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Accounting Policies of Helios and Matheson Information Technology Ltd. Company

Sep 30, 2013

1. SIGNIFICANT ACCOUNTING POLICIES

(A) Basis of Preparation

These Financial Statements have been prepared in accordance with the generally accepted Accounting Principles in India under the Historical Cost convention on accrual basis. These financial statements have been prepared to comply in all material aspects with the accounting standards notified under section 211 (3C) [Companies (Accounting Standards) Rules, 2006, as amended] and all other relevant provisions of the Companies Act, 1956. All Assets & Liabilities have been classified as current or non-current as per the company''s normal operating cycle and other criteria set out in the Schedule VI to the Companies Act, 1956.

(B) Tangible Assets

Tangible Assets are stated at cost which includes cost of acquisition, installation, direct costs and borrowing cost incurred upto the date of commissioning.

(C) Depreciation

(i) Depreciation has been provided at the SLM rates as prescribed by Schedule XIV of the Companies Act, 1956.

(ii) Depreciation has been provided on Double Shift Basis.

(iii) Depreciation on additions and deletion during the year has been provided on pro-rata basis with reference to the month of addition and deletion.

(iv) Land &Site Development has not been depreciated.

(D) Foreign Currency Transactions

(i) Cost of imported material is converted to Indian currency at the rates prevailing at the time of payment.

(ii) The expenditure in Foreign Currency is accounted at the rates prevailing on the date of transaction.

(iii) The Export Sales are accounted for at the actual rates prevailing at the time of bill discounting.

(vi) Balances of Monetary items in Foreign Currency outstanding at the close of the year are converted in Indian Currency at the appropriate rates of exchange prevailing on the date of the Balance Sheet.

(v) Exchange rate difference between the prevailing rate on the date of transaction and on the date of settlement as also on conversion of monetary items in Current Assets and Current Liabilities at the end of the year are recognized as income & expenses as the case may be in Profit & Loss Account.

(E) Inventories

(i) Raw Material, Stores, Spares & Maintenance items, consumable goods are valued at lower of landed cost and Net Realizable Value. The cost formula used is FIFO for all items.

(ii) Work in process is valued at cost.

(iii) Finished Goods are valued at Cost or Net Realizable Value whichever is lower.

(iv) The cost of imported raw material includes custom duties and other direct expenditure.


Sep 30, 2012

A) basis of preparation of financial statements:-

the financial statements are prepared under the historical cost convention, on an accrual basis, in accordance with indian generally accepted accounting principles (gaap) and applicable accounting standards as notified under the companies(accounting standards)rule,2006, issued by the central government, in consultation with national advisory committee on accounting standards ( nacs) and relevant provisions of the companies act, 1956 and the guidelines issued by security exchange board of india (sebi). the management evaluates all recently issued or revised accounting standards on an ongoing basis. .

b) use of estimates

the preparation of the financial statements in conformity with indian gaap requires that the management make estimates and assumptions that affect the reported amount of assets and liabilities, and disclosure of contingent assets and liabilities as on the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period, where no reliable estimate can be made, a disclosure is made as contingent liability, actual results could differ from those estimates.

c) fixed assets

fixed assets are stated at the cost of acquisition and the value of acquired business assets less accumulated depreciation, direct costs are capitalized till the assets are ready to be put to use and include financing costs relating to acquisition, capital work in progress includes the cost of fixed assets that are not yet ready for their intended use and the cost of assets not put to use before the balance sheet date.

the consideration paid for acquisition and takeover of businesses includes the value of business contracts, customer rights, employees, technology, knowhow, software and hardware products and other assets in connection with the acquired businesses and is part of capital expenditure, this value is based on independent valuation.

d) impairment of assets

as per accounting standard 28, the company assesses at each balance sheet date whether there is any indication that an asset including good will is impaired, if any such indication exists, the company estimates the recoverable amount of the asset, if such recoverable amount of the asset is less than the carrying amount then carrying amount is reduced to recoverable amount, the reduction is treated as impairment and recognized in profit and loss account, if at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost, in respect of goodwill the impairment loss will be reversed only when it was caused by specific external events and their effects have been reversed by subsequent events, during the year no such impairment has occurred.

