Mar 31, 2015
1.1 Basis of preparation of financial statements
The financial statements have been prepared in compliance with
Generally Accepted Accounting Principles {'GAAP') in India, under the
historical cost convention. GAAP comprises mandatory accounting
standards as 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 and Exchange Board of India (SEBI). Accounting policies
have been consistently applied except where a newly issued accounting
standard is initially adopted or a revision to an existing accounting
standard requires a change in the accounting policy hitherto in use.
The preparation of the financial statements in accordance with
generally accepted accounting principles requires that management makes
estimates and assumptions that affect die reported amount of assets and
liabilities and disclosure of contingent liabilities as of the dale of
financial statements and the reported amounts of revenue and expenses
during the reporting period. Management believes that the estimates
used in the preparation of financial statements are prudent and
reasonable. Actual results could differ from these estimates- Any
revision to accounting estimates is recognised prospectively in the
current and future periods,
1.2 Fixed Assets and Depreciation
Tangible assets
Fixed assets are stated at cost less accumulated depreciation. Cost
includes inward freight, duties, taxes and incidental expenses related
to acquisition and installation of the asset. Depreciation provided on
Written Down Value Method ('WDV'} is based on the estimated useful
lives of the assets as prescribed under Part C of Schedule II of the
Companies Act 2013. For additions and disposals, depreciation is
provided pro-rata for the period of use,
Intangible assets
Intangible assets are amortized over their respective individual
estimated useful economic life on a straight line basis. Intangible
assets comprise Goodwill, which is not being amortized.
Depreciation on tangible assets is provided on the Written down value
method over the useful lives of assets estimated by the Management.
Depreciation for assets purchased / sold during a period is
proportionately charged. Intangible assets are amortized over their
respective individual estimated useful lives on a straight- line basis,
commencing from the date the asset is available to the Company for its
use.
The Management estimates the useful lives for the other fixed assets as
follows:
Buildings 22-25 years
Plant and machinery 5 years
Office equipment 5 years
Computer equipment and Software 3-5 years
Furniture and fixtures 5 years
Vehicles 5 years
The Management believes that the useful lives as given above best
represent the period over which the Management expects to use these
assets. Hence the useful lives for these assets is different from the
useful lives as prescribed under Part C of Schedule II of the Companies
Act 2013.
Depreciation and amortization methods, useful lives and residual values
are reviewed periodically, including at each financial year end,
1.3 Leases
In accordance with Accounting Standard 19 "Accounting for leases1',
lease arrangements, where the risks and rewards incidental to ownership
of an asset substantially vests with the lessor, are recognised as
operating leases. Lease payments under operating lease are recognised
as an expense in the profit and loss account,
1.4 fit veil lories
Inventories comprising of resalable licenses are valued at lower of
cost and net realizable value. Cost is determined on the basis of FIFO
method and includes all costs inclined in bringing the inventories to
their present location and condition. Net realisable value is the
estimated selling price in the ordinary course of business, less
selling expenses.
1.5 Revenue and cost recognition
The Company derives its revenues primarily from software technology and
IT enabled services. Revenue from time-and-material contracts is
recognised as related services arc rendered. Revenue from fixed-price
contracts is recognised on a percentage of completion basis. In case of
sale of software, revenue is recognised when right to use the software
is transferred to the customer.
The asset "Unbilled revenue1', represents revenues recognised in excess
of amounts billed. These amounts are billed after the milestones
specified in the agreement are achieved. For the cm off date, the
percentage of efforts have been estimated based on the time, resource
spent and the status of the project.
Revenue from maintenance contracts is recognised ratably over the term
of maintenance,
Dividend income is recognised when the Company's right to receive
dividend is established. Interest income is recognised on the time
proportion basis,
1.6 Employee retirement and other benefits Defined Contribution Plans:
Defined Benefit Plans-
Gratuity and leave encashment schemes arc defined benefits. The present
value of the obligation under such defined benefit plans is determined
based on actuarial valuation carried out by an independent actuary at
the balance sheet date using the Projected Unit Credit Method, which
recognises each period of service as giving rise to one additional unit
of employee benefit entitlement and measures each unit separately to
build up the final obligation.
