Non Executive Director) and Mr. S. V. Ramani (Whole time

Director & Secretary).

The Shareholders / Investors grievance committee met for 4 times during the year. There is no valid request pending for share transfer as on date of the

Director’s Report.

MANAGEMENT

The Management discussion and analysis Reports is dealt with elsewhere in the Report.

CEO & CFO CERTIFICATION TO THE BOARD

The CEO & CFO have certified to the Board that Financial Statement together with Cash Flow Statement for the year 2009-10 to the best of their

knowledge is true and fair.

Name No .of Shares

Mr. B. Hari 19,59,395

Mr. S.V. Ramani 3,975

Mr. Ramdevan V Krishnaswamy 3,56,160


SHAREHOLDERS’ INFORMATION


GENERAL INFORMATION FOR SHAREHOLDERS

(a) As indicated in the Notice to our Shareholders, the 22nd Annual General Meeting of the Company will be held on Wednesday the 22nd dayof September 2010 at 11.30 a.m. at Sabha Hall, Savera Hotel, 146, Dr. Radhakrishnan Salai, Mylapore, Chennai, India.

(b) The Financial Year of the Company is April to March

(c) Date of book closure: From 17th September to 22nd September (both days inclusive) for the purpose of the Annual General Meeting.

(d) The Shares of the Company are listed on

(1) Madras Stock Exchange Stock Code No. : OTL

(2) Calcutta Stock Exchange Script Code No. : 10025152

(3) Bombay Stock Exchange Stock Code No : 532607

(e) Share Transfer System: The Share Transfer Committee of the Company meets every Week for approving share transfers. The Transfers arenormally completed within 7 working days from the date of receipt of request.

(f) Demat Depository : NSDL / CSDL : ISIN No. INE 426B01033

(g) Dematerialisation of Shares: The Shares of the Company are compulsorily traded in demat form and are available for trading on both theDepository Systems in India – NSDL (National Securities Depository Limited) and CDSL (Central Depository Services (India) Limited). As on

31st March, 2010, approximately 90% of shares of the Company has been dematerialized.

(h) Address for correspondence :

(i) Registered Office : New No. 48, Old No. 30, Second Floor,Dr. Madhavan Nair Road, Mahalingapuram, Chennai - 600 034Phone: +91-44-4308 1246/47, Telefax: +91-44-4308 1248

(ii) Compliance Office and : Plot Y-18EP-Block, Sector-V, Salt Lake, Kolkata – 700 091Secretarial Depar tment Phone: 2357 2555/2560/, Fax : 2357 2564

Email: [email protected]

(iii) Share Registrar andTransfer Agents : Cameo Corporate Services Ltd.

Subramanian Building, 1, Club House Road, Chennai – 600 002Phone: 044-2846 0390–95, Fax : 044 2846 0129Email: [email protected]

DISCLOSURE

Disclosure regarding materially significant related party transactions:No transaction of material nature has been entered into by the Company with its Promoters, Directors or the Management, their subsidiaries or relatives etc.that may have potential conflict with the interest of the Company.

DISCLOSURE OF NON–COMPLIANCE BY THE COMPANY

There were no instances of non-compliance or penalty, strictures imposed on the Company by Stock Exchanges or SEBI or any statutory authority on anymatter related to capital markets, during the last three years.

MEANS OF COMMUNICATION

The Quarterly Results of the Company were published during the financial year under review in leading national newspapers namely, The Business Standard,The Financial Express and The Malaichudar (Chennai Edition) and posted in the website of the Company www.ontrackindia.com.

Management Discussion and Analysis Report forms par t of this Annual Report.



PATTERN OF SHARE HOLDINGSAS ON 31ST MARCH, 2010

PHYSICAL & ELECTRONIC

DISTRIBUTION OF SHAREHOLDINGSAS ON 31ST MARCH, 2010

PHYSICAL & ELECTRONIC

Shareholding of Share Percentage No. PercentageNominal Value of Re. 1 Holders to of of

No. Total Shares Total Shares

(1) (2) (3) (4) (5)

Upto – 100 963 28.38 55580 0.61

101 – 500 1477 43.50 401715 4.39

501 – 1000 411 12.11 327151 3.58

1001 – 2000 214 6.31 330225 3.61

2001 – 3000 102 3.01 268460 2.94

3001 – 4000 50 1.47 178387 1.95

4001 – 5000 27 0.80 124761 1.36

5001 – 10000 63 1.86 436466 4.77

10001 and above 87 2.56 7019260 76.78

Total 3394 100.00 9142005 100.00

Categories of No.of No.of % ofShareholders Shareholders Shares Holding

Resident 3159 3642419 39.84

NRI 40 171543 1.88

Body Corporate 160 2749396 30.07

Promoters 6 2515787 27.52

Directors / relatives 25 59460 0.65

Clearing Members 4 3400 0.04

Total 3394 9142005 100.00



STOCK MARKET PRICE MOVEMENT

The monthly high and low quotations and volume of shares traded at the Bombay Stock Exchnage (BSE) during the financial year 2009-10 (12 months) aregiven in the table below :

CSE

Period High Low Total No. of

(Rs.) (Rs.) shares traded

April, 2009 7.71 4.99 28,254

May, 2009 9.42 7.33 55,157

June, 2009 9.00 6.88 38,435

July, 2009 8.10 6.17 32,102

August, 2009 7.70 6.37 75,590

September, 2009 8.50 6.31 79,709

October, 2009 9.63 6.75 74,980

November, 2009 10.42 7.00 2,20,125

December, 2009 11.70 8.03 1,22,391

January, 2010 11.25 7.50 2,21,523

February, 2010 12.75 9.00 1,47,729

March, 2010 11.60 9.17 1,00,732


GENERAL BODY MEETING

(i) GENERAL MEETINGS:

(a) Annual General Meetings:

YEAR LOCATION DATE TIME

2006-2007 Hotel Residency Tower 14th September, 2007 11.30 A.M.Sir Thyagaraya Road, T. NagarChennai - 600 017

2007-2008 New Woodlands Hotel 26th September, 2008 11.30 A.M.Dr. Radhakrishna Road, MyalaporeChennai - 600 017

2008-2009 Narada Gana Sabha Trust 25th September, 2009 11.30 A.M.(Satguru Gana Sabha Hall),314(Old No.254), T.T.K. Road,Chennai - 600018

NOMINATION FACILITY

Individual Shareholders can now avail the facility of nomination. The nominee shall be the person in whom all rights of transfer and / or amount payable

in respect of the shares shall vest-in the event of the death of shareholder (s). A minor also can be a nominee provided the name of the guardian is given

in the Nomination Form. The facility of nomination is not available to non-individual shareholders such as bodies corporate, financial institutions, Kartas

of Hindu Undivided Families and holders of Power of Attorney. In case of any assistance, please contact Cameo Corporate Services Ltd., Subramanian

Building, 1, Club House Road, Chennai - 600 001 at the R & TA of the Company.



ANNEXURE TO DIRECTORS’ REPORT

DECLARATION REGARDING COMPLIANCE BY BOARD MEMBERS ANDSENIOR MANAGEMENT PERSONNEL WITH THE COMPANY’S CODE OF CONDUCT

This is to confirm that the Company has adopted a Code of Conduct for its employees including the Managing Director. In addition, the Company has

adopted a Code of Conduct for its Non-Executive Directors. Both these Codes are available on the Company’s web site at www.ontrackindia.com.

I confirm that the Company has in respect of the financial year ended March 31, 2010, received from the senior management team of the Company and

the Members of the Board a declaration of compliance with the Code of Conduct as applicable to them.

For the purpose of this declaration, Senior Management Team means the Chief Financial Officer, the Company Secretary and employees in the Vice-President

cadre as on March 31, 2010.

Place : Kolkata B. Hari

Dated : 29th May, 2010 CEO & Managing Director


SECRETARIAL COMPLIANCE CERTIFICATE

AUDITOR’S CERTIFICATE

To the Members of Ontrack Systems Limited.

We have examined the compliance of conditions of corporate governance

by Ontrack Systems Limited for the year ended March 31, 2010, as stipulated

in Clause 49 of the Listing Agreement of the Company with Stock Exchanges.

The compliance of conditions of corporate governance is the responsibility

of the management. Our examination was limited to procedures and

implementation thereof, adopted by the Company for ensuring the

compliance of the conditions of the Corporate Governance. It is neither an

audit nor an expression of opinion on the financial statements of the

Company.

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

explanations given to us, we certify that the Company has complied with

the conditions of Corporate Governance as stipulated in the above mentioned

Listing Agreement.

We further state that such compliance is neither an assurance as to the

future viability of the Company nor the efficiency or effectiveness with

which the management has conducted the affairs of the Company.

For GOENKA SHAW & CO.

Chartered Accountants

FR No. 319075E

Sd/-

Kolkata, India (CA Saroj Kumar Swain)

29th May, 2010 Partner

Membership No. 061912


AUDITORS’ REPORT

AUDITORS’ REPORT

1. We have audited the attached Balance Sheet of ONTRACK SYSTEMS

LIMITED as at 31st March 2010, the Profit & Loss Account and also

the Cash Flow Statement for the year ended on that date. These

financial statements are the responsibility of the Company’s

Management. Our responsibility is to express an opinion on these

financial statements based on our audit.

2. We conducted our audit in accordance with the Auditing Standards

generally accepted in India. Those standards require that we plan

and perform the audit to obtain reasonable assurance about whether

the financial statements are free of material misstatement. An audit

includes examining on a test basis, evidence supporting the amounts

and disclosures in the financial statements. An audit also includes

assessing the accounting principles used and significant estimates

made by Management, as well as evaluating the overall financial

statement presentation. We believe that our audit provides a

reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003, as

amended by the Companies (Auditor’s Report) (Amendment) Order,

2004 issued by the Central Government of India in terms of sub-

section (4A) of Section 227of the Companies Act 1956 and on the

basis of such checks as we considered appropriate and according

to the information and explanations given to us, we enclose in the

Annexure a statement on the matters specified in paragraphs 4&5 of

the said Order.

4. Further to our comments in Annexure referred to in paragraphs 3

above, we report that:

(i) 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;

(ii) 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;

(iii) The Balance Sheet , Profit & Loss Account and Cash Flow

Statement dealt with by this report are in agreement with the

books of account;

(iv) In our opinion the Balance Sheet, Profit and Loss Account and

Cash Flow Statement dealt with by this report comply with the

Accounting Standards(AS) referred to in sub-section (3C) of

section 211 of the Companies Act 1956;

(v) We have no such observations, which have an adverse effect

on the functioning of the company.

(vi) On the basis of written representations received from the

Directors of the company, and taken on record by the Board of

Directors, we report that none of the Directors is disqualified as

at 31st March’2010 from being appointed as a Director of the

company in terms of clause(g) of sub-section (1) of section

274 of the companies Act,1956.

(vii) In our opinion and to the best of our information and according

to the explanations given to us the said accounts read in

conjunction with Significant accounting policies and Notes to

the accounts as referred to in Schedule “24”, subject to the

attention invited to note No. B(2),B(3),B(4)&B(5) and the

consequent impact thereof if any on the financial statement for

year can not be ascertainable and commented upon by us,

give the information required by the Companies Act 1956 in the

manner so required and give a true and fair view in conformity

with the accounting principles generally accepted in India:

a. In the case of the Balance Sheet of the state of affairs of

the Company as at 31st March 2010

b. In case of the Profit and Loss Account of the profit for the

year ended on that date; and

c. In the case of Cash Flow Statement of the cash flows for

the year ended on that date.



FR No. 319075E

Sd/-




AUDITORS’ REPORT TO THE MEMBERS


ANNEXURE TO AUDITORS’ REPORT


Referred to in paragraph 3 of our Report of even date

1. (a) The Company has maintained proper records showing fullpar ticulars including quantitative details and situation of itsfixed assets.

(b) As informed, the fixed assets have been physically verified bythe management at the year end and no material discrepanciesare repor ted to have been noticed on such verification.

(c) During the year the company has not disposed off ofsubstantial par t of it’s fixed assets. Therefore the provisionof the clause (ic) of paragraph 4 of the aforesaid Order in ouropinion is not applicable to the Company.

2. (a) The inventory has been physically verified by the managementduring the year. In our opinion the frequency of verification isreasonable.

(b) In our opin ion and according to the informat ion &explanations given to us, the procedures of physicalverification of inventories followed by the Management arereasonable and adequate in relation to the size of the Companyand nature of its business.

(c) On the basis of our examination of records of inventory andin our opinion, the Company is maintaining proper records ofinventory. The discrepancies noticed on verification betweenthe physical stocks and the book records were not material inrelation to the operation of the company.

3. (a) On the basis of our examination of the books of account andaccording to the information and explanations given to us,the Company has during the year not granted or acceptedany loans secured or unsecured to/from Companies, firms orother parties covered in the Register maintained under Section301 of the Companies Act’ 1956.

(b) In view of our comment in paragraph iii(a) above, otherclauses of the paragraph 4 of the aforesaid Order are notapplicable to the Company.

4. In our opinion and according to the information and explanationsgiven to us there are adequate internal control procedurescommensurate with the size of the Company and the nature of itsbusiness with regard to purchase of inventory and fixed assetsand for the sale of goods and services. Further during the courseof our audit, we have neither come across, nor have we beeninformed of any continuing failure to correct major weaknessesin internal control system.

5. (a) On the basis of our examination of the books of account andaccording to the information and explanations given to us,

the Company has during the year entered into transactionthat needs to be entered into the Register maintained underSection 301 of the Companies Act 1956.

(b) According to the information and explanations given to us,the transaction made in pursuance of such contract orarrangement have been made at prices, which are reasonablehaving regard to the prevailing market prices as on the date ofsuch transaction.

6. In our opinion and according to the information and explanationsgiven to us, the Company has not accepted any deposit from thepublic within the meaning of section 58A and 58AA or any otherrelevant provisions of the Companies Act, 1956 and theCompanies (Acceptance of Deposits) Rule 1975. To the best ofour knowledge and according to the information and explanationsgiven to us, no order has been passed by the Company LawBoard or National Company Law Tribunal or Reserve Bank ofIndia or any other Tribunal against the company.

7. According to the information & explanations given to us, theCompany has no internal audit system commensurate with thesize and nature of its business during the year.