e) revenue recognition

revenue from software services and projects comprise income from time and material and fixed price contracts, revenue from time and material contracts is recognized on the basis of software developed and billable in accordance with terms of the contracts with the clients, revenue from fixed price contracts is recognized using percentage of completion of method calculated as a percentage of the cost of efforts incurred up to the reporting date to estimated total cost of efforts.

maintenance revenue is recognized over the period of underlying maintenance contracts.

interest receipt is recognized on accrual basis, dividend is recognized on receipt basis.

unbilled revenue primarily comprises the revenue recognized in relation to efforts incurred ontime and material contracts till a mile stone is reached and on fixed price, fixed time frame contracts and until the balance sheet date, the valuation of unbilled renevue is recognised at cost in the financial statement.

f) foreign currency transactions (other than fixed assets)

the transactions in foreign currency are recorded in the books by applying the exchange rate prevailing as at the date of the transaction, investments in foreign currency are reported using the exchange rate at the date of transaction.further the gain or loss on account of fluctuations in exchange rate has been recognized in theprofit and loss account, in respect of foreign currency transaction in fixed assets the exchange gain or loss is adjusted in the carrying amount of fixed asset and accordingly the depreciation is charged, the consolidated inflows and outflows arising from foreign currency transactions are disclosed in this report.

g) forward contracts in foreign currency

the company uses forward contracts and options to hedge its exports in foreign exchange, this reduces the risk or cost to the company and this cover is not used for speculation or trading purposes.

h) expenditure

expenses are accounted on accrual basis and provisions are made for all known losses and liabilities, provisions are made for future and unforeseeable factors, which may affect the ultimate profit on fixed price, software development and service contracts are charged to revenue in the same year.

i) depreciation

the depreciation has been provided on the basis of straight line method adopting the rates and the manner as provided in schedule xiv to the companies act, 1956 as amended, depreciation is charged on a 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.

j) investments

investments in subsidiaries are accounted as per accounting standard 13 of accounting for investments issued by the institute of chartered accountants of india. investments are stated at cost including advisory and related expenses incurred in connection with the investments, no provision is made for diminution in the value of investments as they are long term and strategic in nature.

k) retirement benefits

the company has a scheme of provident fund for its employees, registered with the regional provident fund commissioner, chennai.

the company''s contribution to provident fund is charged to the profit and loss account every year, certain senior executives of the company are also participants in a defined contribution plan of superannuation plan of helios & matheson it ltd., superannuation trust.

the company makes contribution under this plan to this trust every month, the company has no further obligation beyond its monthly contribution.

the gratuity provision is made in terms payment of gratuity act 1972.

the leave encashment provision is made as per the service rules of the company.

I) taxes on income

provision is made for income tax on an annual basis, under the tax payable method, based on the tax liability as computed after taking credit for allowances and exemptions, in case of matters under appeal, due to disallowances or otherwise, full provision is made when the said liabilities are accepted by the company, sufficient future taxable income will be available against which such deferred tax assets can be realized as per as -22 "accounting for taxes on income" issued by the institute of chartered accountants of india. deferred tax is recognized, subject to the consideration of prudence, on timing differences, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

deferred tax assets are not recognized on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized as per as-22 "accounting for taxes on income" issued by the institute of chartered accountants of india.

m) cash flow statement

cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments, the cash flows from regular revenue generating, investing and financing activities of the company are segregated.

n) leases

lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor, are recognized as operating leases, lease rentals under operating leases are recognized in the statement of profit and loss account on a straight line basis.


Sep 30, 2011

The financial statements are prepared under the historical cost convention, on an accrual basis, in accordance with indian generally accepted accounting principles (gaap) and applicable accounting standards as notified under the companies (accounting standards) rule 2006, issued by the central government, in consultation with national advisory committee on accounting standards (nacs) and relevant provisions of the companies act, 1956 and the guidelines issued by security exchange board of india (sebi). the management evaluates all recently issued or revised accounting standards on an ongoing basis.

use of estimates

the preparation of the financial statements in conformity with indian gaap requires that the management make estimates and assumptions that affect the reported amount of assets and liabilities, and disclosure of contingent assets and liabilities as on the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period, where no reliable estimate can be made, a disclosure is made as contingent liability, actual results could differ from those estimates.

fixed assets

fixed assets are stated at the cost of acquisition and the value of acquired business assets less accumulated depreciation, direct costs are capitalized till the assets are ready to be put to use and include financing costs relating to acquisition, capital work in progress includes the cost of fixed assets that are not yet ready for their intended use and the cost of assets not put to use before the balance sheet date.

