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Accounting Policies of Encore Software Ltd. Company

Mar 31, 2015

2.1 Basis for Preparation of Financial Statements: The financial statements of the Company have been prepared in accordance with Generally Accepted Accounting Principles in India (Indian GAAP) under the historical cost convention under accrual basis. Indian GAAP comprises of mandatory accounting standards prescribed under section 133 of the Companies Act, 2013 (Act) read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities Exchange Board of India (SEBI).The accounting policies have been consistently applied by the Company except to the extent of deviations specifically stated. The financial statements are prepared in Indian Rupees.

2.2 Use of Estimates: The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

2.3 Tangible & Intangible Fixed Assets: Tangible Assets are stated in the accounts at historical cost together with all costs directly attributable to their acquisition less accumulated depreciation and impairment if any.

Capital work in progress comprises of the cost of fixed assets that are not yet ready for their intended use at the reporting date.

Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortisation and impairment if any.

2.4 Impairment of Assets: An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged off to the Profit & Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of the recoverable amount.

2.5 Investments: Investments are classified into current investment and long-term investments. Current investments are carried at the lower of cost and fair value, and provision is made to recognize any decline in the carrying value. Long- term investments are carried at cost, and provision is made to recognize any decline, other than temporary, in the value of such investment(s).

2.6 Revenue Recognition: Revenue from software development services and sale of software is recognised based on the milestones achieved on a percentage-of-completion basis. Product sale is recognised on delivery and passing of title. Rejections/returns if any are recognised when Software supplied is found inadequate/product supplied is returned.

Fee for manufacturing license is recognized during the year in which the company has licensed the manufacturing rights using the technology.

Income from royalty is recognized on accrual basis in accordance with the substance of the relevant agreement. Interest income is recorded on accrual basis.

2.7 Depreciation: Depreciation on Tangible Assets has been provided under Straight Line method based on useful life as estimated by the management which are less than the useful life of assets prescribed in Part C of Schedule II of the Companies Act, 2013.

Depreciation is charged on pro-rata basis for assets purchased/sold during the year.

Individual assets costing less than Rs. 5000 are depreciated in full in year of purchase.

Intangible assets are amortised over their respective individual estimated useful life on straight line basis, commencing from the date the asset is available to the Company for its use.

The Management's estimate of useful life for the various fixed assets is given below:

Machinery and Equipment 5 years

Tools and Fixtures 3 years

Computer Equipment 3 years

Furniture and Fixtures 5 years

Vehicles 5 years

Library Books 1 year

2.8 Employee Benefits

i) Post-employment benefit plans: During the year ended 31st March 2015, in view of the few employees, the company has made provision for gratuity and leave encashment on estimated basis instead of on actuarial valuation.

Till 31st March 2014, for defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in full in the profit and loss account for the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortized on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to the present value of available refunds and reductions in future contributions to the scheme.

ii) Short-term employee benefits: The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employee renders the service. These benefits include compensated absences such as paid annual leave, overseas social security contributions and performance incentives.

2.9 Provisions, Contingent Liabilities & Contingent Assets: Provisions involving substantial degree of estimation in measurement of recognizing when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements

2.10 Foreign Currency Conversion: Foreign currency transactions are dealt with in accordance with the Accounting Standard on Accounting for Effects of Changes in Foreign Exchange Rates.

2.11 Provision for Current and Deferred Tax: Provision for current tax is made after taking into consideration benefits admissible under the provisions of Income Tax Act, 1961

Deferred tax resulting from "timing difference" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a reasonable certainty that the asset will be realised in future.

In view of the losses, as a conservative policy, the Company has not recognized deferred tax assets resulting on account of unabsorbed business losses and other benefits available under Income Tax.


Mar 31, 2014

1.1 Basis for Preparation of Financial Statements

The Accounts have been prepared and presented in accordance with Indian Generally Accepted Accounting Practices (GAAP) under the historical cost convention on the accrual basis of accounting following. GAAP comprises of mandatory accounting standards as prescribed by the Companies (Accounting Standards) Rules, 2006, the provisions of the Companies Act, 2013 (to the extent notified) and Companies Act, 1956, to the extent applicable and guidelines issued by the Securities Exchange Board of India (SEBI). The accounting policies have been consistently applied by the Company. The financial statements are prepared in Indian Rupees.