8. On the basis of information & explanations made available to us,we are of the opinion that, The Central Government has notprescribed for the maintenance of any cost records underSection 209(1)(d) of the Companies Act 1956 for the Company

9. (a) On the basis of examination of the books of account andaccording to the information & explanations given to us, theCompany is regular in depositing with appropriateauthorities undisputed statutory dues, except Provident &al l ied fund, Employee state insurance, Income Tax(T.D.S.),Fringe benefit tax, Central sales tax, Service tax andProfessional Tax.

According to the information and explanations given to us,the undisputed amounts payable are Provident and allied Fundof Rs.45.54 lacs, Employees state insurance of Rs. 9.76lacs, Income Tax (T.D.S.) of Rs.136.23lacs, Fringe benefittax of Rs.10.21 lacs, Central sales tax of Rs.6.65lacs, Service

tax of Rs. 1.29lacs and Professional Tax of Rs6.18 lacs which

were outstanding as at 31st March 2010 for a period of more

than six months from the date they became payable.

(b) According to the information and explanations given to us,

there are no dues of sales tax, customs duty, excise duty,

service tax, wealth tax and cess which have not been

deposited on account of any dispute, except the disputed

Income tax demand. The amounts involved and the forum



where the dispute is pending are detailed in the statement

given below:

Sl. Name of the statue Nature of Dues Rs. in lacs Forum where disputeis pending

01 Income Tax Assessed demand 8.36 ITAT, Chennaifor A.Y: 2003-04

02 Income Tax Assessed demand 2.95 CIT (A), Chennaifor A.Y: 2004-05



05 Income Tax Assessed demand 9.28 AO-VI Chennaifor A.Y: 2007-08

06 Income Tax Assessed demand 2.36 AO-VI, Chennaifor A.Y: 2008-09

10. The Company has accumulated losses of Rs.470.24 lacs and it

has incurred no cash loss during the financial year covered by

our repor t. However the cash loss in the immediately preceding

financial year is Rs. 549.20 lacs.

11. Based on our audit procedures and according to the information

and explanations given to us, we are of the opinion that the

Company has not defaulted in repayment of dues to financial

institution, banks or debenture holders during the year.

12. The Company has not granted any loans and advances on the

basis of security by way of pledge of shares, debentures and

other similar securities.

13. In our opinion the Company is not a chit fund or a nidhi / mutual

benefit fund / society, therefore the provision of clause (xiii) of

paragraph 4 of the aforesaid Order is not applicable to the

Company.

14. As per records of the Company and the information & explanations

given to us by the management, the Company is dealing in or

trading in shares, securities, debenture and other investments

and in our opinion, proper records have been maintained of the

transactions and contracts, and timely entries have been made

therein, also the shares, securities, debentures and the other

investments have been held by the Company in its own name.

15. According to the information & explanations given to us, the

Company has not given any guarantee for loans taken by others,

from banks or financial institutions, the terms & conditions whereof

are prejudicial to the interest of the Company.

16. On the basis of our examinations and according to the information

and explanations given to us, the term loan availed by the

company were , prima facie, applied for the purpose for which

they were obtained.

17. According to the information and explanations given to us and

on an overall examination of the Balance Sheet of the Company,

we repor t that no fund raised during the year on shor t-term basis

have been used for long-term investment .

18. According to the information & explanations given to us, the

Company has not made any preferential allotment of shares to

par ties and companies covered in the register maintained under

section 301 of the Companies Act, 1956. Accordingly, the

provision of clause (xviii) of paragraph 4 of the aforesaid Order is

not applicable to the Company.

19. The Company has not issued any debentures during the year

under audit. Accordingly, the provision of clause (xix) of

paragraph 4 of the aforesaid Order is not applicable to the

Company.

20. The Company has not raised any money by way of public issue

during the year. Therefore the provisions of clause (xx) of the

paragraph 4 of the aforesaid Order are not applicable to the

Company .

21. During the course of our examination of the books of accounts

carried out in accordance with Generally Accepted Auditing

Practices, we have neither come across any instance of fraud on

or by the Company nor have we been informed of any such case

by the Management.



FR No. 319075E

Sd/-





BALANCE SHEET

As on As on31.03.2010 31.03.2009

SCHEDULE NO. (Amount in Rs.) (Amount in Rs.)I SOURCES OF FUNDS

SHAREHOLDERS’ FUNDS

Capital 1 9,14,20,050.00 7,95,03,000.00

Reserves and surplus 2 6,63,73,350.00 5,44,56,300.00

15,77,93,400.00 13,39,59,300.00LOAN FUNDS

Secured loans 3 12,73,57,927.14 12,37,45,746.88

Unsecured loans 4 4,13,77,319.93 57,66,918.26

16,87,35,247.07 12,95,12,665.14

32,65,28,647.07 26,34,71,965.14

II APPLICATION OF FUNDSFixed Assets

Gross block 5 14,22,99,560.55 14,10,97,020.13

Less: Depreciation & impairment loss 6,00,93,232.73 4,71,98,768.23

Net block 8,22,06,327.82 9,38,98,251.90

INVESTMENTS 6 6,92,91,102.63 6,62,19,102.63

DEFERRED TAX ASSETS 7 44,84,548.00 19,57,234.00

A. Current assets, loans and advances

Stock-in-trade 8 6,56,13,290.35 1,95,43,622.85

Sundry debtors 9 17,62,74,906.03 9,68,81,245.43

Cash & Bank balances 10 2,46,83,541.90 2,19,25,704,05

Loans & advances 11 4,27,37,412.81 3,28,67,451.00

30,93,09,151.09 17,12,18,023.33

B. Less : Current liabilities & provisions

Current liabilities 12 18,53,35,786.44 12,17,86,080.22

Provisions 13 1,021,302.00 10,21,302.00

18,63,57,088.44 12,28,07,382.22

Net current assets (A-B) 12,29,52,062.65 4,84,10,641.11

Miscellaneous Expenditure 14 5,70,227.96 8,55,341.94

Profit & Loss Account 4,70,24,378.01 5,21,31,393.56

TOTAL 32,65,28,647.07 26,34,71,965.14

Significant Accounting Policies 24& Notes on accounts

The Schedule referred to above form integral par t of the Balance SheetIn accordance with our repor t of even date attached herewith.

For GOENKA SHAW & CO.Chartered Accountants

Sd/- Sd/- Sd/-

Kolkata, India (B. Hari) (S. V. Ramani) (CA Saroj Kumar Swain)29th May, 2010 Managing Director Whole-time Director and Secretary Partner

BALANCE SHEETAS ON 31ST MARCH, 2010


PROFIT & LOSS ACCOUNT

PROFIT & LOSS ACCOUNTFOR THE YEAR ENDED 31ST MARCH, 2010

Year ended Year ended31.03.2010 31.03.2009

SCHEDULE NO. (Amount in Rs.) (Amount in Rs.)INCOME

Sales/Services 15 35,58,29,997.42 24,19,32,957.10Other Income 16 28,78,523.55 1,16,40,141.82

TOTAL 35,87,08,520.97 25,35,73,098.92

EXPENDITURE

(Increase)/decrease of stock–(WIP) 17 40,79,634.44 77,58,489.31

Cost of purchases 18 20,30,49,642.77 5,48,95,735.63

Consumption of Con. Stores 19 18,19,599.13 13,97,701.71

Operating expenses 20 5,05,25,453.65 11,15,54,686.82

Staff Cost 21 2,56,44,456.20 3,14,07,559.79

Administrative expenses 22 3,31,68,318.91 8,34,73,533.94

Finance charges 23 2,34,62,135.84 1,80,05,577.47

Deferred Revenue Expenditure 14 2,85,113.98 2,85,113.98

Depreciation & impairment loss 5 1,35,88,672.02 1,89,85,642.11

Prior Period Adjustment (Depreciation) 5 (6,94,207.52) —

TOTAL 35,49,28,819.42 32,77,64,040.76

Profit before tax 37,79,701.55 (7,41,90,941.84)

Less: Provision for Tax 12,00,000.00 —

Provision for FBT — 4,00,000.00

Add: Deferred Tax charge/(credit) 7 9,21,996.00 3,82,091.00

Profit after tax 16,57,705.55 (7,49,73,032.84)

Add: Profit/(Loss) brought forward (5,21,31,393.56) 2,28,41,639.28

Deferred tax credit upto 01.04.2009 34,49,310.00 (4,86,82,083.56)

Profit/(Loss) available for appropriation (4,70,24,378.01) (5,21,31,393.56)

Appropriations:

Transfer to general reserve — —

Proposed Dividend — —

Corporate Dividend Tax — —

Balance C/F to Balance Sheet (4,70,24,378.01) (5,21,31,393.56)

(4,70,24,378.01) (5,21,31,393.56)

Earning per share (Basic/diluted) 0.19 (9.43)Significant Accounting policies 24& notes on accounts

The Schedule referred to above form integral par t of the Profit & Loss Account

In accordance with our repor t of even date attached herewith.


Sd/- Sd/- Sd/-Kolkata, India (B. Hari) (S. V. Ramani) (CA Saroj Kumar Swain)29th May, 2010 Managing Director Whole-time Director and Secretary Partner


CASH FLOW STATEMENT

CASH FLOW STATEMENTFOR THE YEAR ENDED 31ST MARCH, 2010

31.03.2010 31.03.2009Rs. Rs. Rs. Rs.

A. Cash flow from operating activitiesNet profit before tax and extraordinary items 37,79,701.55 (7,41,90,942.00)

Adjustment for– Depreciation 1,28,94,464.50 1,89,85,642.00– Deferred revenue expenses written off 2,85,113.98 2,85,114.00– Interest paid 2,34,62,135.84 1,80,05,577.00– Bad debts written off — 3,31,29,667.00– Interest received (12,35,143.97) (26,52,011.00)– Dividend received (4,657.00) (62,194.00)– P/L on sale of assets — 3,54,01,913.35 (3,75,100.00) 6,73,16,695.00

Operating profit before WC changes 3,91,81,614.90 (68,74,247.00)

Adjustment for– Trade Receivables (7,93,93,660.60) (33,05,073.17)– Inventories (4,60,69,667.50) 1,08,13,141.00– Other Receivables 21,38,341.81 2,13,34,839.84– Trade Payables 7,71,55,591.72 27,86,13,981.67– Other Payables (1,36,05,885.50) (5,97,75,280.07) (24,82,63,309.07) 5,91,93,580.27– Cash Generated from Operations (2,05,93,665.17) 5,23,19,333.27– Tax paid/(Refund) (Net ) 11,57,394.73 (64,86,264.00)

Net cash from operating activities (2,17,51,059.90) 5,88,05,597.27

B. Cash flow from Investing activities– Purchases of fixed assets (12,02,540.42) (97,79,645.00)– Sale of fixed assets — 3,75,100.00– Purchases of investment (30,72,000.00) (50,83,397.00)– Movement in Loan (1,20,50,908.89) (16,39,756.79)– Dividend on shares 4,657.00 62,194.00– Interest received 12,35,143.97 2,652,011.00

Net cash used in investing activities (1,50,85,648.34) (1,34,13,493.79)

C. Cash flow from financing activities– Proceeds from increase in Capital 2,38,34,100.00 —Proceeds/(Repayment) of Bank Borrowings– Long Term (57,14,478.00) (1,04,61,675.00)– Shor t Term 93,00,158.39 34,54,761.21– Proceeds from Other Borrowings 3,56,36,901.54 (11,62,529.95)– Interest Paid (2,34,62,135.84) (1,80,05,577.00)

Net Cash from financing acitivities 3,95,94,546.09 (2,61,75,020.74)

Net increase/(decrease) in cash &cash equivalents (A+B+C) 27,57,837.85 1,92,17,082.74Cash & cash equivalents – opening balance 2,19,25,704.05 27,08,621.31

Cash & cash equivalents – closing balance 2,46,83,541.90 2,19,25,704.05

Note :1. Cash & Cash Equivalents represent Cash & Bank balnces2 .Figures in parenthesis represent Cash Outflow.3. Previous year figures have been regrouped/rearranged whereever found necessary.

As per our repor t of even date attachedFor GOENKA SHAW & CO.




SCHEDULES FORMING PART OF THE BALANCE SHEET ANDPROFIT & LOSS ACCOUNT (...CONTD.)

As at As at

31st March 2010 31st March 2009

(Amount in Rs.) (Amount in Rs.)

SCHEDULE NO. 1

SHARE CAPITAL

Authorised:

20000000 Equity shares of Rs.10/- each 20,00,00,000.00 20,00,00,000.00

Issued, subscribed & paid up :

9142005 Equity shares of Rs. 10/- each fully paid up

(Previous year 7950300 Equity shares of Rs.10/- each) 9,14,20,050.00 7,95,03,000.00

9,14,20,050.00 7,95,03,000.00

SCHEDULE NO. 2

RESERVES & SURPLUS

Share Premium 5,68,47,850.00 4,49,30,800.00

General Reserves 94,00,000.00 94,00,000.00

Employee Stock Option Outstanding 1,25,500.00 1,25,500.00

6,63,73,350.00 5,44,56,300.00

SCHEDULE TO ACCOUNTS



SCHEDULES FORMING PART OF THE BALANCE SHEET ANDPROFIT & LOSS ACCOUNT

As at As at31st March 2010 31st March 2009(Amount in Rs.) (Amount in Rs.)