the consideration paid for acquisition and takeover of businesses includes the value of business contracts, customer rights, employees, technology, knowhow, software and hardware products and other assets in connection with the acquired businesses and is part of capital expenditure, this value is based on independent valuation.

impairment of assets

as per accounting standard 28, the company assesses at each balance sheet date whether there is any indication that an asset including good will is impaired, if any such indication exists, the company estimates the recoverable amount of the asset, if such recoverable amount of the asset is less than the carrying amount then carrying amount is reduced to recoverable amount, the reduction is treated as impairment and recognized in profit and loss account, if at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost, in respect of goodwill the impairment loss will be reversed only when it was caused by specific external events and their effects have been reversed by subsequent events, during the year no such impairment has occurred.

revenue recognition

revenue from software services and projects comprise income from time and material and fixed price contracts, revenue from time and material contracts is recognized on the basis of software developed and billable in accordance with terms of the contracts with the clients, revenue from fixed price contracts is recognized using percentage of completion of method calculated as a percentage of the cost of efforts incurred up to the reporting date to estimated total cost of efforts.

maintenance revenue is recognized over the period of underlying maintenance contracts.

interest receipt is recognized on accrual basis, dividend is recognized on receipt basis.

unbilled revenue primarily comprises revenue recognized but not billed to the client in relation to efforts incurred on time and material and fixed price contracts till either the balance sheet date or till a mile stone is reached.

foreign currency transactions (other than fixed assets)

the transactions in foreign currency are recorded in the books by applying the exchange rate prevailing as at the date of the transaction, investments in foreign currency are reported using the exchange rate at the date of transaction, further the gain or loss on account of fluctuations in exchange rate has been recognized in the profit and loss account, in respect of foreign currency transaction in fixed assets the exchange gain or loss is adjusted in the carrying amount of fixed asset and accordingly the depreciation is charged, the consolidated inflows and outflows arising from foreign currency transactions are disclosed in this report.

forward contracts in foreign currency

the company uses forward contracts and options to hedge its exports / obligations in foreign exchange, this reduces the risk or cost to the company and this cover is not used for speculation or trading purposes.

expenditure

expenses are accounted on accrual basis and provisions are made for all known losses and liabilities, provisions are made for future and unforeseeable factors, which may affect the ultimate profit on fixed price, software development and service contracts are charged to revenue in the same year.

depreciation

the depreciation has been provided on the basis of straight line method adopting the rates and the manner as provided in schedule xiv to the companies act, 1956 as amended, depreciation is charged on a 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.

investments

investments in subsidiaries are accounted as per accounting standard 13 of accounting for investments issued by the institute of chartered accountants of india. investments are stated at cost including advisory and related expenses incurred in connection with the investments, no provision is made for diminution in the value of investments as they are long term and strategic in nature.

retirement benefits

the company has a scheme of provident fund for its employees, registered with the regional provident fund commissioner, chennai.

the company's contribution to provident fund is charged to the profit and loss account every year, certain senior executives of the company are also participants in a defined contribution plan of superannuation plan of helios and matheson IT ltd., superannuation trust, the company makes contribution under this plan to this trust every month, the company has no further obligation beyond its monthly contribution.

the gratuity provision is made in terms payment of gratuity act 1972.

the leave encashment provision is made as per the service rules of the company.

taxes on income

provision is made for income tax on an annual basis, under the tax payable method, based on the tax liability as computed after taking credit for allowances and exemptions, in case of matters under appeal, due to disallowances or otherwise, full provision is made when the said liabilities are accepted by the company, sufficient future taxable income will be available against which such deferred tax

assets can be realized as per as -22 'accounting for taxes on income' issued by the institute of chartered accountants of india. deferred tax is recognized, subject to the consideration of prudence, on timing differences, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods, deferred tax assets are not recognized on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized as per as-22 'accounting for taxes on income' issued by the institute of chartered accountants of india.

cash flow statement

cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments, the cash flows from regular revenue generating, investing and financing activities of the company are segregated.

quantitative details

the company is engaged in software development, software consultancy and maintenance of computer software, the production and sale of such software cannot be expressed in any generic unit, hence, it is not possible to give the quantitative details of sales and certain information as required under part ii of schedule vi to the companies act, 1956.