1.2 Use of Estimates

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

1.3 Revenue Recognition

Revenue from software development services and sale of software is recognised based on the milestones achieved on a percentage-of-completion basis. Product sale is recognised on delivery and passing of title.

Rejections / returns if any are recognised when Software supplied is found inadequate / product supplied is returned.

Fee for manufacturing license is recognized during the year in which the company has licensed the manufacturing rights using the technology.

Income from royalty is recognized on accrual basis in accordance with the substance of the relevant agreement.

Interest income is recorded on accrual basis.

1.4 Expenditure

Expenses are accounted on accrual basis and provision is made for all known losses and liabilities.

1.5 Fixed Assets

Fixed assets are stated at their original cost of acquisition and subsequent improvement thereto, including taxes, duties, freight and other incidental expenses related to acquisition, construction and installation of asset(s) concerned.

1.6 Depreciation

Depreciation on fixed assets is provided using the straight-line method based on useful life as estimated by the management. Depreciation is charged on pro-rata basis for assets purchased/sold during the year. Individual assets costing less than Rs. 5,000 are depreciated in full in the year of purchase. The management''s estimate of useful life for the various fixed assets is given below:

Machinery and Equipment 5 years

Tools and Fixtures 3 years

Computer Equipment 3 years

Furniture and Fixtures 5 years

Vehicles 5 years

Library Books 1 year

1.7 Inventories

Inventory of finished goods, materials and components are valued at the lower of cost and estimated net realisable value. Cost is recognized on FIFO basis.

1.8 Employee Benefits

i) Post-employment benefit plans

For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in full in the profit and loss account for the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortized on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, and a s reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to the present value of available refunds and reductions in future contributions to the scheme.

ii) Short-term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employee renders the service. These benefits include compensated absences such as paid annual leave, overseas social security contributions and performance incentives.

1.9 Research and Development

Expenditure on Research is recognized as an expense in the year in which it is incurred.

1.10 Foreign Currency Conversion

Foreign currency transactions are dealt with in accordance with the Accounting Standard on Accounting for Effects of Changes in Foreign Exchange Rates (AS11), notified by the Companies (Accounting Standards) Rules, 2006.

1.11 Investments

Investments are classified into current investment and long-term investments. Current investments are carried at the lower of cost and fair value, and provision is made to recognize any decline in the carrying value. Long-term investments are carried at cost, and provision is made to recognize any decline, other than temporary, in the value of such investment(s).

1.12 Provision for Current and Deferred Tax

Provision for current tax is made after taking into consideration benefits admissible under the provisions of Income Tax Act, 1961

Deferred tax resulting from "timing difference" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a reasonable certainty that the asset will be realised in future.

In view of the losses, as a conservative policy, the Company has not recognized deferred tax assets resulting on account of unabsorbed business losses and other benefits available under Income Tax.

1.13 Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged off to the Profit & Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of the recoverable amount.

1.14 Provisions, Contingent Liabilities & Contingent Assets

Provisions involving substantial degree of estimation in measurement of recognizing when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.


Mar 31, 2013

1.1.1 Basis for preparation of financial statements:

The Accounts have been prepared and presented under the historical cost convention on the accrual basis of accounting following Generally Accepted Accounting Practices (GAAP) and comply with the Accounting Standards prescribed by the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, to the extent applicable.

Use of Estimates:

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

1.1.2 Revenue Recognition:

Revenue from software development services and Sale of Software is recognised based on the milestones achieved on a percentage-of-completion basis. Product sale is recognized on delivery and passing of title. Fee for Manufacturing License is recognized during the year in which the company has licensed the manufacturing rights using the technology. Rejections/returns if any are recognized when Software supplied is found inadequate / Product supplied is returned. Revenue from royalty is recognized when the right to receive the payment is established. Interest income is recorded on accrual basis.

1.1.3 Expenditure:

Expenses are accounted on accrual basis and provision is made for all known losses and liabilities.

1.1.4 Fixed Assets:

Fixed assets are stated at their original cost of acquisition and subsequent improvement thereto, including taxes, duties, freight and other incidental expenses related to acquisition, construction and installation of asset(s) concerned.