SCHEDULE NO. 3

SECURED LOANOCC limit with Indian Bank, Strand Road Branch 3,69,66,707.39 4,05,76,182.38(On hypothecation of Stocks and Book Debts)- refer note : b & c

OCC limit with SBI, Commercial Branch 5,17,16,219.75 4,96,55,086.50(On hypothecation of Stocks and Book Debts)- refer note : b

Working Capital Term Loan from Indian Bank 46,25,000.00 —(On hyipothecation of Book Debts)- refer note : a

Working Capital Term Loan from SBI-Commercial Branch 1,12,50,000.00 50,00,000.00(On hypothecation of Book Debts)- refer note : a

Term Loan with SBI-Commercial Branch 2,28,00,000.00 2,85,14,478.00(On Hypothecation/lien of Building, Plant & Machineryand Personal Guarantee of Managing Director)- refer note : a

12,73,57,927.14 12,37,45,746.88

Notes:

a) Secured by way of charge of mor tgage on entireimmovable assets of the company at Salt Lake andEkdalia Road on the basis of paripasu entirehypothecation charge over moveable fixed assets of thepersonal guarantee of Managing Director.

b) Secured against hypothecation of stocks, debt & othermoveable assets of the company both at Salt Lake &Rajarhat, charge of mor tgage on paripasu inter on entireimmovable proper ties of the company at Salt Lake,Rajarhat and Ekdalia Road and personal guarantee ofManaging Director.

c) Working capital loan with Indian Bank is fur ther secureby way of pledge of equity shares of the company standingin the name of Managing Director and his family member

& FDR / CDR standing in the name of the company

SCHEDULE NO. 4

UNSECURED LOANSAuto Loan 1,46,448.34 1,72,948.21Advance received from Corporate 4,12,30,871.59 55,93,970.05

4,13,77,319.93 57,66,918.26



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SCHEDULE NO. 6INVESTMENT (AT COST) TRADE,LONG TERM (AT COST) QUOTED:Investment in Equity with 11,900.00 11,900.00Tata Consultancy Services Ltd.(28 Nos. Equity shares of Rs.425/- each fully paid up)Market value @ Rs. 540/- per shareLONG TERM (AT COST) UNQUOTED :IN SUBSIDIARY COMPANIESInvestment in Equity withOntrack Systems (UK) Ltd. 1,31,99,722.93 1,31,99,722.93(100% Wholly Owned Subsidiary).(17,50,000 Ordinary shares of 10 pence each fully paid up)Investment in Equity withOntrack Systems (UAE) Ltd. 48,64,972.00 48,64,972.00(100% Wholly Owned Subsidiary)(3,000 Ordinary shares of AED 150/- each fully paid up)Ontrack Systems (Aust.) Pty. Ltd. 3,82,14,630.19 3,82,14,630.19(100% Wholly Owned Subsidiary)(394010 Ordinary shares of AUD 1.00 each fully paid up)Investment in Ontrack Global Services Ltd. 94,25,940.00 94,25,940.00(99.99% share holding).(942594 Ordinary shares of Rs.10/- each fully paid up)Comunet Info Systems Pvt. Ltd. 30,72,000.00 —IN OTHER COMPANIESInvestment in Equity withOntrack Systems B.V, Netherland 5,01,729.40 5,01,729.40(Current year 26%, previous year 51% share holding)(9,256 Ordinary shares of Euro 1/- each fully paid up)PersonalMedic Limited 208.11 208.11(3 Ordinary shares of £ 1/- each fully paid up)

6,92,91,102.63 6,62,19,102.63

SCHEDULE NO. 7

DEFERRED TAX Assets / (Liabilities)Opening Balance 19,57,234.00 23,39,325.00Adj: Deffered Tax Credit/(Charge) up to 1.4.2009 34,49,310.00 —

54,06,544.00 23,39,325.00Adj: Deferred tax charge/(credit) for the year 9,21,996.00 3,82,091.00

44,84,548.00 19,57,234.00

SCHEDULE NO. 8

STOCK –IN–TRADE (As taken, valued and certified by Mgmt.)Work–in–progress 1,00,18,826.98 1,40,98,461.42Consumable and spares SSD 9,22,870.82 14,78,957.95Trading stock 5,46,71,592.55 39,66,203.48

6,56,13,290.35 1,95,43,622.85SCHEDULE NO. 9SUNDRY DEBTORS(Unsecured considered good)

Debts over six months 3,61,99,517.47 3,22,08,789.34Others 14,00,75,388.56 6,46,72,456.09

17,62,74,906.03 9,68,81,245.43





SCHEDULE NO. 10CASH AND BANK BALANCECash in Hand 46,198.28 7,800.68Balance with schedule banksCurrent Account 10,47,640.16 49,391.11Dividend unpaid A/c 4,62,100.13 4,62,100.13Gratuity A/c - Indian Bank 1,756.00 1,756.00Fixed Deposit Cummulative 2,29,59,222.00 2,11,50,321.82(Lien with the Bank)Asahi Bank, Kanda, Japan 1,18,172.81 1,33,673.46Indian Bank - EEFC GBP A/c 34,559.80 1,12,123.16Indian Bank - EEFC USD A/c 10,345.85 7,527.69SBI - EEFC USD A/c 2,536.87 —Dividend A/c - Indian Bank 1,010.00 1,010.00

2,46,83,541.90 2,19,25,704.05SCHEDULE NO. 11Loans & AdvancesUnsecured loan to body corporate considered goodLoan to Bodies Corporates 1,99,88,096.49 79,37,187.60(Advances recoverable in cash or in kind or for value to be rreceived)Advances 27,60,103.11 52,59,140.92Deposits 34,79,727.66 27,08,848.12Advance to Supplier 50,50,000.00 51,18,471.00Advance Tax/TDS ( Net of Tax Provision) 2,04,565.73 2,47,171.00Prepaid Expenses 1,22,018.79 4,63,731.33Share Application to Subsidiaries (Pending allotment) 1,11,32,901.03 1,11,32,901.03(Advances recoverable in cash or in kind or for valueto be received include inter corporate deposits)

4,27,37,412.81 3,28,67,451.00

SCHEDULE NO. 12

CURRENT LIABILITIESSUNDRY CREDITORS - For goods supplied 10,73,45,745.99 3,01,90,154.27 - For expenses 3,28,42,805.91 3,07,93,774.46Dividend Unpaid Account 4,62,100.13 4,62,100.13Interest Accrued but not due 3,98,647.00 5,67,919.00Advance from Customers 3,40,59,323.00 3,32,12,823.00Share Application Money-Pending Allotment 69,30,000.00 2,38,34,100.00Other Advance 32,97,164.41 27,25,209.36

18,53,35,786.44 12,17,86,080.22SCHEDULE NO. 13

PROVISIONSProvision for FBT (Net of Advance FBT) 10,21,302.00 10,21,302.00

10,21,302.00 10,21,302.00

SCHEDULE NO. 14

DEFERRED REVENUE EXPENDITUREDeffered Revenue Expenditure - Brand Building 8,55,341.94 11,40,455.92Less: 1/5 written off 2,85,113.98 2,85,113.98

5,70,227.96 8,55,341.94




SCHEDULE NO. 15SALESDomestic Sales / Services 27,13,13,745.98 9,40,91,442.90(TDS of Rs. 9.20 lacs, Previous year Rs. 7.80 lacs)Expor t Sales / Services 8,45,16,251.44 14,78,41,514.20

35,58,29,997.42 24,19,32,957.10SCHEDULE NO. 16OTHER INCOMEMiscellaneous Income 1,40,884.58 8,83,917.62Profit on Sale of Assets — 3,75,100.00Incentive & Discount Received 14,97,838.00 16,48,627.31Dividend on Shares 4,657.00 62,194.00Interest Received 12,35,143.97 26,52,010.79(TDS Rs. 2.38 lacs, P.Y. Rs. 1.25 lacs)Currency Fluctuation Profit — 60,18,292.10

28,78,523.55 1,16,40,141.82SCHEDULE NO. 17INCREASE/DECREASE IN W.I.P.Opening stocks-WIP 1,40,98,461.42 2,18,56,950.73Closing stocks: 1,00,18,826.98 1,40,98,461.42

(Increase)/Decrease in W.I.P. 40,79,634.44 77,58,489.31

SCHEDULE NO. 18COST OF PURCHASEOpening stocks 39,66,203.48 62,52,071.08Add: Purchase 25,37,55,031.84 5,26,09,868.03

25,77,21,235.32 5,88,61,939.11Less: Closing stocks 5,46,71,592.55 39,66,203.48

20,30,49,642.77 5,48,95,735.63SCHEDULE NO. 19CONSUMPTION OF CONSUMABLE STORESOpening stocks 14,78,957.95 22,47,742.66Add: Purchase 12,63,512.00 6,28,917.00

27,42,469.95 28,76,659.66Less: Closing stocks 9,22,870.82 14,78,957.95

18,19,599.13 13,97,701.71SCHEDULE NO. 20

OPERATING EXPENSESElectricity expenses 12,92,840.95 14,74,039.98Professional and consultancy charges 1,56,32,119.93 65,93,053.02Repairs & Maintenance 18,95,028.70 17,14,119.19Bandwith Charges 12,99,019.93 15,35,368.55Insurance Premium 1,39,211.54 93,025.00Operative expenses for WOS-UAE 1,73,87,315.01 1,89,19,924.12Operative expenses for (WOS)-UK (Opt) 1,28,79,917.59 8,12,25,156.96

5,05,25,453.65 11,15,54,686.82




SCHEDULES FORMING PART OF THE BALANCE SHEET ANDPROFIT & LOSS ACCOUNT


SCHEDULE NO. 21

STAFF COSTSalaries, Incentives and Bonus 2,43,12,552.78 2,86,81,263.65

Employers contribution to Provident Fund 11,56,991.28 15,10,773.88Employers contribution to E.S.I 1,24,912.14 1,18,534.94

Contribution to group gratuity 50,000.00 55,000.00Insurance Benefit for Staff — 10,41,987.32

2,56,44,456.20 3,14,07,559.79SCHEDULE NO. 22

ADMINISTRATIVE EXPENSESAdministrative expenses for WOS-UK 22,20,670.59 2,24,50,774.87Administrative expenses for WOS-UAE 92,14,967.00 1,00,79,153.82Directors remuneration 31,80,000.00 31,80,000.00Printing & Stationary 4,75,027.10 7,55,671.80Business promotion 2,29,159.00 3,30,711.90Adver tisement and Publicity 3,26,868.00 13,22,730.00Office expenses 11,24,745.90 11,61,691.85Remuneration to Auditors 2,75,000.00 2,75,000.00Staff training & Development expense 19,500.00 3,61,350.00Bad Debt — 3,31,29,666.86Discount allowed 9,13,177.29 5,15,469.46Currency Fluctuation Loss 79,08,180.52 —Rent, Rates and Taxes 3,95,214.00 2,14,744.00Traveling and conveyance expenses 45,25,956.44 57,06,708.14Postage & Telephone 11,66,539.34 14,70,569.06Staff welfare expenses 91,630.40 3,55,723.40Misc. Expenses 11,01,683.33 21,63,568.78

3,31,68,318.91 8,34,73,533.94

SCHEDULE NO. 23FINANCE CHARGES

Bank Interest 1,67,21,285.58 1,36,10,903.00Other Interest 814,520.60 873,993.84Bank Charges 59,26,329.66 35,20,680.63

2,34,62,135.84 1,80,05,577.47


SCHEDULE NO. 24

ACCOUNTING POLICIES AND NOTES ANNEXED TO AND FORMINGPART OF ACCOUNTS FOR THE YEAR ENDED 31st MARCH, 2010.

A. Statement of significant accounting policies

i) Accounting Convention:

The financial statement has been prepared under the historicalcost convention in accordance with the generally acceptedaccounting principles as adopted consistently by the company.

ii) Use of Estimates:

The preparation of financial statements, in conformity with thegenerally accepted accounting principles, requires estimates andassumptions to be made that affect the repor ted amount ofassets and liabilities on the date of financial statements and thereported amount of revenues and expenses during the reportedyear. Differences between the actual results and estimates arerecognized in the year in which the results are known /materialized.

iii) Fixed Assets :

Fixed Assets are stated at cost less accumulated depreciation

iv) Depreciation :

Depreciation on Fixed Assets has been provided on Straight LineMethod and written off over a period as estimated by themanagement

Computer and its Accessories including Software 3 Years

Building - freehold 20 Years

Other Fixed Assets 5 Years

Lease hold Land & Building is amortized for the lease period.

v) Impairments:

At each Balance Sheet date, the Company reviews the carryingamount of its fixed Assets to determine whether there is anyindications that those assets suffered any impairment loss. Ifany such indication exists, the recoverable amount of the assetis estimated in order to determine the extent of impairment loss.The recoverable amount is the higher of an asset net selling priceand value in use. In assessing value in use , the estimated futurecash flow expected from the continuing use of the assets andfrom its disposal are discounted to their present value using apre-determined rate that reflect the current market assessmentof time value of money and the risks specific to the assets .Reversal of impairment loss is recognized immediately as incomein the Profit & Loss Account.

vi) Investments:

Long term investments are stated at cost. Provision for diminutionin the value of long-term investment is made only if such a


decline is other than temporary in nature in the opinion of theManagement. If the value of Investment for take over of a goingconcern is much higher than estimated cost of Net Assets Valueincluding their intrinsic value as estimated by management, theadditional payment in lieu of takeover value is considered asGoodwill and if it is reverse the amount will be transferred toCapital Reserve.

vii) Inventories:

Inventories of trading goods, spare parts and consumable storesare valued at lower of cost or net realizable value. Outdated anddamaged stocks are written off on technical evaluation. The WIPis valued at direct cost attributed to projects based on stages ofcompletion as cer tified by the management.

viii) Recognition of Revenue:

Sales:

The sales are recognized at the point of dispatch of material tothe customers and bills are raised to them. Sales are shown netof goods return, rebates, rate differences etc. Income frommaintenance contracts are accounted for in the relevantaccounting year upon entering into the contract. Revenue fromsoftware development is recognized on the basis of achievementof prescribed milestone as relevant to terms of contract asproportionate completion method as applicable.

Income & Expenditure:

The Company follows mercantile system of accounting andrecognizes significant items of Income & Expenditure on accrualbasis.

ix) Deferred Revenue Expenditure:

Deferred revenue expenditure is amortized over a period of fiveyears.

x) Foreign Currencies Transactions :

Foreign currency transactions are accounted for at the prevailingexchange rate as on the date of execution of the transaction orof the rate cover under forward contract as applicable. Foreigncurrency monetary items not cover under forward exchangecontract and due at the end of the year are converted at theexchange rate prevailing as on that date. Exchange differencesarising on the settlement of the transactions or on repor ting atthe year end rates are recognized as Income or as expenses inthe period in which arise, except in respect of fixed assetsacquired from out side India, where exchange variance is adjustedto the carrying amount of the respective fixed assets.

xi) Employees Benefit:

Short Term Employees Benefits: The undiscounted amount ofshort term employee benefit expected to be paid in exchange for



the services rendered by the employees are recognized duringthe period when the employees render the service

Post Employment benefits plans:

a) Defined Contribution Plan: Contribution under definedcontribution plan payable in keeping with the relatedscheme are recognized as expenses for the year.

b) Defined benefit plan: The Group gratuity scheme providedby the company is a defined benefit plan. Benefit under thedefine benefit plan are generally based on the years ofservice rendered and the employee’s eligible compensation(immediately before retirement). The scheme coverssubstantially all regular employees and the companycontributes funds to the Life Insurance corporation ofIndia, which administers the scheme on behalf of thecompany.