The obligation is measured at the present value of the estimated future
cash flows. The discount rates used for determining the present value
of the obligation under defined benefit plans, is based on the market
yields on Government securities as at the balance sheet date. Actuarial
gains and losses are recognised immediately in the Profit and loss
account.
1.7 Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of the transaction. foreign currency
denominated monetary assets and monetary liabilities at the year end
are translated at the year-end exchange rate. Exchange rate differences
resulting from foreign exchange transactions settled during the year,
including year-end translation of monetary assets and liabilities are
recognised in the profit and loss account.
1.8 Investments
Investments, which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long term investments.
Long-term investments are stated at cost, and provision for diminution
is made when, in the management's opinion, there is a decline, other
than temporary, in the carrying value of such investments. Current
investments are carried at lower of cost and fair value.
1.9 Provisions and contingent liabilities
The Company creates a provision when there is 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 the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Provisions are reviewed at each balance sheet date and adjusted to
reflect the current best estimate. If it is no longer probable that an
out How of resources would be required to settle the obligation, the
provision is reversed.
Contingent assets are not recognised in the financial statements.
However, contingent assets are assessed continually and if it is
virtually certain that an inflow of economic benefits will arise, the
asset and related income are recognised in the period in which the
change occurs,
1.10 Taxation
Income tax expense comprises current tax expense and deferred tax
expense or credit computed in accordance with the relevant provisions
of the Income Tax Act, 1961. Provision for current taxes is recognised
under the taxes payable method based on the estimated tax liability
computed after taking credit for allowances and exemptions in
accordance with the Indian Income tax Act, 1961,
Deferred tax assets and liabilities are recognised for the future tax
consequences attributable to timing differences that result between the
profits offered for income taxes and the profits as per the financial
statements of the Company. Deferred tax assets and liabilities are
measured using the tax rates and the tax laws that have been enacted or
substantively enacted by the balance sheet date. The effect on deferred
tax assets and liabilities of a change in tax rates is recognised in
the period that includes the enactment rate. Deferred tax assets in
respect of carry forward losses are recognised only to the extent that
there is virtual certainty that sufficient future taxable income will
be available against which such deferred tax asset can be realised.
Other deferred tax assets are recognised only if there is a reasonable
certainly that sufficient future taxable income will be available
against which such deferred tax assets can be realised. Deferred tax
assets are reviewed as at each balance sheet date and written down or
written-up to reflect the amount that is reasonably / virtually certain
(as the case may be) to be realised.
A substantial portion of profits of the Company are exempted from
Indian income tax, being profit from undertakings situated at Special
Economic Zones ("SEZ") in India. One of the Company's undertaking is
eligible for a tax holiday as a Special Economic Zone unit commencing
from 2010 onwards in respect of 100% of the export profits Tor a period
of 5 years, 50% of such profits for next 5 years and 50% of the profits
for further period of 5 years subject to satisfaction of certain
capital investments requirements.
In this regard, the Company recognises deferred taxes in respect of
those originating timing differences, which reverse after the tax
holiday year resulting in tax consequences. Timing differences, which
originate and reverse within the tax holiday year do not result in tax
consequence and therefore no deferred taxes are recognised in respect
of the same. For this purpose, the timing differences, which originate
first are considered to reverse first.
1.11 Earnings per share
The basic earnings per share is computed by dividing the net profit
attributable to the equity shareholders for the year by the weighted
average number of equity shares outstanding during the year. Diluted
earnings per share is computed using the weighted average number of
equity shares and also the weighted average number of equity shares
that could have been issued on the conversion of all dilutive potential
equity shares. The dilutive potential equity shares are adjusted for
the proceeds receivable, had the shares been actually issued at fair
value. Dilutive potential equity shares are deemed converted as of the
beginning of the year, unless they have been issued at a later date.
1.12 Impairment of assets
The Company assesses at each balance Sheet date whether there is any
indication that an asset may be impaired, if any such indication
exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash generating unit which the asset belongs to, is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount The reduction is treated as an impairment loss and is recognised
in the 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 depreciable
historical cost.