1.1.5 Depreciation:

Depreciation on fixed assets is provided using the straight-line method based on useful life as estimated by the management. Depreciation is charged on pro-rata basis for assets purchased/sold during the year. Individual assets costing less than Rs. 5,000 are depreciated in full in the year of purchase. The management''s estimate of useful life for the various fixed assets is given below:

1.1.6 Inventories:

Inventory of finished goods, materials and components are valued at the lower of historic and estimated net realizable value. Products developed by Ncore Technology Pvt. Limited, and transferred to the Company on amalgamation, are treated as semi-finished products, and their costs are written off every year based on sales as compared to the estimated demand for such products.

The Company did not have any inventory during the year under review.

1.1.7 Employee Benefits:

i) Post-employment benefit plans

For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognized in full in the profit and loss account for the period in which they occur. Past service cost is recognized immediately to the extent that the benefits are already vested, and otherwise is amortized on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to the present value of available refunds and reductions in future contributions to the scheme.

ii) Short-term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognized during the period when the employee renders the service. These benefits include compensated absences such as paid annual leave, overseas social security contributions and performance incentives.

1.1.8 Research and Development:

Expenditure on Research is recognized as an expense in the year in which it is incurred.

1.1.9 Foreign Currency Conversion:

Foreign currency transactions are dealt with in accordance with the Accounting Standard on Accounting for Effects of Changes in Foreign Exchange Rates (AS11), notified by the Companies (Accounting Standards) Rules, 2006.

1.1.10 Investments:

Investments are classified into current investment and long-term investments. Current investments are carried at the lower of cost and fair value, and provision is made to recognize any decline in the carrying value. Long-term investments are carried at cost, and provision is made to recognize any decline, other than temporary, in the value of such investment(s).

1.1.11 Provision for Current and Deferred Tax:

Provision for current tax is made after taking into consideration benefits admissible under the provisions of Income Tax Act, 1961

Deferred tax resulting from "timing difference" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the asset will be realized in future.

In view of the losses, as a conservative policy, the Company has not recognized deferred tax assets resulting on account of unabsorbed business losses and other benefits available under Income Tax.

1.1.12 Impairment of Assets:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged off to the Profit & Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of the recoverable amount.

1.1.13 Provisions, Contingent Liabilities & Contingent Assets:

Provisions involving substantial degree of estimation in measurement of recognizing when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements 23 Notes on Accounts


Mar 31, 2012

1.1.1 Basis for preparation of financial statements:

The Accounts have been prepared and presented under the historical cost convention on the accrual basis of accounting following Generally Accepted Accounting Practices (GAAP) and comply with the Accounting Standards prescribed by the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, to the extent applicable.

Use of Estimates:

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

1.1.2 Revenue Recognition:

Revenue from software development services and Sale of Software is recognised based on the milestones achieved on a percentage-of-completion basis. Product sale is recognised on delivery and passing of title. Fee for Manufacturing License is recognized during the year in which the company has licensed the manufacturing rights using the technology. Rejections/returns if any are recognised when Software supplied is found inadequate / Product supplied is returned. Revenue from royalty is recognised when the right to receive the payment is established. Interest income is recorded on accrual basis.

1.1.3 Expenditure:

Expenses are accounted on accrual basis and provision is made for all known losses and liabilities.

1.1.4 Fixed Assets:

Fixed assets are stated at their original cost of acquisition and subsequent improvement thereto, including taxes, duties, freight and other incidental expenses related to acquisition, construction and installation of asset(s) concerned.

1.1.5 Depreciation:

Depreciation on fixed assets is provided using the straight-line method based on useful life as estimated by the management. Depreciation is charged on pro-rata basis for assets purchased/sold during the year. Individual assets costing less than Rs. 5,000 are depreciated in full in the year of purchase. The management's estimate of useful life for the various fixed assets is given below:

1.1.6 Inventories:

Inventory of finished goods, materials and components are valued at the lower of historic and estimated net realisable value. Products developed by Ncore Technology Pvt. Limited, and transferred to the Company on amalgamation, are treated as semi-finished products, and their costs are written off every year based on sales as compared to the estimated demand for such products.

1.1.7 Employee Benefits:

i) Post-employment benefit plans

For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in full in the profit and loss account for the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortized on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to the present value of available refunds and reductions in future contributions to the scheme.

ii) Short-term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employee renders the service. These benefits include compensated absences such as paid annual leave, overseas social security contributions and performance incentives.

