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Accounting Policies of 8K Miles Software Services Ltd. Company

Mar 31, 2014

1.1 BASIS OF PREPARATION OF FINANCIAL STATEMENTS

a) Basis of Accounting:

The financial statements of the company have been prepared in accordance with the Generally Accepted Accounting Principles (GAAP) in India and presented under historical cost convention on the accrual basis of accounting and materially comply with the Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI) and prescribed in the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956, to the extent applicable.

b) Use of Estimates:

The preparation of Financial Statements in conformity with Generally Accepted Accounting Principles (GAAP) in India requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure relating to contingent liabilities on the date of financial statements and reported amount of income and expenses during the period.

c) Current/Non-Current Classification

Any asset or liability is classified as current if it satisfies any of the following conditions:

i) It is expected to be realized or settled or is intended for sale or consumption in the company''s normal operating cycle;

ii) It is expected to be realized or settled within twelve months from the reporting date;

iii) In the case of an asset,

* It is held primarily for the purpose of being traded; or

* It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date.

iv) In the case of a liability, the company does not have an unconditional right to defer settlement of the liability for at least twelve months from the reporting date.

All other assets and liabilities are classified as non-current.

For the purpose of current / non-current classification of assets and liabilities, the company has ascertained its normal operating cycle as 12 months. This is based on the nature of services and the time between the acquisition of assets or inventories for processing and their realization in cash and cash equivalents and also based on arrangements or agreements or contracts entered into with respective parties.

1.2 TANGIBLE AND INTANGIBLE ASSETS:

a) Tangible Fixed Assets:

Tangible fixed assets are carried at the cost of acquisition or construction, less accumulated depreciation. The cost of fixed assets includes taxes (other than those subsequently recoverable from tax authorities), duties, freight and other directly attributable costs related to the acquisition or construction of the respective assets. Expenses directly attributable to new manufacturing facility during its construction period are capitalized. Know-how related to plans, designs and drawings of buildings or plant and machinery is capitalized under relevant asset heads. Profit or Loss on disposal of tangible assets is recognized in the Statement of Profit and Loss.

b) Intangible Assets:

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment loss, if any. Profit or Loss, if any, on disposal of intangible assets is recognized in the Statement of Profit and Loss.

c) Depreciation And Amortization:

Depreciation is provided on fixed assets on the written down value (WDV) method. The rates of depreciation prescribed in Schedule XIV to the Companies Act 1956 are considered as minimum rates.

Depreciation has been charged in respect of intangible assets - Software (internally developed) and Goodwill (purchased),under Straight Line Basis across the useful life of such asset as determined by the management.

Assets costing less than Rs.5,000 are fully charged to the Statement of Profit and Loss in the year of acquisition. Leasehold land and leasehold improvements are amortized over the primary period of lease.

1.3 REVENUE RECOGNITION:

Revenue is primarily derived from Information Technology Software Consulting and related services. Revenues are recognized on the services rendered on accrual basis, based on arrangements with clients either on fixed Price or on Time and Material basis.

1.4 LEASE ACCOUNTING:

This Standard is not applicable as the Company does not have any finance lease agreement in force.

1.5 INVENTORY:

The Company is a service company primarily rendering IT services. Hence, no quantitative details are being furnished.

1.6 INVESTMENTS

Investments are classified into current and long term investments. Investments that are readily realizable and intended to be held for not more than an year from the date of acquisition are classified as current investments. Al other investments are classified as long term investments.

Current investments are stated at lower of cost or fair value. The comparison of cost and fair value is done separately in respect of each category of investments.

Long term investments are stated at cost. A provision for diminution in the value of long term investments is made only if such a decline is other than temporary in the opinion of management.

On disposal of investments, the difference between its carrying amount and net disposal proceeds is recognized in the Statement of Profit & Loss.

Investments in subsidiaries are accounted as per Accounting Standard 13 issued by the Institute of Chartered Accountants of India. Investments are stated at cost. No provision is made for diminution in value of investments as they are long term and strategic in nature.

1.7 TRANSACTION IN FOREIGN CURRENCY:

a) Initial Recognition:

Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the Statement of Profit and Loss.

b) Measurement of foreign currency items at the Balance Sheet date:

Foreign currency monetary items of the Company are restated at the closing exchange rates. Non- monetary items are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences arising out of these translations are recognized in the Statement of Profit and Loss.

c) Forward exchange contracts:

The premium or discount arising at the inception of forward exchange contract is amortized and recognized as an expense/income over the life of the contract. Exchange differences on such contracts are recognized in the Statement of Profit and Loss in the period in which the exchange rates change. Any Profit or Loss arising on cancellation or renewal of such forward exchange contract is also recognized as income or expense for the period.

The Company has not entered into any forward exchange contracts during the period of audit.

1.8 TRADE RECEIVABLES:

Trade receivables are stated after writing off debts considered as bad, if any. Adequate provision shall be made for debts if considered doubtful.