Other Long Term employment benefit (unfunded): Thecost of providing long term employee benefit is generallyrecognised on cash basis.

xii) Segment Reporting:

The geographical segments have been identified as primarysegment on the basis of location of the major customers of theCompany. These segments represent a strategic business unitthat offers different places of unit having different risk and returns.Inter-segment sales and transfers if any are accounted for, as ifthe sales or transfers were to third par ties at current marketprices. Income & expenditure and Assets & Liabilities notallocable to any specific geographical segment, are classifiedas unallocated. The company’s secondary segment is businesssegment and it operates only in one business segment namelyTrading/dealing with computer hardware and software. Thereforeno separate secondary segment is identifiable as required byAccounting standard 17 issued by ICAI.

xiii) Borrowing Costs :

Borrowing costs attributable to qualifying assets are capitalizedup to the date when such assets are ready for their intend use,other borrowing cost are recognized as expenses in the periodin which they are incurred.

xiv) Earnings per Share:

Basic earning per share are calculated by dividing the net profitor loss for the period attributable to equity share holders (afterdeducting attributable taxes) by the weighted average numberof equity shares outstanding during the period. The weightedaverage number of equity shares outstanding during the periodis adjusted for events of bonus issue, bonus element in a rightsissue to existing shareholders, share split and reverse sharessplit (consolidation of shares).

For the purpose of calculating diluted earnings per shares, thenet profit or loss after tax for the period attributable to equityshare holders and the weighted average number of sharesoutstanding during the period are adjusted for the effects for alldilutive potential equity shares.

xv) Tax on Income:

Current Tax represents the amount that would be payable beston the computation of tax as per prevailing taxation laws underIT Act 1961. Deferred tax is recognized subject to considerationof prudence, on timing differences, being the differencebetween taxable income and accounting income that originatein one period and are capable of reversal in one or moresubsequent periods. Deferred tax is calculated using the taxrates and tax laws that has been enacted and/or substantiallyenacted as at the Balance Sheet date. Deferred tax assets are notrecognized unless there is virtual certainty that sufficient futuretaxable income will be available against which such deferred taxassets can be realized.

xvi) Contingent Liabilities & Assets:

Provisions involving substantial degree of estimation inmeasurement are recognized when there is a present obligationas a result of past events and it is probable that there will be anoutflow of resources. Contingent Liabilities are not recognizedbut are disclosed in the Notes to the accounts. ContingentAssets are neither recognized nor disclosed in the financialstatements.


B. Notes on Accounts

1. Contingent Liabilities not provided for:

(Rs. in lacs)

31.03.2010 31.03.2009

a) Income Tax Demand against 286.00 116.57which Appeals are pending

b) Bank Guarantee :Foreign 539.76 629.31Domestic 43.69 26.17

2. Loans and Advances include Rs.10.00 lacs due from a party, againstwhich the company has filed money suit and the matter is subjudice.Pending the outcome of the legal proceedings, the extent of amountsrecoverable there against is not ascertainable and therefore no provisionhas been made in the accounts.

3. The employees’ gratuity fund scheme managed by Life InsuranceCorporation of India is a defined benefit plan. The present value of theobligation is currently not determined /ascertained based on theactuarial valuation using the Projected Unit Cost Method and notprovided for in the accounts during the year.

4. The employees group medical policy is managed by an InsuranceCompany. The premium obligation under this policy is currently notascertained and not provided for in the accounts during the year.

5. No provision has been made for the present value of leave accrued inrespect of the eligible employees based on the actuarial valuationusing the Projected Unit Cost Method.The present value of theobligation is currently not determined/ascertained.

Leave benefit as per management’s policy is not to be accruedbeyond 30 days but availed of and the employees have been advisedto plan their leave in advance while in service and immediately beforesuperannuation. Leave not availed of is not encashable.

6. Sundry Creditors do not include any dues to micro, small and mediumenterprises on account of principal amount together with interestand accordingly no additional disclosure have been made. The aboveinformation regarding micro, small and medium enterprises havebeen determined to the extent such parties have been identified onthe basis of information available with the company.

7. Depreciation has been provided for in the Accounts on “Straight LineMethod” and the assets are depreciated over the useful life of the

assets based on the estimation made by the management and usingthe rates which are not less than those prescribed in Sch-XIV to theCompanies Act 1956.

8. The company has passed a special resolution in Extra ordinary GeneralMeeting held on 14th May 2010 for the issue of Preferential allotmentof 1,02,00,000 equity shares to the promoter’s & their groups.Consequent to such allotment, the percentage of holding of thepromoters’ and their group in the equity shares of the companywould be 65.74 against the present holding of 27.54.

9. During the year, by virtue of acquiring equity shares having 48%voting right in Comunet Info-Systems Pvt. Ltd, the company becamethe associate enterprise of the company.

10. Major Components of Deferred Tax Assets/(Liabilities) as at31.03.2010 are as follows:

(Rs. in lacs)

Items As at During As at01.01.2009 the Year 31.03.2010

Depreciation difference 15.57 42.29 57.86

Expenses disallowed under 40(a) 4.88 (17.01) (12.13)

Amortization of Deferred (0.88) — (0.88)Revenue Expenses

19.57 25.28 44.85

Deferred Tax credit/(charge) 34.50up to 01.04.2009

Deferred Tax credit/(charge) (9.22)for the year

25.28

11. Calculation of Earning per shares : (Rs. in lacs)

Particulars 31.03.2010 31.03.2009

Net profit after tax attributable 16.58 (749.73)to shareholders

Weighted avg. number of 86,81,648 79,50,300equity shares outstanding (No.)

Nominal value of equity shares Rs.10/- Rs. 10/-

Basic/Diluted earning per share Re. 0.19 Rs. (9.43)




12. Remuneration to Auditors

(Amount in Rs. in lacs) (Amount in Rs. in lacs)Year ended 31.03.2010 Year ended 31.03.2009

Statutory Audit fees 2.25 2.25

Tax Audit fee 0.50 0.50

2.75 2.75

13. Remuneration to Managing Director & Wholetime Director

(Amount in Rs.) (Amount in Rs.)Year ended 31.03.2010 Year ended 31.03.2009

Remuneration 30.00 30.00

Statutory Audit fees 1.80 1.80

31.80 31.80

14. Related Party Transaction

Name of the Related parties and description of relationship:

Name Relationship

Ontrack Systems (UK) Ltd. Entity under common controlOntrack Systems (UAE) Ltd. Entity under common controlOntrack Systems (Aust) Pty. Ltd. Entity under common controlOntrack Global Services Ltd. Entity under common controlOntrack Systems (B.V. ) Netherland Associated EnterpriseComunet Info-Systems Pvt. Ltd. Associated EnterpriseMr. B. Hari Key Managerial PersonnelMr. S.V.Ramani Key Managerial Personnel

Mrs. Simi Hari Relatives of Key Managerial Personnel

Particulars of Transactions and closing balances at the end of the year (Rs. In Lacs)

Nature of Transactions Entity under Associate Key Managerial Balance as atCommon control Enterprises Personnel & relatives 31.03.2010

Remuneration 36.00 23.80(34.80) (17.75)

Sales 444.49 284.02(1493.91) (567.32)

Investment 657.05 35.74 692.79(657.05) (5.02) (662.07)

Advance Received 91.01 91.01(21.71) (21.71)

Advance Paid 102.49 8.84 111.33(102.49) (8.84) (111.33)

Figures in parenthesis represent for the previous year.


15. SEGMENT INFORMATION :

Primary: Geographical Segment

Segment wise Revenue ResultsRs. In lacs

Particulars Domestic UAE Europe & Others Total

Segment Revenue 2713.14 674.36 170.80 3558.30(940.91) (626.39) (852.03) (2419.33)

Segment Result 197.45 408.33 19.80 625.58(94.84) (336.40) (-184.73) (246.51)

Unallocated income 16.43(excluding interest income) (89.88)

Unallocated Expenditure 253.00(734.90)

Finance Charges (Net) 222.27(153.54)

Depreciations (Net) 128.94(189.86)

Profit/(Loss) before tax 37.80(-741.91)

Provision for Taxation 21.22(7.82)

Profit/(Loss) after tax 16.58

(-749.73)

Segment Assets 1621.92 841.37 103.75 2567.04(512.42) (1121.98) (107.94) (1742.34)

Unallocated Assets 2085.87(1590.58)

Segment Liabilities 1401.89 1401.88(609.84) (609.84)

Unallocated Liabilities 2149.04(1913.36)

Capital Expenditure 12.02(97.80)

Non cash expenditure other than depreciation 2.85(2.85)

Capital Employed 1101.99(809.72)




ANNEXURE – 1 Referred to in Schedule – 24

15. Additional information pursuant to the Provisions of Clauses 3, 4C and 4D of par t II of Schedule VI of the Companies Act, 1956.

Year ended 31.3.2010 Year ended 31.3.2009(Amount in Rs. lacs) (Amount in Rs. lacs)

1. Licensed Capacity 4000.00 4000.00

As per SIA registration with Govt. of India

2. Installed Capacity 4000.00 4000.00

3. PRODUCTION CAPACITY Not applicable Not applicable

4. ACTUAL PRODUCTION Not applicable Not applicable

5. A. IMPORTS 50.94 86.51

B. EXPORTS 845.16 1478.42

6. TURNOVER

Sales 3558.30 2419.33Other income 28.79 116.40

7. COST OF PURCHASE & CONSUMABLES

a. Impor ted 50.94 86.51

b. Indigenous 1997.75 476.42

8. PERCENTAGE OF CONSUMPTION

a. Impor ted 2.49 15.37

b. Indigenous 97.51 84.63

9. EXPENDITURE IN FOREIGN CURRENCIES

CIF Value of impor t 50.94 86.51

Foreign Travel 6.69 6.73

10. EARNINGS IN FOREIGN EXCHANGE

FOB value Expor ts 845.16 1478.42

No specific license is required for manufacture of products, in term of the New Industrial Policy of the Govt. of India except those which are in therestricted list. As per SIA approval received from Govt. of India, the annual capacity of the Company works out to Rs. 4000.00 lacs.

Software development, system integration and networking cannot be expressed in term of any generic unit, therefore it is not practicable to givethese details in quantitative figures. Fur ther in view of the nature of the business, variety of items, volume of transactions and different units of salecomputer hardware items, it is not possible to furnish quantitative details for all the goods traded by the company.

16. Balance of the sundry creditors, sundry debtors and some of the loans & advances given & accepted are subject to confirmation

17. Previous year figures have been regrouped/rearranged/recast wherever found necessary.

In accordance with our repor t ofeven date attached herewith.






GENERAL BUSINESS PROFILE

I. Registration details

Registration no. : 18—15370Registration date : 15.02.1988Balance Sheet date : 31.03.2010

II. Capital raised during the year (Amount in Rs. thousand)

Public issue Rights issueNil Nil

Private placement/Preferencetial Allotment Bonus issue11917 Nil

III. Position of mobilisation and deployment of funds (Amount in Rs. thousand)

Total Liabilities Total Assets512886 512886

Source of funds (Amount in Rs. thousand)Share Capital Reserves & Surplus

91420 66373Secured loans Unsecured loans

127358 41377

Application of funds (Amount in Rs. thousand)

Net Fixed Assets Investment82206 69291

Deferred tax Assets Net Current Assets4485 122952

Deferred Revenue Expenditure Accumulated Loss570 470024

IV. Performance of Company (Amount in Rs. thousand)

Turnover Total Expenditure358709 354929

Profit/(Loss) before tax Profit/(Loss) after tax3780 1658

EPS after extra ordinary item and deferred tax Dividend rate in %0.19 Nil

V. Generic names of principal product/services of Company

Item code no. Product description847190 Computer Hardware

Not applicable IT Services85249009 Software development.





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AUDITORS’ REPORT

AUDITOR’S REPORT TO THE BOARD OF DIRECTORS ON THE CONSOLIDATED FINANCIALSTATEMENTS OF ONTRACK SYSTEMS LIMITED AND ITS SUBSIDIARIES

AUDITOR’S REPORT

consolidation are based on the managements estimates andnot audited by their auditors in the respective countries.

5. As stated in Note B(11), in case of overseas Jointly controlledentity , the financial statement as on 31st March’ 2010 are notavailable, accordingly the interest in joint ventures in theconsolidated financial statements have not been adjusted.

6. Subject to the matters referred to in paragraph 4 & 5 above, wereport that:

(i) The consolidated Financial Statements have been preparedby the company in accordance with the requirements ofAccounting Standard-21( Consolidated Financial Statement),Accounting Standard-23 ( Accounting for Investment inAssociates in Consolidated Financial Statements) andAccounting Standard-27(Financial Reporting of Interest inJoint Ventures) as notified under the Companies( AccountingStandard) Rule,2006.

(ii) Based on our audit and on consideration of the separateaudit repor ts on individual financial statements of theCompany, its subsidiaries and associates and in our opinionand to the best of our information and according to theexplanations given to us the Consolidated Financial statementsread in conjunction with Significant accounting policies andNotes to the accounts as referred to in Schedule “25”,subject to the attention invited to note No. B(2), B(3), B(4),B(5)& B(6) and the overall impact thereof if any on theconsolidated financial statement for year can not beascer tainable and commented upon by us, give a true andfair view in conformity with the accounting principlesgenerally accepted in India:

a. in the case of the Consolidated Balance Sheet, of thestate of affairs of the Group as at 31st March 2010

b. in case of the Consolidated Profit and Loss Account, ofthe profit of the group for the year ended on that date;and

c. In the case of Consolidated Cash Flow Statement, ofthe cash flows of the Group for the year ended on thatdate.

For GOENKA SHAW & CO.Chartered AccountantsFR No. 319075E

Sd/-Kolkata, India (CA Saroj Kumar Swain)29th May, 2010 Partner


1. We have audited the attached Consolidated Balance Sheet ofONTRACK SYSTEMS LIMITED (“the Company”), its subsidiaries,its associates and jointly controlled entities (the Company, itssubsidiaries, its associates and jointly controlled entitiesconstitute “the Group”) as at 31st March 2010, the consolidatedProfit & Loss Account and also the consolidated Cash FlowStatement of the Group for the year ended on that date, bothannexed thereto. The Consolidated Financial Statements includesubsidiaries accounted in accordance with Accounting Standard21(“Consolidated Financial Statements”), investments inassociates accounted on the equity method in accordance withAccounting Standard 23(“Accounting for Investments inAssociates in Consolidated Financial Statements”) and the jointlycontrolled entities accounted in accordance with AccountingStandard 27(“Financial Reporting of Interests in Joint Ventures”).These financial statements are the responsibility of theCompany’s Management. Our responsibility is to express anopinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the AuditingStandards generally accepted in India. Those standards requirethat we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of materialmisstatement. An audit includes examining on a test basis,evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accountingprinciples used and significant estimates made by Management,as well as evaluating the overall financial statement presentation.We believe that our audit provides a reasonable basis forour opinion.