1.1.8 Research and Development:

Expenditure on Research is recognized as an expense in the year in which it is incurred.

1.1.9 Foreign Currency Conversion:

Foreign currency transactions are dealt with in accordance with the Accounting Standard on Accounting for Effects of Changes in Foreign Exchange Rates (AS11), notified by the Companies (Accounting Standards) Rules, 2006.

1.1.10 Investments:

Investments are classified into current investment and long-term investments. Current investments are carried at the lower of cost and fair value, and provision is made to recognize any decline in the carrying value. Long-term investments are carried at cost, and provision is made to recognize any decline, other than temporary, in the value of such investment(s).

1.1.11 Provision for Current and Deferred Tax:

Provision for current tax is made after taking into consideration benefits admissible under the provisions of Income Tax Act, 1961

Deferred tax resulting from "timing difference" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a reasonable certainty that the asset will be realised in future.

In view of the losses, as a conservative policy, the Company has not recognized additional deferred tax assets resulting on account of unabsorbed business losses and other benefits available under Income Tax.

1.1.12 Impairment of Assets:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged off to the Profit & Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of the recoverable amount.

1.1.13 Provisions, Contingent Liabilities & Contingent Assets:

Provisions involving substantial degree of estimation in measurement of recognizing when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.


Mar 31, 2011

1.1.1 Basis for preparation of financial statements:

The Accounts have been prepared and presented under the historical cost convention on the accrual basis of accounting following Generally Accepted Accounting Practices (GAAP) and comply with the Accounting Standards prescribed by the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, to the extent applicable.

Use of Estimates:

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

1.1.2 Revenue Recognition:

Revenue from software development services and sale of software is recognised based on the milestones achieved on a percentage-of-completion basis. Product sale is recognised on delivery and passing of title. Fee for Manufacturing License is recognized during the year in which the company has licensed the manufacturing rights using the technology. Rejections/ returns if any are recognised when Software supplied is found inadequate / product supplied is returned. Revenue from royalty is recognised when the right to receive the payment is established. Interest income is recorded on accrual basis.

16.1.3 Expenditure:

Expenses are accounted on accrual basis and provision is made for all known losses and liabilities.

16.1.4 Fixed Assets:

Fixed assets are stated at their original cost of acquisition and subsequent improvement thereto, including taxes, duties, freight and other incidental expenses related to acquisition, construction and installation of asset(s) concerned.

16.1.5 Depreciation:

Depreciation on fixed assets is provided using the straight-line method based on useful life as estimated by the Management. Depreciation is charged on pro-rata basis for assets purchased/sold during the year. Individual assets costing less than Rs. 5,000 are depreciated in full in the year of purchase. The Management's estimate of useful life for the various fixed assets are given below:

Machinery and Equipment 5 years

Tools and Fixtures 3 years

Computer Equipment 3 years

Furniture and Fixtures 5 years

Vehicles 5 years

Library Books 1 year

16.1.6 Inventories:

Inventory of finished goods, materials and components are valued at the lower of historic and estimated net realisable value. Products developed by Ncore Technology Pvt. Limited, and transferred to the Company on amalgamation, are treated as semi-finished products, and their costs are written off every year based on sales as compared to the estimated demand for such products.

16.1.7 Employee Benefits

i) Post-employment benefit plans

For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in full in the Profit and Loss account for the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortized on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as,adjusted for unrecognised past service cost, and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to the present value of available refunds and reductions in future contributions to the scheme.

ii) Short-term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employee renders the service. These benefits include compensated absences such as paid annual leave, overseas social security contributions and performance incentives.

16.1.8 Research and Development:

Expenditure on Research is recognized as an expense in the year in which it is incurred.

16.1.9 Foreign Currency Conversion:

Foreign currency transactions are dealt with in accordance with the Accounting Standard on Accounting for Effects of Changes in Foreign Exchange Rates (AS11), notified by the Companies (Accounting Standards) Rules, 2006.

16.1.10 Investments:

Investments are classified into current investment and long-term investments. Current investments are carried at the lower of cost and fair value, and provision is made to recognize any decline in the carrying value. Long-term investments are carried at cost, and provision is made to recognize any decline, other than temporary, in the value of such investment(s).