1.9 EMPLOYEE BENEFITS:

The company is registered with PF Authorities and both the Employer Contribution and Employee Contributions are deposited as per the relevant Act, during the period under audit.The Company has not made Provision of Gratuity and other retirement benefits as per the Actuarial Valuation referred in the Accounting Standard 15 "Accounting for Retirement Benefits in the financial Statement of Employers". The effect on the current period profit was not ascertainable.

1.10 RESEARCH AND DEVOLOPMENT

Research Expense is recognized as an expense as and when incurred.

Expenditure incurred on fixed assets used for research and development is capitalized and depreciated in accordance with the depreciation policy of the company and is disclosed separately.

1.11 PROVISION FOR TAXATION

Tax expense comprises of current tax (i.e. amount of tax for the period determined in accordance with the Income Tax Act, 1961) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period).

The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the Balance Sheet date.

Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future; however, where there is unabsorbed depreciation or carry forward loss under taxation laws, deferred tax assets are recognized only if there is a virtual certainty of realization of such assets. Deferred tax assets are reviewed as at each Balance Sheet date to reassess realization.

1.12 PROVISIONS AND CONTINGENCIES:

The Company creates a provision when there exists a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources is remote, no provision or disclosure is made.

1.13 EARNINGS PER SHARE:

The Basic and Diluted Earnings Per Share ("EPS") is computed by dividing the net profit after tax for the year by weighted average number of equity shares outstanding during the year.

1.14 PROPOSED DIVIDEND:

No Dividend has been declared and paid during the period under audit.

1.15 BORROWING COST:

All borrowing costs are charged to revenue except to the extent they are attributable to qualifying assets which are capitalized. During the year under review there was no borrowing attributable to qualifying assets and hence no borrowing cost was capitalized.

1.16 CASH AND CASH EQUIVALENTS:

Cash and cash equivalents include cash & cheques in hand, bank balances, demand deposits with banks and other short-term highly liquid investments where the original maturity is three months or less.

1.17 GOVERNMENT GRANTS AND SUBSIDIES:

The Company has not received any Government grants during the reporting period.

1.18 SEGMENT REPORTING:

Since the group of products and services rendered by the Company pertains to Information Technology related products and services, the operations of the Company relate to a single reportable segment.

1.19 TRANSFER PRICING:

As per the information and explanations provided by the Management, during the Current year, the Company has not entered into any international transaction which attracts the provisions of Sec.92-92F of the Income Tax Act, 1961.


Mar 31, 2012

A. Basis of Preparation of Financial Statements:

The financial statements of the company have been prepared and presented under historical cost convention on the accrual basis of accounting and materially comply with the Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI) and the relevant provisions of the Companies Act, 1956, to the extent applicable.

b. Use of Estimates:

The preparation of Financial Statements in conformity with generally accepted Accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

c. Revenue Recognition:

Revenue from software services are recognized as related services are performed.

d. Fixed Assets:

Fixed assets are carried at cost of acquisition less depreciation. Cost of acquisition of fixed assets is inclusive of all incidental expenses relating to the cost of acquisition and the cost of installation / erection as applicable.

e. Depreciation:

Depreciation is provided on fixed assets on the written down value (WDV) method. The rates of depreciation prescribed in Schedule XIV to the Companies Act 1956 are considered as minimum rates.

f. Employee Benefits:

The company has not registered with PF & ESI Authorities and both the Employer Contribution and Employee Contributions were not deposited as per the relevant Acts, during the period under audit

g. Transfer Pricing:

In the Current year, the Company has not entered into any international transaction which attracts the provisions of Sec.92 - 92 F of the Income Tax Act, 1961

h. Quantitative Information:

Since the company does not deal in Inventory, no quantitative details are being furnished. i. Accounting for Taxes on Income:

Income-tax expense comprises current year tax (i.e. Minimum Alternate Tax (MAT) for the period determined in accordance with Income Tax Act, 1962). Deferred tax resulting from timing differences between book profits and tax profits is accounted for under the liability method, at the current rate of tax, only to the extent the timing differences are expected to crystallize.

j. Segment Reporting:

Although the company has reportable business and geographical segments, segmentation as required by AS-17 "Segment Reporting' issued by the Institute of Chartered Accountants of India, has not been complied with. This is mainly due to the fact that, products and services included in a single business segment is similar with respect to majority of factors.

k. Investments.

Investments in subsidiaries are accounted as per accounting standard 13 issued by the Institute of Chartered Accountants of India. Investments are stated at cost. No provision is made for diminution in value of investments as they are long term and strategic in nature.

1. Related Party Disclosures 1. Relationships

Category - I - Major shareholders in the company:

- Erstwhile Promoters-20.61%

- Mr. Suresh Venkatachari -64.12%

- Mr.R.S.Ramani-7.12%

Category - II - Subsidiaries and associates of the company.

- Mentor minds solutions and Services Inc (USA) -100% subsidiary company

acquired during the preceding financial year.

- Mentor minds solutions and Services Pvt Ltd-100% subsidiary company

acquired during the preceding financial year.

- 8k miles Software Services Inc (USA) -100% subsidiary company acquired

during the preceding financial year.

- 8k miles Software Services (FZE) (UAE) -100% subsidiary company acquired

during the preceding financial year.