the tax year for the company being the year ending 31st, march, the provision for taxation for the period is the aggregate of the provision made for the twelve months ended 31st march, 2011 and the provision based on the figures for the remaining six months up to 30th September, 2011, the ultimate tax liability of which will be determined on the basis of the figures for the period 1st april, 2011 to 31st march, 2012.

dues to ssi, micro, small and medium enterprises:

sundry creditors includes amount due to ssi, micro, small and medium enterprises as on 30.09.11 : Rs. nil (nil) with available information from micro, small and medium enterprises regarding their registration with central/state government authorities the disclosure as per sec 23 of the micro small medium enterprises development act 2006 is made.

segment reporting

the company is operating in a single segment and the risk and reward is same for the segment in all the locations and hence segment reporting is not applicable to the company.

unclaimed dividend

The company transferred Rs.1,47,101/- to the investor education and protection fund, this is the amount in the dividend payable account for the year ended 31.03.2004 remaining unclaimed and unpaid for a period of seven years from the date that they first became due for payment u/s. 205c of the companies act, 1956.

during the year the subsidiary company m/s. helios and matheson information technology inc, usa (formerly known as helios and matheson north America inc) made reverse stock split at 2.5:1 and as a result the parent company and its subsidiary now hold 17,23,040 shares as investment.


Sep 30, 2010

Basis of preparation of financial statements:-

the financial statements are prepared under the historical cost conversion, on an accrual basis, in accordance with indian generally accepted accounting principles (gaap) and applicable accounting standards as notified under the companies(accounting standards) rules, 2006, issued by the central government, in consultation with national advisory committee on accounting standards ( nacs) and relevant provisions of the companies act, 1956 and the guidelines issued by security exchange board of india (sebi). the management evaluates all recently issued or revised accounting standards on an on going basis. .

use of estimates

the preparation of the financial statements in conformity with indian gaap requires that the management make estimates and assumptions that affect the reported amount of assets and liabilities, and disclosure of contingent assets and liabilities as on the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period, where no reliable estimate can be made, a disclosure is made as contingent liability, actual results could differ from those estimates.

fixed assets

fixed assets are stated at the cost of acquisition and the value of acquired business assets less accumulated depreciation, direct costs are capitalized till the assets are ready to put to use and includes financing costs relating to acquisition, capital work in progress includes the cost of fixed assets that are not yet ready for their intended use and the cost of assets not put to use before the balance sheet.

the consideration paid for acquisition and takeover of businesses includes the value of business contracts, customer rights, employees, technology, knowhow, software and hardware products and other assets in connection with the acquired businesses and is part of capital expenditure, this value is based on independent valuation.

impairment of assets

as per accounting standard 28, the company assesses at each balance sheet date whether there is any indication that an asset including good will is impaired, if any such indication exists, the company estimates the recoverable amount of the asset, if such recoverable amount of the asset is less than the carrying amount then carrying amount is reduced to recoverable amount, the reduction is treated as impairment and recognized in profit and loss account, if at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost, in respect of goodwill the impairment loss will be reversed only when it was caused by specific external events and their effects have been reversed by subsequent events, during the year no such impairment has occurred.

revenue recognition

revenue from software services and projects comprise income from time and material and fixed price contracts, revenue from time and material contracts is recognized on the basis of software developed and billable in accordance with terms of the contracts with the clients, revenues from fixed price contracts is recognized using percentage of completion of method calculated as a percentage of the cost of efforts incurred up to the reporting date to estimated total cost of efforts.

maintenance revenue is recognized over the period of underlying maintenance contracts.

interest receipt is recognized on accrual basis, dividend is recognized on receipt basis.

unbilled revenue primarily comprises the revenue recognized in relation to efforts incurred up on fixed price, fixed time frame contracts until the balance sheet date.

foreign currency transactions (other than fixed assets)

the transactions in foreign currency are recorded in the books by applying the exchange rate prevailing as at the date of the transaction. investments in foreign currency are reported using the exchange rate at the date of transaction, fccb liability is stated at the fixed exchange rate of rs.46.07 as per offer document and not restated to the closing exchange rate, other foreign currency transactions are converted at the exchange rate prevailing on the last working day of the accounting year, further the gain or loss on account of fluctuations in exchange rate has been recognized in the profit and loss account, in respect of foreign currency transaction in fixed assets the exchange gain or loss is adjusted in the carrying amount of fixed asset and accordingly the depreciation is charged, the consolidated inflows and outflows arising from foreign currency transactions are disclosed elsewhere in this report.