3. The financial statements of Indian and overseas subsidiarieshaving total assets (Net) of Rs. 121.65 lacs as at 31stMarch’2010, total revenue of Rs.269.35 lacs and net cashoutflows amounting to Rs. 1.33 lacs for the year ended on 31stMarch’2010 and associate companies having a carrying valueof Rs.30.72lacs as at 31st March’ 2010, have been audited bytheir auditors in respective countries.

The repor ts of those auditors have been furnished to us and ouropinion in so far as it relates to the amounts included in respectof these subsidiaries and associates is based solely on the reportsof those auditors.

4. As stated in Note B(8), B(9), B(10) of Schedule 25, in case ofcer tain foreign subsidiaries of the Company having total assets(net) of Rs.135.04 lacs as at 31st March’2010 and total revenueof Rs.459.19 lacs (net of consolidation adjustment) and netcash outflows amounting to Rs. 9.16 lacs for the year endedon 31st March’2010 and in the case of associate companyOntrack Systems B.V. Netherland having a carrying value of Rs.6.18 lacs as at 31st March’ 2010, the figures used for the

55ONTRACK SYSTEMS LIMITEDONTRACK SYSTEMS LIMITED55

CONSOLIDATED FINANCIAL STATEMENT

CONSOLIDATED BALANCE SHEETAS ON 31ST MARCH 2010

As on As on31.03.2010 31.03.2009

SCHEDULE NO. (Amount in Rs.) (Amount in Rs.)

I SOURCES OF FUNDSShareholder’s Funds

Capital 1 9,14,20,050.00 7,95,03,000.00Reserves and Surplus 2 4,56,87,713.94 3,82,35,684.38

13,71,07,763.94 11,77,38,684.38

Loan FundsSecured Loans 3 12,73,57,927.14 12,37,45,746.88Unsecured Loans 4 4,13,77,319.93 58,50,516.86

16,87,35,247.07 12,95,96,263.74

TOTAL 30,58,43,011.01 24,73,34,948.12

II APPLICATION OF FUNDSFixed AssetsGross Block 5 20,14,41,768.64 20,02,39,228.22Less: Depreciation & Impairment Reserve 7,27,42,417.42 5,95,97,775.18

Net Block 12,86,99,351.22 14,06,41,453.04

INVESTMENTS 6 37,02,197.66 5,13,837.51

DEFERRED TAX ASSETS 7 53,32,220.30 35,56,117.31

A. Current Assets, Loans and AdvancesInventories 8 6,56,13,290.35 1,95,43,622.85Sundry Debtors 9 2,104,02,213.49 11,34,96,626.85Cash & Bank Balances 10 2,61,06,114.01 2,51,05,807.56Loans & Advances 11 6,21,30,061.28 5,70,50,693.87

36,42,51,679.13 21,51,96,751.13B. Less : Current Liabilities & Provisions

Current Liabilities 12 22,12,27,279.94 14,22,67,519.91Provisions 13 10,21,302.00 10,21,302.00

22,22,48,581.94 14,32,88,821.91

Net Current Assets (A-B) 14,20,03,097.20 7,19,07,929.22Misc. Expenditure (Expenditure to the Extend 14 60,99,443.45 64,17,398.43not written off or adjustec)Profit & Loss Account 2,00,06,701.19 2,42,98,212.61TOTAL 30,58,43,011.01 24,73,34,948.12Significant Accounting Policies & Notes to the Account 25

The schedules referred to above from an integral par t of the Balance Sheet






CONSOLIDATED PROFIT & LOSS ACCOUNTFOR THE YEAR ENDED 31ST MARCH, 2010

As on As on31.03.2010 31.03.2009

SCHEDULE NO. (Amount in Rs.) (Amount in Rs.)INCOME

Sales/Services 15 39,76,52,608.79 29,60,91,684.68Other Income 16 30,44,853.70 1,17,56,724.45

TOTAL 40,06,97,462.49 30,78,48,409.13

EXPENDITURE(Increase)/decrease of stock (WIP) 17 40,79,634.44 77,58,489.31Cost of purchases 18 20,30,49,642.77 5,48,95,735.63Consumption of Con. stores 19 18,19,599.13 13,97,701.71Staff Cost 20 8,28,89,218.76 15,90,99,316.75Operating expenses 21 2,87,53,361.11 2,62,23,738.26Administrative expenses 22 3,80,31,975.65 8,93,18,838.48Finance charge 23 2,54,12,234.80 2,01,86,711.78Preliminary & Deferred Revenue Exp.w/off 14 3,17,954.98 3,17,954.98Depreciation & Impairment Loss 6 1,38,38,849.76 1,98,57,422.14Prior Period Adjustment (Depreciation) 6 (6,94,207.52) —TOTAL 39,74,98,263.88 37,90,55,909.04

Profit Before Tax 31,99,198.62 (7,12,07,499.91)

Less: Taxes 24 23,56,997.19 (6,84,387.00

Profit After Tax 8,42,201.43 (7,05,23,112.91)

Profit/(Loss) brought forward (2,42,98,212.61) —Deferred Tax Credit up to 01.04.2009 34,49,310.00 (2,08,48,902.61) 4,62,24,900.30Profit/(Loss) available for appreciation (2,00,06,701.19) (2,42,98,212.61)

AppropriationsTransfer to general reserve — —Proposed Dividend — —Corporate Dividend Tax — —Balance C/F to Balance Sheet (2,00,06,701.19) (2,42,98,212.61)

(2,00,06,701.19) (2,42,98,212.61)

Earning per share (Basic/Diluted) 0.10 (8.87)

Significant Accounting Policiesand Notes to the Account 25

The schedules referred to above from an integral par t of the Profit & Loss Account






CONSOLIDATED CASH FLOW STATEMENTFor the Year ended For the Year ended

31.03.2010 31.03.2009Rs. Rs. Rs. Rs.

A Cash flow from operating activitiesNet Profit before tax and EOI 3,199,198.62 (71,207,499.91)Adjustment forDepreciation 13,838,849.76 19,857,422.14Deferred Rev. Exp. w/o 317,954.98 317,954.98Interest Paid 25,412,234.80 20,186,711.78Bad - Debts written off 33,129,666.86Interest received (1,235,143.97) (2,768,593.42)Dividend received (4,657.00) (62,194.00)Income from Associates (116,360.15) (543,868.00)Currency fluctuation profit/ (Unrealised loss) (4,465,020.44) (14,864,282.00)P/L on sale of assets — 33,747,857.98 (375,100.00) 54,877,718.42Operating profit before working capital changes 36,947,056.59 (16,329,781.49)Adjustment forInventories (46,069,667.50) 10,813,141.00Trade Receivables (96,905,586.64) 25,849,372.00Other Receivables (25,888,276.27) 27,656,078.93Trade Payables 83,248,702.14 83,248,702.14Other Payables (8,868,941.41) (94,483,769.68) (41,338,926.14) 106,228,367.93Cash Generated from Operations (57,536,713.09) 89,898,586.44Tax paid/(Refund) (Net ) 1,157,394.73 2,351,121.00Net cash from operating activities before (58,694,107.82) 87,547,465.44Extra ordinary & prior period itemsDepreciation (694,207.52) —Currencies translation gain 645,979.82 —Net cash from operating activities before Extra ordinary (58,742,335.52) 87,547,465.44

B Cash flow from Investing activitiesPurchases of fixed assets (1,202,540.42) (54,218,890.00)Sale of fixed assets — 1,311,113.00Purchases of investment(Including accrued income) (3,188,360.15) 32,629,504.00Income from Associates 116,360.15 543,867.92Movement in Loan 20,636,533.59 (32,681,490.08)Dividend received 4,657.00 62,194.00Interest received 1,235,143.97 2,768,593.42Net cash used in investing activities 17,601,794.14 (49,585,107.74)

C Cash flow from financing activitiesProceeds from increase in Capital 23,834,100.00 —Proceeds/(Repayment) of Bank BorrowingsLong Term (5,714,478.00) (10,461,675.00)Shor t Term 9,216,559.79 10,147,288.01Proceeds from Other Borrowings 35,636,901.54 (1,162,530.00)Interest Paid (25,412,234.80) (20,186,711.78)Minority Interest — (3,164,014.00)Net Cash from financing acitivities 37,560,848.53 (24,827,642.77)Net Increase/(decrease) in cash &cash Equivalent (A+B+C) (3,579,692.85) 13,134,714.93Cash & cash equivalents-Opening balance 21,681,471.93 8,546,757.00Cash & cash equivalents-Closing balance 18,101,779.08 21,681,471.93Cash & cash equivalentsCash & Bank balances 26,106,114.01 25,105,807.56Overdrawn Bank balance (8,004,334.93) (3,424,335.63)

18,101,779.08 21,681,471.93Notes:1. Cash & Cash Equivalents represent Cash & Bank balnces (Including over draft balances)2. Figures in parenthesis represent Cash Outflow.3. Previous year figures have been regrouped/rearranged whereever found necessary.

In terms of our repor t of even dateFor GOENKA SHAW & CO.Char tered Accountants

CA. S.K. Swain B. Hari S.V.RamaniPartner Managing Director Whole-time DirectorKolkata, India & Secretary29th day of May 2010




SCHEDULE NO. 1SHARE CAPITALAuthorised:20000000 Equity shares of Rs.10/- each 20,00,00,000.00 20,00,00,000.00(Previous year 20000000 equity of Rs. 10/- each)Issued, subscribed & paid up :9142005 Equity shares of Rs.10/- each fully paid up 9,14,20,050.00 7,95,03,000.00(Previous year 7950300 equity of Rs. 10/- each)

9,14,20,050.00 7,95,03,000.00

SCHEDULE NO. 2RESERVES & SURPLUSShare Premium 5,68,47,850.00 4,49,30,800.00General Reserves 94,00,000.00 94,00,000.00Employee stock options outstanding 1,25,500.00 1,25,500.00C/Fluctuation Reserves (2,06,85,636.06) (1,62,20,615.62)

4,56,87,713.94 3,82,35,684.38

SCHEDULE NO. 3SECURED LOANTerm Loan from SBI- Commercial Br. (Ref note : a) 2,28,00,000.00 2,85,14,478.00Working Capital Term Loan from SBI, Commercial Br. (Ref note : a) 1,12,50,000.00 50,00,000.00Working Capital Term Loan from Indian Bank, Strand Rd. Br. (Ref note : a) 46,25,000.00 —Working Capital loan with SBI, Commercial Br. (Ref note : b ) 5,17,16,219.75 4,96,55,086.50Working capital loan with Indian Bank,Strand Road Br.(Ref note : b & c) 3,69,66,707.39 4,05,76,182.38

12,73,57,927.14 12,37,45,746.88Notes :a) Secured by way of charge of mortgage on entire immovable assets of the

company at Salt Lake and Ekdalia Road on the basis of paripasu inter-se,hypothecation charge over entire movable fixed assets of the company bothat Salt Lake and Rajarhat and personal guarantee of Managing Director.

b) Secured against hypothecation of stocks, book debts & other movable assetsof the company both at Salt Lake & Rajarhat, charge of mortgage on the basis ofparipasu inter-se on the entire immovable properties of the company at Salt Lake,Rajarhat and Ekdalia Road and personal guarantee of Managing Director

c) Working capital loan with Indian Bank is further secured by way of pledge ofequity shares of the company standing in the name of Managing Director andhis family members & FDR/CDR standing in the name of the company.

SCHEDULE NO. 4UNSECURED LOANSAdvance Received from Body Corporate 4,12,30,871.59 55,93,970.05HDFC Auto -Loan 1,46,448.34 2,56,546.81

4,13,77,319.93 58,50,516.86

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET ANDPROFIT & LOSS ACCOUNT (...CONTD.)


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SCHEDULE NO. 6INVESTMENT (AT COST)LONG TERM Trade (QUOTED)Tata Consultancy Services Ltd. 11,900.00 11,900.00(28 Nos. Equity shares of Rs. 425/- each fully paid up)Market value as at 31.03.2010 Rs. 21,858.00 (Previous year Rs. 15,120)LONG TERM (AT COST) (UNQUOTED)Investment in equity withOntrack Systems B.V, Netherland 6,18,089.55 5,01,729.40(26% share holding)(9,256 Ordinary shares of Euro 1/- each fully paid up)Comunet Info-Systems Pvt. Ltd. 30,72,000.00 —(48% Shares holding)(96000 ordinary shares of Rs 22/-(F.V. Rs. 10/-) each fully paid)Investment in Equity with Personal Medic Limited 208.11 208.11(3 Ordinary shares of £ 1 each fully paid up)

37,02,197.66 5,13,837.51SCHEDULE NO. 7Deferred Tax (Liabilities) / AssetsOpening Balances 35,56,117.31 24,71,730.31Add: Deferred Tax Credit up to 1.4.2009 34,49,310.00 —Less: Currency Translation gain for earlier years 6,45,979.82 —

63,59,447.49 24,71,730.31Less/(Add) : Deferred Tax Charge/(Credit) for the year 10,27,227.19 (10,84,387.00)

53,32,220.30 35,56,117.31

SCHEDULE NO. 8STOCK-IN-TRADE (as taken, valued and certified by management)Work-in-progress 1,00,18,826.98 1,40,98,461.42Consumable and spares SSD 9,22,870.82 14,78,957.95Trading stock 5,46,71,592.55 39,66,203.48

6,56,13,290.35 1,95,43,622.85SCHEDULE NO. 9SUNDRY DEBTORS(Unsecured Considered good)Debts over six months 3,74,33,609.37 4,36,71,185.03Others 17,29,68,604.12 6,98,25,441.82

21,04,02,213.49 11,34,96,626.85

SCHEDULE NO. 10CASH AND BANK BALANCECash in hand 3,06,411.23 3,56,345.98

Balance with scheduled banks(i) Current A/c 10,47,640.16 49,391.11(ii) Dividend A/c - Indian Bank 1,010.00 1,010.00(iv) Gratuity A/c 1,756.00 1,756.00(v) Fixed Deposit Cummulative (Lien with the Bank) 2,29,59,222.00 2,11,50,321.82(v) EEFC GBP A/c - Indian Bank 34,559.80 1,12,123.16(vi) EEFC USD A/c - Indian Bank 10,345.85 7,527.69(vii) SBI - EEFC USD A/c 2,536.87 —(vii) Dividend unpaid A/c 4,62,100.13 4,62,100.13(viii) Bank balance with other bank in current A/c :