16.1.11 Provision for Current and Deferred Tax:

Provision for current tax is made after taking into consideration benefits admissible under the provisions of Income Tax Act, 1961

Deferred tax resulting from "timing difference" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the Balance Sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a reasonable certainty that the asset will be realised in future. In view of the losses, as a conservative policy, the Company has not recognized additional deferred tax assets resulting on account of unabsorbed business losses and other benefits available under Income Tax.

16.1.12 Impairment of Assets:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged off to the Profit & Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of the recoverable amount.

16.1.13 Provisions, Contingent Liabilities & Contingent Assets:

Provisions involving substantial degree of estimation in measurement of recognizing when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.


Mar 31, 2010

16.1.1 Basis for preparation of financial statements:

The Accounts have been prepared and presented under the historical cost convention on the accrual basis of accounting following Generally Accepted Accounting Practices (GAAP) and comply with the Accounting Standards presented by the Companies ( Accounting Standard) Rules 2006 and the relevant provisions of the Companies Act, to the extent applicable Use of Estimates: The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

16.1.2 Revenue Recognition: Revenue from software development services and Sale of Software is recognised based on the milestones achieved on a percentage-of-completion basis. Product sale is recognised on delivery and passing of title. Rejections/returns if any are recognised when Software supplied is found inadequate / Product supplied is returned. Revenue from royalty is recognised when the right to receive the payment is established. Interest income is recorded on accrual basis.

16.1.3 Expenditure: Expenses are accounted on accrual basis and provision is made for all known losses and liabilities.

16.1.4 Fixed Assets:

Fixed assets are stated at their original cost of acquisition and subsequent improvement thereto, including taxes, duties, freight and other incidental expenses related to acquisition, construction and installation of asset(s) concerned.

16.1.5 Depreciation:

Depreciation on fixed assets is provided using the straight-line method based on useful life as estimated by the management.

Depreciation is charged on pro-rata basis for assets purchased/sold during the year. Individual assets costing less than Rs.

5,000 are depreciated in full in the year of purchase. The managements estimate of useful life for the various fixed assets is

given below:

Machinery and Equipment 5 years

Tools and Fixtures 3 years

Computer Equipment 3 years

Furniture and Fixtures 5 years

Vehicles 5 years

Library Books 1 year

16.1.6 Inventories:

Inventory of finished goods, materials and components are valued at the lower of historic and estimated net realisable value. Products developed by Ncore Technology Pvt. Limited, and transferred to the Company on amalgamation, are treated as semi- finished products, and their costs are written off every year based on sales as compared to the estimated demand for such products.

16.1.7 Employee Benefits:

i) Post-employment benefit plans : For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in full in the profit and loss account for the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortized on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to the present value of available refunds and reductions in future contributions to the scheme.

ii) Short-term employee benefits: The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employee renders the service. These benefits include compensated absences such as paid annual leave and performance incentives.

16.1.8 Research and Development:

Expenditure on Research is recognized as an expense in the year in which it is incurred.

16.1.9 Foreign Currency Conversion:

Foreign currency transactions are dealt with in accordance with the Accounting Standard on Accounting for Effects of Changes in Foreign Exchange Rates (AS11), issued by the Institute of Chartered Accountants of India.

16.1.10 Investments:

Investments are classified into current investment and long-term investments. Current investments are carried at the lower of cost and fair value, and provision is made to recognize any decline in the carrying value. Long-term investments are carried at cost, and provision is made to recognize any decline, other than temporary, in the value of such investment(s).

16.1.11 Provision for Current, Deferred and Fringe Benefit Tax:

Provision for current tax is made after taking into consideration benefits admissible under the provisions of Income Tax Act, 1961 Deferred tax resulting from "timing difference* between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a reasonable certainty that the asset will be realised in future. In view of the losses, as a conservative policy, the Company has not recognized additional deferred tax assets resulting on account of unabsorbed business losses and other benefits available under Income Tax. Fringe Benefit tax is computed based on the taxable value of fringe benefits provided or deemed to be provided to the employees.

16.1.12 Impairment of Assets:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged off to the Profit & Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of the recoverable amount.

16.1.13 Provisions, Contingent Liabilities & Contingent Assets:

Provisions involving substantial degree of estimation in measurement of recognizing when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

 
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