forward contracts in foreign currency

the company uses forward contracts and auctions to hedge its exports in foreign exchange, this reduces the risk or cost to the company and this cover is not used for speculation or trading purposes.

expenditure

expenses are accounted on accrual basis and provisions are made for all known losses and liabilities, provisions are made for future and unforeseeable factors, which may affect the ultimate profit on fixed price, software development and service expenses are charged to revenue in the same year.

depreciation

the depreciation has been provided on the basis of straight line method adopting the rates and the manner as provided in schedule xiv to the companies act, 1956 as amended, depreciation is charged on a pro-rata basis for assets purchased/sold during the year, individual costing less than rs. 5,000/ - are depreciated in full in the year of purchase.

investments

investments in subsidiaries are accounted as per accounting standard 13 of accounting for investments issued by the institute of chartered accountants of india. investments are stated at cost including advisory and related expenses incurred in connection with the investments, no provision is made for diminishing in the value of investments as they are long term and strategic in nature.

sundry debtors

sundry debtors amount to rs 75.02 crore as of September 2010 as compared to rs. 75.27 crore as of September 2009. the debtors are considered good and realizable, the debtors are -118 days of sales of September 2010 as against 133 days of sales as of September 2009. Asignificant part of this receivable is since realized.

retirement benefits

the company has a scheme of provident fund for its employees, registered with the regional provident fund commissioner, chennai.

the companies contribution to provident fund are charged to the profit and loss account every year, certain senior executives of the company are also participants in a defined contribution plan of superannuation plan of helios & matheson it ltd., superannuation trust. the company makes contribution under this plan to this trust every month, the company has no further obligation beyond its monthly contribution.

taxes on income

provision is made for income tax on an annual basis, under the tax payable method, based on the tax liability as computed after taking credit for allowances and exemptions, in case of matters under appeal, due to disallowances or otherwise, full provision is made when the said liabilities are accepted by the company, sufficient future taxable income will be available against which such deferred tax assets can be realized as per as -22 "accounting for taxes on income" issued by the institute of chartered accountants of india.

deferred tax is recognized, subject to the consideration of prudence, on timing differences, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

deferred tax assets are not recognized on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized as per as-22 "accounting for taxes on income" issued by the institute of chartered accountants of india.

cash flow statement

cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments, the cash flows from regular revenue generating, investing and financing activities of the company are segregated.

preferential allotment of warrants:

the company allotted 8,00,000 equity shares to the promoters upon exercise of option by them, consequent to this allotment share capital and share premium were increased by rs.80,00,000 and rs.4,39,68,000 respectively during the year, the balance 49,00,000 warrants were forfeited as the holders of the warrants did not exercise their rights to convert the warrants in to equity shares, the forfeited amount of rs. 3,18,30,400 was credited to capital reserves account as per sebi preferential guidelines. the forfeited application money has been used for the business requirements of the company, all the preferential warrants that have been forfeited on account of non exercise of option by the holders of the warrants were duly cancelled and extinguished, the company does not have any warrant pending conversion.

secured loans

secured loans from the banks are secured by hypothecation of fixed and current assets of the company and guaranteed by the managing director and the promoters of the company.

unbilled revenue

unbilled revenue is revenue recognized in the books as per percentage completion of work done but not invoiced to customer since it is not due for billing as per payment schedule in the contract entered in to with the customer.

cash and bank balance:-

the cash and bank balance is rs. 73,24,32,154 (37,51,25,122) which includes balances of rs.5,35,99,436 (1,28,88,171 ) in foreign currency.

quantitative details

the company is engaged in software development .software consultancy and maintenance of computer software, the production of sale of such software can not be expressed in any generic unit, hence, it is not possible to give the quantitative details of sales and certain information as required under part ii of schedule vi to the companies act, 1956.

dues to ssi, micro, small and medium enterprises:

sundry creditors includes amount due to ssi, micro, small and medium enterprises as on 30.09.2010 : rs. nil (nil) with available information from micro, small and medium enterprises regarding their registration with central/state government authorities the disclosure as per sec 23 of the micro small medium enterprises development act 2006 is made.



 
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