ASAHI BANK, KANDA JAPAN 1,18,172.81 1,33,673.46HSBC-UK 11,58,368.00 27,93,130.91Axis Bank, India 3,991.16 38,427.30

2,61,06,114.01 2,51,05,807.56





SCHEDULE NO. 11LOANS AND ADVANCESLoan to Body Corporates (Unsecured considered good) 1,99,88,096.49 4,06,24,630.08Advances (Recoverable in cash or in kind or for value to be received) 3,11,13,517.61 64,59,890.92Adv IT/TDS (Net of provision) 74,795.73 2,47,171.00Deposits 45,74,558.46 27,08,848.12Advance to Supplier 50,50,000.00 51,18,471.00Prepaid Expenses 4,45,009.49 4,63,731.33Advance to Associates 8,84,083.50 14,27,951.42

6,21,30,061.28 5,70,50,693.87SCHEDULE NO. 12CURRENT LIABILITIESSUNDRY CREDITORSFor goods 11,43,62,700.63 3,11,13,998.49For expenses 5,12,60,253.51 4,64,97,855.35Share application money - pending allotment 54,02,666.87 2,38,34,100.00Advance from customer 3,40,59,323.00 3,32,12,823.00Other advance 72,77,253.87 34,22,846.31Interest Accrued but not due 3,98,647.00 2,99,461.00Dividend unpaid account* 4,62,100.13 4,62,100.13Overdrawn bank balance 80,04,334.93 34,24,335.63

22,12,27,279.94 14,22,67,519.91

* Includes amount of Rs. 11078.00 due to be transferred to investor

Education and Protection Fund

SCHEDULE NO. 13PROVISIONSProvision for Fringe Benefit Tax (Net off) 10,21,302.00 1,021,302.00

10,21,302.00 1,021,302.00

SCHEDULE NO. 14MISCELLANEOUS EXPENDITUREA.Preliminary & preoperative Expenses 65,682.00 98,523.00

Less: Written Off during the year 32,841.00 32,841.00

32,841.00 65,682.00

B. Deferred Revenue Expenditre-Brand Building 63,51,716.43 66,36,830.41

Less: Written Off during the year 2,85,113.98 2,85,113.98

60,66,602.45 63,51,716.43

Total: (A+B) 60,99,443.45 64,17,398.43





SCHEDULE NO. 15SALESDomestic Sales / Services 27,13,13,745.98 9,63,07,651.83(TDS of Rs. 9.19 lacs, Previous year Rs. 7.80 lacs)Export Sales / Services 12,63,38,862.81 19,97,84,032.85

39,76,52,608.79 29,60,91,684.68

SCHEDULE NO. 16OTHER INCOMEIncome from currency fluctuation — 54,74,424.18Miscellaneous income 1,90,854.58 8,83,917.62Profit on Sale of Assets — 3,75,100.00Incentive & Discount received 14,97,838.00 16,48,627.31Dividend on shares 4,657.00 62,194.00Interest received 12,35,143.97 27,68,593.42(TDS of Rs. 2.38 lacs, Previous year Rs. 1.25 lacs)Income from investment in Associates 1,16,360.15 5,43,867.92

30,44,853.70 1,17,56,724.45SCHEDULE NO. 17(INCREASE)/DECREASE IN (W.I.P.)Opening stock - WIP : 1,40,98,461.42 2,18,56,950.73Closing stock - WIP : 1,00,18,826.98 1,40,98,461.42

40,79,634.44 77,58,489.31

SCHEDULE NO. 18COST OF PURCHASE - TRADINGOpening stock 39,66,203.48 62,52,071.08Add : Purchases 25,37,55,031.84 5,26,09,868.03

25,77,21,235.32 5,88,61,939.11Less : Closing stock 5,46,71,592.55 39,66,203.48

20,30,49,642.77 5,48,95,735.63SCHEDULE NO. 19CONSUMPTION OF CONSUMABLE STORESOpening stock 14,78,957.95 22,47,742.66Add : Purchases 12,63,512.00 6,28,917.00

27,42,469.95 28,76,659.66Less : Closing Stock 9,22,870.82 14,78,957.95

18,19,599.13 13,97,701.71SCHEDULE NO. 20STAFF COSTSalaries 8,15,57,315.34 15,63,73,020.61Employer’s Contribution to Provident Fund 11,56,991.28 15,10,773.88Employer’s Contribution to E.S.I 1,24,912.14 1,18,534.94Employer’s Contribution to Gratuity 50,000.00 55,000.00Insurance benefit to staff — 10,41,987.32

8,28,89,218.76 15,90,99,316.75






SCHEDULE NO. 21

OPERATING EXPENSESElectricity expenses 13,27,759.82 21,74,039.98Bandwidth charges 51,04,617.18 21,10,368.55Professional and consultancy charges 1,37,83,875.37 85,95,553.02Repairs & maintenance 18,95,028.70 21,12,849.19Insurance premium 2,14,539.94 93,025.00Operative expenses for WOS-UAE 52,57,316.01 22,33,561.94Operative expenses for WOS-UK 11,70,224.09 89,04,340.58

2,87,53,361.11 2,62,23,738.26

SCHEDULE NO. 22

ADMINISTRATIVE EXPENSESDirectors’ remuneration 31,80,000.00 61,80,395.43Rent, Rates and taxes 8711998.66 4,514,744.00Discount allowed 916239.79 5,15,469.46Currency Fluctuation Loss 79,08,180.52 —Travelling and conveyance expenses 77,62,695.78 1,07,64,708.14Postage, telephone and telegram 20,34,780.37 26,70,569.06Printing & stationary 5,16,973.36 7,55,671.80Business promotion 13,72,781.36 33,75,816.20Adver tisement and publicity 3,40,596.30 17,22,730.00Office expenses 18,65,202.88 15,13,237.85Remuneration to Auditors 5,02,962.00 4,28,230.00Staff training expenses 19,500.00 3,61,350.00Staff welfare expenses 4,32,373.12 3,55,723.40Misc. Exp. 18,06,082.22 23,57,562.78Bad debt — 3,31,29,666.86Administrative expenses for WOS–UK 4,21,580.29 1,61,25,746.96Administrative expenses for WOS-UAE 2,40,029.00 45,47,216.54

3,80,31,975.65 8,93,18,838.48

SCHEDULE NO. 23

FINANCE CHARGESBank Interest 16,721,285,58 13,610,903.00Other Interest 814,520.60 873,993.84

Bank Charges 7,876,428.62 5,701,814.94

2,54,12,234.80 2,01,86,711.78

SCHEDULE NO. 24

TAXESCurrent Tax 1,329,770.00 —Deferred Tax 1,027,227.19 (1,084.387.00)Fringe Benefit Tax — 400,000.00

2,356,997.19 (684,387.00)


SCHEDULE NO. 25

SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTSCOMPANY OVERVIEWOntrack Systems Limited along with its wholly owned andcontrolled subsidiaries Ontrack Systems (UK) Ltd., OntrackSystems (UAE) Ltd., Ontrack Systems (Aust) Pty. Ltd. and OntrackGlobal Services Ltd. is a leading global Information Technologyservice provider. The Company has two Associate Companiesnamely Ontrack Systems B.V. Netherland and Communet Info-Systems Pvt. Ltd. and also has a joint venture with PersonalMedic (UK) Ltd. Communet Info-Systems Pvt. Ltd. became anAssociate Company during the repor ting year by vir tue of holding48% stake. The Company has an established line of business inIndia, UK, UAE, Holland and Australia which mainly deals withcomputer software development both onsite and offshore. TheCompany is headquar tered in India.

OSL Group is formed to provide Information Technology solutions,Information Technology consultancy, Development servicesglobally, enhancing competitive advantage of its customers. TheCompany also provides both onsite as well as offshore servicesin the area of in ternet , migrat ion projects,data warehousing, e-commerce and web-based solutionsamongst others.

A. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PREPARATIONS THE FINANCIAL STATEMENTS

The consolidated financial statements of Ontrack Systems Limited(The Company), its subsidiaries and associates (“The Group”)are prepared under the historical cost convention and inaccordance with the requirements of the Companies Act, 1956.

PRINCIPLES OF CONSOLIDATIONThe financial statements of the subsidiary companies used in theconsolidated are drawn up to the same repor ting date as of thecompany.

The consolidated financial statement have been prepared on thefollowing basis in accordance with Accounting Standard on“Consolidated Financial Statement” (AS-21), “Accounting forInvestments in Associates in Consolidated Financial Statements”(AS-23) and “Financial Reporting of Interest in Joint Ventures”(AS-27), notified under the Companies (Accounting Standard)Rules, 2006.

a) The financial statements of the company and its subsidiarycompanies have been combined on a line –by- line basis byadding together like items of assets, liabilities, income &expenses. Inter – company balances and transactions andunrealized profits and losses have been fully eliminated.

b) Interest in a jointly controlled entity is repor ted usingproportionate consolidation

c) The consolidated financial statement includes the share ofprofit/loss of associate companies, which are accountedunder the “Equity Method” as per which the share of profitthe associate company has been added to the cost ofinvestment. An associate is an enterprise in which the investorhas significant influence and which is neither a subsidiarynor a joint venture.

d) The Consolidated f inancial statement includes threesubsidiaries incorporated outside India whose financialstatements have been drawn up in accordance with thegeneral ly accepted accounting practices (GAAP) asapplicable locally. These financial statements have been re-stated in Indian Rupees considering them as non-integral

NOTES TO CONSOLIDATED FINANCIAL STATEMENT

par t of the Group’s operations and the resultant exchangegain / loss on conversion has been carried forward as CurrencyTranslation Reserve. In the opinion of the Management, basedon the analysis of the significant transaction of thosesubsidiaries, no material adjustments are required to be madeto comply with group accounting policies/Indian GAAP.

e) The line-by-line consolidation of expenses are made in theProfit & Loss account of the Group, except cer tain expenseswhich are clubbed under Operating & Administrative expensesof each subsidiary and do not corroborate to any par ticularexpense of the Company. Such expenses are shown as theOperating and Administrative expenses of the respectivesubsidiaries under the respective heads in the Group.

f) The excess of cost to the company of its investments insubsidiary companies over its share of the equity of thesubsidiary companies at the dates on which the investmentsin the subsidiary companies are made, is recognized as“Goodwill” being an asset in the consolidated financialstatements. Alternatively, where the share of equity in thesubsidiary companies as on the date of investments is inexcess of cost of investment of the Company, it is recognizedas “Capital Reserve” and shown under the head “Reserves &Surplus” , in the consolidated financial statements.

g) Minority interest in the net assets of consolidated subsidiariesconsists of the amount of equity attributable to the minorityshare holders at the dates on which investments are made bythe Company in the subsidiary companies and fur thermovements in their share in the equity, subsequent to theparent subsidiary relationship come into existence.

THE LIST OF SUBSIDIARIES COMPANIES, ASSOCIATES ANDJOINT VENTURES, WHICH ARE INCLUDED IN THECONSOLIDATION AND THE COMPANIES HOLDINGS THEREINARE AS UNDER:

Name of the Country of % Shareholding % ShareholderCompany Incorporation and Voting and Voting

Power 2010 Power 2009

Subsidiary Companies

a) Ontrack Systems UK 100 100(UK) Ltd.

b)Ontrack Systems UAE 100 100(UAE) Ltd.

c)Ontrack Systems Australia 100 100(Aust) Pty. Ltd.

d)Ontrack Global India 99.99 99.99Services Ltd.

Associates

a) Comunet Info- India 48 NILSystems Pvt. Ltd

b)Ontrack Systems Netherland 26 26B.V Netherland

Joint Venture

Personal Medic UK 3 equity 3 equity(UK) Ltd. shares held of shares held

£ 1/- each £ 1/- eachfully paid fully paid



USE OF ESTIMATES

The preparation of financial statements, in conformity with thegenerally accepted accounting principles, requires estimates andassumptions to be made that affect the repor ted amount of assetsand liabilities on the date of financial statements and the repor tedamount of revenues and expenses during the repor ted year.Differences between the actual results and estimates arerecognized in the year in which the results are known / materialized.

FIXED ASSETS

Fixed Assets are stated at cost less accumulated depreciation

DEPRECIATION

Depreciation on Fixed Assets has been provided on Straight LineMethod and written off over a period as estimated by themanagement, except for Ontrack System (Aust.) Pty Ltd.

Computer and its Accessories including Software 3 Years

Building - freehold 20 Years

Other Fixed Assets 5 to 6 Years

Vehicles of UAE, Subsidiary 4 years

Lease hold Land & Building is amor tized over the period of lease.

In respect of Fixed assets in Ontrack System (Aust.) Pty. Ltd, thedepreciation has been provided on Written Down Value(WDV)method and in accordance with Australian Tax Rule. Thedepreciation charge is not significant in the context of theconsolidated financial statements.

IMPAIRMENTS

At each Balance Sheet date, the Company reviews the carryingamount of its fixed Assets to determine whether there is anyindications that those assets suffered any impairment loss. If anysuch indication exists, the recoverable amount of the asset isestimated in order to determine the extent of impairment loss.The recoverable amount is the higher of an asset net selling priceand value in use. In assessing value in use , the estimated futurecash flow expected from the continuing use of the assets andfrom its disposal are discounted to their present value using apre-determined rate that reflect the current market assessment oftime value of money and the risks specific to the assets . Reversalof impairment loss is recognized immediately as income in theProfit & Loss Account.

INVESTMENTS

Long term investments are stated at cost. Provision for diminutionin the value of long-term investment is made only if such a declineis other than temporary in nature in the opinion of theManagement. If the values of Investment for take over of a goingconcern are much higher than estimated cost of Net AssetsValue including their intrinsic value as estimated by management,the additional payment in lieu of takeover value is considered asGoodwill and if it is reverse the amount will be transferred toCapital Reserve.

INVENTORIES

Inventories of trading goods, spare par ts and consumable storesare valued at lower of cost or net realizable value. Outdated and

damaged stocks are written off on technical evaluation. The WIPis valued at direct cost attributed to projects based on stages ofcompletion as cer tified by the management.