Mar 31, 2013
1.1 Basis of preparation of financial statements
The accompanying financial statements have been prepared in compliance
with the requirements of the Companies Act, 1956, and Generally
Accepted Accounting Principles (GAAP1) in India, under the historical
cost convention. GAAP comprises mandatory accounting standards as
specified in the Companies (Accounting Standards) Rules, 2006 issued by
the Central Government, in consultation with National Advisory
Committee on Accounting Standards (''NACAS'') and relevant provisions
of Companies Act, 1956, to the extent applicable.
The preparation of the financial statements in accordance with
generally accepted accounting principles requires that management makes
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent liabilities as of the date of
financial statements and the reported amounts of revenue and expenses
during the reporting period. Management believes that the estimates
used in the preparation of financial statements are prudent and
reasonable. Actual results could differ from these estimates. Any
revision to accounting estimates is recognised prospectively in the
current and future periods.
1.2 Fixed assets and depreciation
Tangible assets
Fixed assets are stated at cost less accumulated depreciation. Cost
includes inward freight, duties, taxes and incidental expenses related
to acquisition and installation of the asset. Depreciation is provided
on Written Down Value (''WDV''). For additions and disposals,
depreciation is provided pro-rata for the period of use. The rate of
depreciation is based on Schedule XIV of the Companies Act, 1956.
Intangible assets
Intangible assets are amortized over their respective individual
estimated useful economic life on a straight line basis. Intangible
assets comprise Goodwill, which is not being amortized.
1.3 Leases
In accordance with Accounting Standard 19 "Accounting for leases",
lease arrangements, where the risks and rewards incidental to ownership
of an asset substantially vests with the lessor, are recognised as
operating leases. Lease payments under operating lease are recognised
as an expense in the profit and loss account.
1.4 Inventories
Inventories comprising of resalable licenses are valued at lower of
cost and net realizable value. Cost is determined on the basis of FIFO
method and includes all costs incurred in bringing the inventories to
their present location and condition. Net realisable value is the
estimated selling price in the ordinary course of business, less
selling expenses.
1.5 Revenue and cost recognition
The Company derives its revenues primarily from software technology and
IT enabled services. Revenue from time-and-material contracts is
recognised as related services are rendered. Revenue from fixed-price
contracts is recognised on a percentage of completion basis. In case of
sale of software, revenue is recognised when right to use the software
is transferred to the customer.
The asset "Unbilled revenue", represents revenues recognised in excess
of amounts billed. These amounts are billed after the milestones
specified in the agreement are achieved and the customer acceptance for
the same is received. For the cut off date, the percentage of efforts
have been estimated based on the time, resource spent and the status of
the project.
Revenue from maintenance contracts is recognised ratably over the term
of maintenance.
Warranty costs on sale of services are accrued based on management''s
estimates and historical data at the time related revenues are
recorded.
Dividend income is recognised when the Company''s right to receive
dividend is established. Interest income is recognised on the time
proportion basis.
1.6 Employee retirement and other benefits Defined Contribution Plans:
Defined Benefit Plans
Gratuity and leave encashment schemes are defined benefits. The present
value of the obligation under such defined benefit plans is determined
based on actuarial valuation carried out by an independent actuary at
the balance sheet date using the Projected Unit Credit Method, which
recognises each period of service as giving rise to one additional unit
of employee benefit entitlement and measures each unit separately to
build up the final obligation.
The obligation is measured at the present value of the estimated future
cash flows. The discount rates used for determining the present value
of the obligation under defined benefit plans, is based on the market
yields on Government securities as at the balance sheet date.
Actuarial gains and losses are recognised immediately in the Profit and
loss account.
1.7 Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of the transaction. Foreign currency
denominated monetary assets and monetary liabilities at the year end
are translated at the year-end exchange rate. Exchange rate differences
resulting from foreign exchange transactions settled during the year,
including year-end translation of monetary assets and liabilities are
recognised in the profit and loss account.
1.8 Investments
Investments, which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other invetsments are
classified as long term investments.