Category - III - Other parties where common control exists.

- Kaveri (India) Ltd, Regd. Office: 1-7-241/11/D.S.D.Road, Secunderabad-3.

- Golconda Engg.Entp.Ltd, Regd.Office: 1-7-241/ 11/D.S.D.Road,Secunderabad-3

- Surana Securities Ltd, Regd.Office: 1-7-241/11/D.S.D.Road, Secunderabad-3.

- P.M.Telelinks Ltd (Formerly Surana Strips ltd), Regd.Office: 1-7-

241/11/D.S.D.Road, Secunderabad-3.

- Surana Steels Ltd, Regd.Office: 1-7-241/11/D.S.D.Road, Secunderabad-3.

- P.M.Telecom, 1-7-241/11/D.S.D.Road, Secunderabad-3.

- Surana Udyog Ltd, 7th floor, 1-7-241/11/D.S.D.Road, Secunderabad-3.

- 8k Miles Web Services Private Limited - No.7, 3rd floor, Ganapathy colony 3 rd

street, Teynampet, Chennai - 600018.

- 8k Miles Inc(USA). - 3525, Quaker bridge road, Suite 1600, Hamilton, NJ

08619, USA

- Vinoosh foods and Entertainment private Limited - No.7, 3rd floor, Ganapathy

colony 3rd street, Teynampet, Chennai - 600018.

Category - IV - Key Managerial Personnel:

- Mr. G.P.Surana, Director, 19 P & T Colony, Vikrampuri Colony Secunderabad.

- Mr. Suresh Venkatachari, Director, Apt Blk 223 Yishun, Street 21, #06-475,,

Singapore, 760223, , Singapore.

- Mr.R.S.Ramani, Director, No 62 Vellala Street,Purasawalkam, Chennai -

600084,

- Mr. M.V.Bhaskar, Director, Tl Venkatesh Nagar, II Street, 1st Extension,

Virugambakkam, Chennai -600092.

- Mr. Ravi Surana, 19 P & T Colony, Vikrampuri Colony Secunderabad.

- Ms.T.P.Saira, Director, Old No. 15 New No.6 II Cresent Park Street, Gandhi nagar, Adyar, Chennai - 600020.

- Ms.Padmini Ravichandran - 15, 6th Cross Street, Karpagam Gardens, Adyar, Chennai - 600020.

- Mr.V.Srinivasan - 56, Thambiah Road, West Mambalam,Chennai - 600033.

Category - V - Relatives of Key Managerial Personnel:

- Sri G.P.Surana, Father of Ravi Surana 19 P & T Colony, Secunderabad.

2. Transactions with related parties:-

Category - I - Major shareholders in the company:

Loan Received from Directors:

- Mr.Suresh Venkatachari : Rs.22,65,747/-.

- Mr.R.S.Ramani : Rs.27,531/-.

Category - II - Subsidiaries and associates of the company.

8k miles Software Services Inc(USA) :

Amount Invoiced: US$ 52400 (Rs.2613644)

Amount Reed against invoices raised: US$ 57147.17(Rs.2588560)

Amount invested in share capital: US$ 1000 (Rs.45220).

8k miles Software Services FZE (UAE):

Amount invested in share capital: AED150000 (Rs.18, 40,500).

Mentor Minds Solutions Services Inc:

Amount Invoiced: US$ 97300 (Rs.49,10,256)

Amount Received against invoices raised: US$ 49000 (Rs.24,68,775)

Amount invested in share capital: Rs.l 1,50,11,500.

Mentorminds solutions and Services Pvt Ltd:

Amount invested in share capital: Rs.88,07,505. Advances made: Rs.54,10,695.

Category - III - Other parties where common control exists. 8k Miles Software Services Singapore

Amount Invoiced: US$ 15000 (Rs.8040600) Amount Received against invoices raised: Rs.768548.

Vinoosh foods USA

Amount Invoiced: US$ 15000 (Rs.697050)

Amount Received against invoices raised: Rs.783304.

8k Miles Web Services Private Limited

Consideration payable for business purchased - Rs.l,60,00,000/- Loan repayable: Rs.45,57419.

8k Miles Inc(USA)

Amount Invoiced: Nil

Amount Received against invoices raised: US$62950.78 (Rs.29,45,873).

Consideration payable for business purchased - Rs.7,40,00,000/-

m. Interest on loans:

The management has decided not to charge any interest on loans advanced to sist concerns and also not to pay interest on loans taken from sister concerns and companj directors.

n. Cash flow statement

The cash flows are reported using the indirect method, whereby net profit after tax adjusted for the effects of transactions of noncash nature and any deferrals or accruals past or future cash receipts or payments. The cash flows from operating, investing ai financing activities of the company are segregated.

p. Details of Capacity and Production

The company is into software development, which cannot be expressed in any generic un As the company is not into manufacture / production of any product, data relating capacity and production is not relevant and hence not provided.

q. Debtors & Creditors

Balances of Debtors and Creditors are yet to be confirmed r. Previous year figures:

Figures for the prior year have been regrouped, recast or rearranged to conform to the current year's classification.

 
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