RECOGNITION OF REVENUE

Sales: The sales are recognized at the point of dispatch of materialto the customers and bills are raised to them. Sales are shownnet of goods return, rebates, rate differences etc. Income frommaintenance contracts are accounted for in the relevantaccounting year upon entering into the contract. Revenue relatingto the provision of services is recognized on the basis ofachievement of prescribed milestone as relevant to terms ofcontract or propor tionate completion method as applicable.

Income & Expenditure: The Company follows mercantile systemof accounting and recognizes significant items of Income &Expenditure on accrual basis.

PRELIMINARY EXPENSES AND DEFERRED REVENUEEXPENDITURE

Preliminary expenses and Deferred revenue expenditure areamortized over a period of five years, except the Deferred revenueexpenditure of Ontrack Global Services Ltd.

In respect of Ontrack Global Services Ltd, Deferred RevenueExpenditure includes Management expenses and Project expenseson pilot project, which will be amortized after the commencementof the Pilot Project.

FOREIGN CURRENCIES TRANSACTIONS

Foreign currency transactions are accounted for at the prevailingexchange rate as on the date of execution of the transaction or ofthe rate cover under forward contract as applicable. Foreigncurrency monetary items not cover under forward exchangecontract and due at the end of the year are conver ted at theexchange rate prevailing as on that date. Exchange differencesarising on the settlement of the transactions or on repor ting atthe year end rates are recognized as Income or as expenses inthe period in which arise, except in respect of fixed assets acquiredfrom out side India, where exchange variance is adjusted to thecarrying amount of the respective fixed assets.

EMPLOYEES BENEFIT

Shor t Term Employees Benefits: The undiscounted amount ofshor t term employee benefit expected to be paid in exchange forthe services rendered by the employees are recognized duringthe period when the employees render the service

Post Employment benefits plans:

a) Defined Contribution Plan: Contribution under definedcontribution plan payable in keeping with the related schemeare recognized as expenses for the year.

b) Defined benefit plan: The Group gratuity scheme provided bythe company is a defined benefit plan. Benefits under thedefined benefit plan are generally based on the years of servicerendered and the employee’s el igible compensation(immediately before retirement). The scheme coverssubstantially all regular employees and the companycontributes funds to the Life Insurance corporation of India,which administers the scheme on behalf of the company.


Other Long Term employment benefit (unfunded): The cost ofproviding long term employee benefit is generally recognized oncash basis.

The employees benefit if applicable to the subsidiaries arerecognized during the year, based on the law as prevailing in theirrespective country of incorporation, except for Ontrack System(UK) Ltd, where the applicability and/or the provision requirementfor employees benefit is not disclosed/repor ted in it’s Financialstatement.

SEGMENT REPORTING

The geographical segments have been identified as primarysegment on the basis of location of the major customers of theCompany. These segments represent a strategic business unitthat offers different places of unit having different risk and returns.Inter-segment sales and transfers if any are accounted for, as ifthe sales or transfers were to third parties at current market prices.Income & expenditure and Assets & Liabilities not allocable toany specific geographical segment, are classified as unallocated.The company’s secondary segment is business segment and itoperates only in one business segment namely Trading/dealingwith computer hardware and software. Therefore no separatesecondary segment is identifiable as required by accountingstandard 17 issued by ICAI.

BORROWING COSTS

Borrowing costs attributable to qualifying assets are capitalizedup to the date when such assets are ready for their intend use,other borrowing cost are recognized as expenses in the period inwhich they are incurred.

EARNINGS PER SHARE

Basic earning per share are calculated by dividing the net profit orloss for the period attributable to equity share holders (afterdeducting attributable taxes) by the weighted average number ofequity shares outstanding during the period. The weighted averagenumber of equity shares outstanding during the period is adjustedfor events of bonus issue, bonus element in a rights issue toexisting shareholders, share split and reverse shares split(consolidation of shares).

For the purpose of calculating diluted earnings per shares, thenet profit or loss after tax for the period attributable to equityshare holders and the weighted average number of sharesoutstanding during the period are adjusted for the effects for alldilutive potential equity shares.

TAX ON INCOME

Current Tax represents the amount that would be payable basedon the computation of tax as per prevailing taxation laws under ITAct 1961. Deferred tax is recognized subject to consideration ofprudence, on timing differences, being the difference betweentaxable income and accounting income that originate in oneperiod and are capable of reversal in one or more subsequentperiods. Deferred tax is calculated using the tax rates and taxlaws that has been enacted and/or substantially enacted as at theBalance Sheet date. Deferred tax assets are not recognized unlessthere is vir tual cer tainty that sufficient future taxable income willbe available against which such deferred tax assets can be realize.

CONTINGENT LIABILITIES & ASSETS

Provisions involving substantial degree of estimation in


measurement are recognized when there is a present obligationas a result of past events and it is probable that there will be anoutflow of resources. Contingent Liabilities are not recognizedbut are disclosed in the Notes to the accounts. Contingent Assetsare neither recognized nor disclosed in the financial statements.

B. NOTES TO THE ACCOUNTS1. Contingent liabilities not provided for : (Rs. in lacs)

31.03.2010 31.03.2009

a) Income Tax Demand against

which Appeals are pending 286.00 116.57

b) Bank Guarantee :

Foreign 545.05 629.31

Domestic 43.69 26.17

2. Loans and Advances include Rs.10.00 lacs due from a par ty,against which the company has filed money suit and the matteris subjudice. Pending the outcome of the legal proceedings, theextent of amounts recoverable there against is not ascer tainableand therefore no provision has been made in the accounts.

3. Sundry Debtors includes Rs.270.65 lacs (AED 22,09,416)relating to account receivables of Ontrack Systems (UAE) Ltd.which have been lying unrealized for period exceeding one year.Necessary action and persuasion has been taken for the realizationof the debts. Pending the outcome of the persuasive and action,the extent of amount recoverable there against is not ascer tainableand therefore no provision has been made in the accounts. Furtherthe management is in belief that the concentration of credit risk isbeing mitigated since the outstanding balance are due mainlyfrom customers with whom there have been good relationships,with track records of regular payments.

4. The employees’ gratuity fund scheme is a defined benefit plan.The present value of the obligation under the plan is currentlynot determined /ascertained based on the actuarial valuation usingthe Projected Unit Cost Method and not provided for in theaccounts during the year.

5. The employees’ group medical policy of Ontrack system Ltd,India; is managed by Insurance Company. The premium obligationunder this policy is currently not ascer tained and not providedfor in the accounts during the year.

6. No provision has been made for the present value of leave accruedin respect of the eligible employees based on the actuarialvaluation using the Projected Unit Cost Method. The presentvalue of the obligation is currently not determined / ascer tained .However in respect of Ontrack Systems Limited, India leave benefitas per management’s policy is not to be accrued beyond 30 daysbut availed of and the employees have been advised to plan theirleave in advance whi le in serv ice immediate ly beforesuperannuation. Leave not availed of is not encashable.

7. The provision for post employment benefits cost in respect ofOntrack Systems (UAE) Ltd. has been made in pursuant to theUnited Arab Emirates federal labour law No. 8 of 1984 (asamended) based on the employees’ accumulated period of serviceand current remuneration as at the date of financial statement .However the management is of the opinion that no significantdifference would have arisen had the liability been calculated onan actuarial basis, as salary inflation and discount rates are likelyto have approximately equal and opposite affects.


8. The accounts of Ontrack System (UK) Ltd is exempted fromstatutory audit in term of Sec 248 of the UK Companies Act.,1985. Therefore it’s unaudited financial statement as approvedby the board of directors of the company are considered for theconsolidation of the accounts.

9. The Audited accounts of Ontrack Systems (Australia) Pty. Ltd. isnot available. The unaudited financial statement as approved bythe board of directors and compilation repor t issued thereon interms of Australian Professional Ethic Standard (APES)-315 hasbeen considered in the consolidation of the accounts.

10. The financial statement of following subsidiaries have beenconsidered on Unaudited basis. Details of the same are as under:

Ontrack Systems Ontrack Systems(UK) Ltd. (Aust) Pty. Ltd

As at March 31, 2010 (Rs. in lacs) (Rs. in lacs)

Net Worth 241.63 (106.59)

For the year ended March 31, 2010Total Revenue 7.57* 451.62Net Increase/(Decrease) in Cash &Cash Equivalent (14.12) 23.28

* Net of consolidation adjustments.

11. Due to non availability of the accounts of M/s. Personal Medic(UK) Ltd., the interest in joint venture has not been accountedfor as per Accounting Standard 27-“Financial Repor ting ofinterest in Joint Ventures” notified by Companies (AccountingStandard) Rules,2006.

12. The company has passed a special resolution in Extra ordinaryGeneral Meeting held on 14th May 2010 for the issue ofPreferential allotment of 1,02,00,000 equity shares to thepromoter’s & their groups. Consequent to such allotment, thepercentage of holding of the promoters’ and their group in theequity shares of the company would be 65.74 against the presentholding of 27.52.

13. By vir tue of acquiring equity shares having 48% voting right inComunet Info-Systems Pvt. Ltd on the last day of the financialyear, it became the associate enterprise of the company andaccordingly no share of income has been added to the cost ofinvestment in associates.

14. Major Components of Deferred Tax Assets/(Liabilities) as at31.03.2010 are as follows:

(Rs. in lacs)Items As at During As at

01.01.2009 the Year 31.03.2010

Depreciation difference 23.28 34.60 57.88Expenses disallowedunder 40(a) 4.88 (17.01) (12.13)Amor tization of DeferredRevenue Expenses (0.88) - (0.88)Unadjusted loses 8.28 0.17 8.45

---------- --------- ----------35.56 17.76 53.32

---------- --------- ----------Deferred Tax credit/(charge)up to 01.04.2009 34.50Deferred Tax credit/(charge)for the year (10.27)Exchange translation lossfor the earlier year (6.47)

----------17.76

----------

15. Calculation of Earning per shares :(Rs. in lacs)

Particulars 31.03.2010 31.03.2009Net profit/(loss) after tax attributableto shareholders 8.42 (705.23)Weighted avg. number of equityshares outstanding (No.) 86,81,648 79,50,300Nominal value of equity shares Rs.10/- Rs. 10/-Basic/Diluted earning per share Re. 0.10 Rs. (8.87)

16. Related Party TransactionName of the Related par ties and description of relationship:Name RelationshipOntrack Systems (B.V. ) Netherland Associated EnterpriseComunet Info-Systems Pvt. Ltd. Associated EnterpriseMr. B. Hari Key Managerial PersonnelMr. S. V. Ramani Key Managerial PersonnelMrs. Simi Hari Relatives of Key Managerial

Personnel


Particulars of Transactions and closing balances at the end of the year(Rs. In Lacs)

Nature of Transactions Associate Key Managerial Balance as atEnterprises Personnel & relatives 31.03.2010

Remuneration 36.00 23.80(34.80) (17.75)

Investment 36.90 36.90(5.02) (5.02)

Advance Received 94.01 94.01(21.71) (21.71)

Advance Paid 188.90 188.90 (16.55) (16.55)




17. SEGMENT INFORMATION FOR THE YEAR ENDED 31ST MARCH 2010

Primary : Geographical Segment

CONSOLIDATED SEGMENT-WISE REVENUE RESULTS (Rs. In Lacs)

PARTICULARS DOMESTIC UAE EUROPE & OTHERS TOTAL

Segment Revenue 2713.14 670.02 594.53 3977.69(963.07) (682.22) (1321.07) (2966.36)

Segment Result 197.45 273.45 8.46 479.36(102.45) (73.24) (-139.66) (36.03)

Unallocated income 16.94(excluding interest income) (84.44)

Unallocated Expenditure 91.09(459.79)

Finance Charges (Net) 241.77

(174.18)Depreciations (Net) 131.45

(198.57)

Profit/(Loss) before tax 31.99(-712.07)

Provision for Taxation 23.57(-6.84)

Profit/(Loss) after tax 8.42(-705.23)

Segment Assets 1698.99 234.06 1000.93 2933.98(512.42) (645.06) (108.06) (1265.54)

Unallocated Assets 2085.87(2333.54)

Segment Liabilities 1407.50 105.21 248.09 1760.80 (638.64) (134.31) (89.13) (862.08)

Unallocated Liabilities 2149.04(1866.77)

Capital Expenditure 12.03(542.19)

Non cash expenditure other than depreciation 3.18(3.18)

Capital Employed 1110.02(870.23)


18. Figures per taining to the subsidiary companies have been reclassified wherever necessary to bring them in line with the Company’s financialstatements

19. Previous year figures have been regrouped/rearranged/recast wherever found necessary.As per our repor t of even date attached




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NOTICE

NOTICENotice is hereby given that the 22nd Annual General Meeting of theShareholders of the Company will be held at 11.30 a.m on Wednesday22nd September at Sabha Hall, Savera Hotel, 146, Dr. RadhakrishnanSalai, Mylapore, Chennai, India to transact the following business:

1. To receive, consider and adopt

a) The Audited Balance Sheet as at March 31st, 2010.

b) The Audited Profit and Loss account for the year ended as onthat date;

c) Directors’ report for the year 2009-2010 and

d) The Auditors’ report, thereon.

2. To appoint a Director in place of Mr. Ramadevan Krishnaswamywho retires by rotation, being eligible offers, himself for reappointment.

3. To appoint a Director in place of Mr. Robin Ghosh who retires byrotation, being eligible offers, himself for reappointment.

4. To appoint Goenka Shaw & Co., Chartered Accountants as theAuditors of the Company who retires at the conclusion of thisAnnual General Meeting and who has consented to continue asAuditors, if re- appointed, to hold office for the period commencingfrom the conclusion of this meeting till the conclusion of nextannual general meeting and to fix their remuneration.

SPECIAL BUSINESS

5. To Consider and, if thought fit, to pass with or without modification,the following resolution as an Special Resolution:-

“RESOLVED THAT consent be and is hereby accorded in terms ofsection 293(1)(d) of the Companies Act, 1956 and other applicableprovisions, if any, of the Companies Act, 1956 to the Board ofDirectors of the Company for borrowing from time to time any sumor sums of monies which together with the monies already borrowedby the Company (apart from temporary loans obtained or to beobtained from the company’s bankers in the ordinary courses ofbusiness) may exceed the aggregate of the paid up capital of thecompany and its free reserves, that is to say, reserves not set apartfor any specific purpose, provided that the total amount so borrowedby the Board shall not at any time exceed the limit of 30,00,00,000/-(Rupees thirty crores).”

6. To Consider and, if thought fit, to pass with or without modification,the following resolution as an Ordinary Resolution:-

“RESOLVED THAT pursuant to provisions of section198,269,309,310 and Schedule XIII and other applicable provisions,if any, of the Companies Act, 1956, approval of the company isaccorded hereby for re-appointment of Sri. B.Hari, Managing Directorfor a period of five years w.e.f 04.02.2010 till 03.02.2015 uponsuch terms and conditions as set out in the draft agreement to beexecuted with Mr. Hari and the company with specific authority tothe Board of Director to alter or vary the terms and conditions of thesaid appointment / agreement having the remuneration which shallnot exceed an overall ceiling of Rs. 2,50,000/- per month as may beagreed to between the Board of Directors & Mr. Hari”.

RESOLVED FURTHER THAT the following perquisites shall not beincluded in the ceiling on remuneration as specified above:

i. Provision for use of the Company’s car for official duties andtelephone at residence(including payment for local calls andlong distance official calls).

ii. Contribution to Provident Fund, Superannuation Fund orAnnuity Fund to the extent these either singly or put togetherare not taxable under the Income Tax Act, 1961.

iii. Gratuity as per the rules of the Company (which shall notexceed one half months salary for each completed year ofservice); and

iv. Earned leave with full pay or encashment as per rules of theCompany.

“RESOLVED FURTHER THAT Board may vary, alter and modifysuch salary, commission and perquisites so as not to exceed thelimits specific in Part-II of Schedule-XIII of the Companies Act,1956(including the statutory modification or re-enactment thereof,for the time being in force), as may be agreed to by the board ofDirectors and Mr. B.Hari.”

“RESOLVED FURTHER THAT notwithstanding anything hereinabove stated where in any financial year during the currency oftenure of Mr. B.Hari. the company incurs a loss or its profits areinadequate, the company shall pay to Mr. B.Hari, remuneration byway of salary, allowances and perquisites not exceeding the limitsspecified in Part-II of Section-II of Schedule XIII to the CompaniesAct, 1956, or such other limits as may be prescribed by theGovernment from time to time as minimum remuneration.”

7. To Consider and, if thought fit, to pass with or without modification,the following resolution as an Ordinary Resolution:-

“RESOLVED THAT pursuant to Section 198,269,309,310 andSchedule XIII and other applicable provisions, if any, of theCompanies Act, 1956, approval of the company is accorded herebyfor reappointment of Mr. S.V.Ramani as Whole-time Director &Company Secretary, for a period of five years with effect from04.02.2010 till 03.02.2015 upon such terms and conditions asset out in the draft agreement to be executed with Mr. S.V.Ramaniand the company with specific authority to the Board of Director toalter or vary to terms and conditions of the said appointment /agreement having the remuneration which shall not exceed an overallceiling of Rs. 1,75,000/- per month as may be agreed to betweenthe Board of Directors & Mr. Ramani”.

RESOLVED FURTHER THAT the following perquisites shall not beincluded in the ceiling on remuneration as specified above:

i. Provision for use of the Company’s car for official duties andtelephone at residence(including payment for local calls andlong distance official calls).

ii. Contribution to Provident Fund, Superannuation Fund orAnnuity Fund to the extent these either singly or put togetherare not taxable under the Income Tax Act, 1961.

iii. Gratuity as per the rules of the Company (which shall notexceed one half months salary for each completed year ofservice); and


NOTES

1. The relevant Explanatory Statement pursuant to Section 173(2)

of the Companies Act, 1956 is annexed hereto.

2. A member entitled to attend and vote at the meeting is entitled

to appoint a proxy to attend and vote on his behalf and proxy

need not be a member. The instrument appointing a proxy should

be deposited at the Registered Office of the Company, not later

than 48 hours before the meeting.

3. The Register of members and share transfer books will remain

closed from 17th September to 22nd September, 2010 (both

days inclusive).

4. Members are requested to bring their copies of the Repor t and

Accounts to the meeting. Please bring the attendance slip with

you duly filled in and hand over the same at the entrance of the

meeting hall.

5. Members are requested to notify any changes in their address

immediately.

6. Members desirous of getting any information about the

accounts and operations of the Company are requested to

address their queries to the Company Secretary at least seven

days in advance of the meeting so that information required

can be made readily available at the meeting. Members may also

login to the Company’s Website: http://www.ontrackindia.com

for details information on the financial performance of the

Company.

7. Members holding shares in physical form are requested to

dematerialize the shares into electronic form to facilitate faster

transfer and avoid rejections for bad deliveries. The share

cer tificates may be sent directly to our Share Transfer Agent:

Cameo Corporate Services Ltd., No. 1, Club House road, Chetpet,

Chennai -600002

8. Pursuant to the provisions of Section 109A of the Companies

Act. 1956, Shareholders are requested to file Nomination Form

in respect of their shareholdings. Any shareholder wishing to

avail of this facility may submit to the Company Statutory

Form 2B.

9. Members wishing to claim their dividend, which remain

unclaimed, are requested to correspond with Company Secretary

at the Corporate Office in Kolkata with a copy to the R & TA,

Cameo Corporate Services Ltd., Chennai. Members are requested

to note that dividend not encashed or claimed within 7 years

from the date of transfer to the Company’s unpaid dividend

account, will as per 205A of the Companies Act, 1956, be

transferred to the Investors Education and Protection Fund.

10. Members are requested to address all communications including

dividend mandates to the Register and Share Transfer Agent:

Cameo Corporate Services Ltd., Subramanian Building, 1, Club

House road, Chetpet, Chennai -600002, India, E-mail :

[email protected]

iv. Earned leave with full pay or encashment as per rules of theCompany.

“RESOLVED FURTHER THAT Board may vary, alter and modify suchsalary, commission and perquisites so as not to exceed the limitsspecific in Par t-II of Schedule-XIII of the Companies Act,1956(including the statutory modification or thereto and if necessaryas may be stipulated by the Government from time to time.”

“RESOLVED FURTHER THAT notwithstanding anything herein abovestated where in any financial year during the currency of tenure of Mr.S.V.Ramani. the company incurs a loss or its profits are inadequate,

the company shall pay to Mr. S.V.Ramani, remuneration by way ofsalary, allowances and perquisites not exceeding the limits specifiedin Par t-II of Section-II of Schedule XIII to the Companies Act, 1956,or such other limits as may be prescribed by the Government fromtime to time as minimum remuneration.”

By Order of the BoardSd/-

Place : Kolkata (S. V. Ramani)Dated : 13th August, 2010 Whole-time Director & Secretary

NOTICE


ITEM NO. 6

Under section 293(1)(d) of the Companies Act, 1956 the Board of Directors of a Company can not , except with the consent of the Company in GeneralMeeting, borrow monies, apart from temporary loans obtained from the Company’s bankers in the ordinary course of business, in excess of theaggregate of the paid up capital & free reserves of the Company, that is to say, reserves not set apart for any specific purpose.

Taking into consideration the requirements of additional funds to meet the cost of the Company’s Capital Expenditure Programmes as also additional workingcapital requirements of the Company, it is expected that the borrowing limit upto Rs. 30 Crores (thirty crores) is required. The consent of shareholders istherefore, sought in accordance with the provisions of Section 293 (1) (d) of the Act, to enable the Directors to borrow monies to the extent of Rs. 30crores(thir ty crores). The resolution under Item No. 5 is to obtain the consent of the shareholders’ for this purpose. Even with the proposed borrowing, thedebt-equity ratio of the Company will be within a reasonable limit.

The proposed offer is in the interest of the company and your Directors commend the Resolutions in item No. 5 of the Notice for acceptance of the members.None of the Directors are interested in the Resolutions at Item 5.

ITEM NO. 7 & 8

The reappointment of Mr. B. Hari and Mr. S. V. Ramani as Managing Director and Whole-time Director & Secretary of the Company for a period of 5 yearscommencing from 04.02.2010 till 03.02.2015.

The remuneration of Mr. B. Hari and Mr. S. V.Ramani is to be fixed by the Board of Directors from time to time , such that the salary and the aggregate valueof all perquisites and allowances shall not exceed the overall ceiling on remuneration approved by the members in General Meeting.

Your Directors at their meeting held on 21st July, 2010 based on the recommendation of the Remuneration Committee of the Board of Directors at its meetingheld on 13th August, 2010, felt desirable that the compensation paid to the MD and WTD of the Company be revised w.e.f. 01.04.2010, more or less in linewith remuneration drawn by their counterparts in similar size company in the country and approved an increase in the ceiling on remuneration payable to Mr.B. Hari and Mr. S. V. Ramani to Rs. 2,50,000 per month & Rs. 1,75,000 per month w.e.f. 04.02.2010 subject to approval of the members.

The following perquisites shall not be included in the computation of the ceiling on remuneration specified above:

i. Provision for use of the Company’s car for official duties and telephone at residence(including payment for local calls and long distance official calls).

ii. Contribution to Provident Fund, Superannation Fund or Annuity Fund to the extent these either singly or put together are not taxable under the IncomeTax Act, 1961.

iii. Gratuity as per the rules of the Company (which shall not exceed one half months salary for each completed year of service); and

iv. Earned leave with full pay or encashment as per rules of the Company.

For the purpose of calculating the above ceiling , perquisites shall be evaluated as per Income Tax Rules, wherever applicable. In the absence of any suchRules, perquisites shall be evaluated at actual cost.

In the event of loss or inadequacy of profits in any financial year, Mr. B. Hari & Mr. S. V. Ramani shall be paid remuneration by way of salary and perquisites asspecified above, subject to the approval of the Central Government, if required.

Mr. Hari & Mr. Ramani shall not be eligible for any sitting fees for attending the Company’s Board or Committee Meetings . The Board of Directors may, in itsdiscretion pay to Mr. Hari and Mr. Ramani lower remuneration than the maximum remuneration herein above stipulated and revise the same from time to timewithin the maximum limit stipulated by this resolution.

Approval of the Members is now being sought for the said increase in the ceiling on remuneration w.e.f. 04.02.10. till 03..02.2015 of Mr. Hari and Mr. Ramani.

The proposed increase in ceiling is within limits prescribed under Part II Section I of the Schedule XIII of the Companies Act, 1956. All other terms andconditions of appointments of the aforesaid MD & WTD as approved by the Members remain unchanged.

The terms of remuneration of Mr. B. Hari & Mr. S. V. Ramani has the approval of the remuneration committee.

The above details may also be treated as an abstract of the modification in terms of appointment of the aforesaid MD & WTD, under the section 302 of theCompanies Act, 1956.

The draft supplemental Agreement to be executed between the Company and Mr. Hari & Mr. Ramani is available for your inspection by the members of thecompany at the company’s office at Plot Y-18, EP Block, Sector-V, Salt Lake, Kolkata-700 091 on all working days of the company, between 10.00 a.m. and2.00 p.m. up to the Annual General Meeting.

Both Mr. B. Hari and Mr. S. V. Ramani of the Directors may be considered as interested to the extent of fixing up their remuneration in the resolution.

The Board recommends the resolutions as at item No. 7 & 8 for your approval.

By Order of the Board of Directors.

Sd/-

Place : Kolkata (S.V. Ramani)

Dated : 13th August, 2010 Whole-time Director & Secretary

NOTICE

Explanatory statement pursuant to section 173(2) of the Companies Act, 1956and Clause 23(a) of the Articles of Association of the Company.


Details of the Directors seeking appointment/reappointmentin the Annual General Meeting fixed on 22nd September 2010

Name of Director

Date of Birth

Date of Appointment

Experience in specific functional areas

Qualification

List of Outside Directorship held

Chairman/Membership of the Committee ofDirectors

Chairman/Membership of the Committeeof Directors of Other Companies in whichhe/she is a Director

Mr. Ramdevan V Krishnaswamy

25h September, 1962

30.07.2008

Specialist in Merger& Acquisition

Management Graduate

Nil

Audit Committee- Chairman

NIL

Mr. Robin Ghosh

26.06.2007

Business Economist

Post Graduate in Economics

Two

Nil

Nil

17.08.1945

NOTICE


TWENTY SECOND ANNUAL GENERAL MEETING

DP ID/Client-ID No. of Shares

Note : (i) The proxy must be returned so as to reach the Investor Service Centre, Ontrack Systems Limited, ew No. - 48, Old No.30, Second Floor, Dr. Madhavan NairRoad, Mahalingapuram, Chennai - 600 034, India, not less than FORTY-EIGHT HOURS before the commencement of the aforesaid meeting.

(ii) Please mark the envelope ‘ONTRACK SYSTEMS-PROXY’.

Signed by the saidAffix

1 RupeesRevenue Stamp

DP ID/Client-ID No. of Shares

ONTRACK SYSTEMS LIMITEDRegistered Office: New No. - 48, Old No.30, Second Floor, Dr. Madhavan Nair Road,Mahalingapuram, Chennai - 600 034, India, Telephone: +91(44) 4308 1246/1247

P R O X Y F O R M

ONTRACK SYSTEMS LIMITEDRegistered Office: New No. - 48, Old No.30, Second Floor, Dr. Madhavan Nair Road,Mahalingapuram, Chennai - 600 034, India, Telephone: +91(44) 4308 1246/1247

A D M I S S I O N S L I PDATE : VENUE : TIME :

22nd September, 2010 Sabha Hall, Savera Hotel, 11.30 A.M.146, Dr. Radhakrishnan Salai, Mylapore, Chennai, India

I hereby record my presence at the Twenty Second Annual General Meeting of the Compqny on 22nd September, 2010. Please tick in the appropriate box.

Member Proxy

Name of the Proxy in Block Letter Member’s Signature Proxy’s Signature

NOTE :1. Member/Proxyholder wishing to attend the meeting must bring the Admission Slip to the meeting and hand over at the entrance duly signed.2. Representatives of body(ies) corporate to bring to the meeting Board Resolution authorising their presence together with proof of identity.

I/We...........................................................................................................................................................................................................................................................of ............................................................................................................................................................................ being a Member/Members of Ontrack SystemsLimited,hereby appoint...............................................................................................................................................................................................................................of................................................................................... or failing him......................................................................................................................................................of.................................................................................. or failing him....................................................................................................................................................of...............................................................................as my/our proxy to attend and vote for me/us on my/our behalf at the Twenty Second Annual General Meeting of the Company to be held on Wednesday, the 22nd dayof September, 2010 and at any adjournment thereof.

As witness my/our hand (s) this day of ......................................................... 2010........................

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