Long-term investments are stated at cost, and provision for diminution
is made when, in the management''s opinion, there is a decline, other
than temporary, in the carrying value of such investments. Current
investments are carried at lower of cost and fair value.
1.9 Taxation
Income tax expense comprises current tax expense and deferred tax
expense or credit computed in accordance with the relevant provisions
of the Income Tax Act, 1961. Provision for current taxes is recognised
under the taxes payable method based on the estimated tax liability
computed after taking credit for allowances and exemptions in
accordance with the Indian Income tax Act, 1961.
Deferred tax assets and liabilities are recognised for the future tax
consequences attributable to timing differences that result between the
profits offered for income taxes and the profits as per the financial
statements of the Company. Deferred tax assets and liabilities are
measured using the tax rates and the tax laws that have been enacted or
substantively enacted by the balance sheet date. The effect on deferred
tax assets and liabilities of a change in tax rates is recognised in
the period that includes the enactment rate. Deferred tax assets in
respect of carry forward losses are recognised only to the extent that
there is virtual certainty that sufficient future taxable income will
be available against which such deferred tax asset can be realised.
Other deferred tax assets are recognised only if there is a reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised. Deferred tax
assets are reviewed as at each balance sheet date and written down or
written-up to reflect the amount that is reasonably / virtually certain
(as the case may be) to be realised.
A substantial portion of profits of the Company are exempted from
Indian income tax, being profit from undertakings situated at Special
Economic Zones ("SEZ") in India. One of the Company''s undertaking is
eligible for a tax holiday as a Special Economic Zone unit commencing
from 2010 onwards in respect of 100% of the export profits for a period
of 5 years, 50% of such profits for next 5 years and 50% of the profits
for further period of 5 years subject to satisfaction of certain
capital investments requirements.
In this regard, the Company recognises deferred taxes in respect of
those originating timing differences, which reverse after the tax
holiday year resulting in tax consequences. Timing differences, which
originate and reverse within the tax holiday year do not result in tax
consequence and therefore no deferred taxes are recognised in respect
of the same. For this purpose, the timing differences, which originate
first are considered to reverse first.
1.10 Earnings per share
The basic earnings per share is computed by dividing the net profit
attributable to the equity shareholders for the year by the weighted
average number of equity shares outstanding during the year. Diluted
earnings per share is computed using the weighted average number of
equity shares and also the weighted average number of equity shares
that could have been issued on the conversion of all dilutive potential
equity shares. The dilutive potential equity shares are adjusted for
the proceeds receivable, had the shares been actually issued at fair
value. Dilutive potential equity shares are deemed converted as of the
beginning of the year, unless they have been issued at a later date.
1.11 Provisions and contingent liabilities
The Company creates a provision when there is 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 the likelihood of outflow
of resources is remote, no provision or disclosure is made.
Provisions are reviewed at each balance sheet date and adjusted to
reflect the current best estimate. If it is no longer probable that an
outflow of resources would be required to settle the obligation, the
provision is reversed.
Contingent assets are not recognised in the financial statements.
However, contingent assets are assessed continually and if it is
virtually certain that an inflow of economic benefits will arise, the
asset and related income are recognised in the period in which the
change occurs.
1.12 Impairment of assets
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash generating unit which the asset belongs to, is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognised in the 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 depreciable
historical cost.
Mar 31, 2012
1.1 Basis of preparation of financial statements
The accompanying financial statements have been prepared in compliance
with the requirements of the Companies Act, 1956, and Generally
Accepted Accounting Principles (GAAP1) in India, under the historical
cost convention. GAAP comprises mandatory accounting standards as
specified in the Companies (Accounting Standards) Rules, 2006 issued by
the Central Government, in consultation with National Advisory
Committee on Accounting Standards ('NACAS') and relevant provisions of
Companies Act, 1 956, to the extent applicable.
The preparation of the financial statements in accordance with
generally accepted accounting principles requires that management makes
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent liabilities as of the date of
financial statements and the reported amounts of revenue and expenses
during the reporting period. Management believes that the estimates
used in the preparation of financial statements are prudent and
reasonable. Actual results could differ from these estimates. Any
revision to accounting estimates is recognised prospectively in the
current and future periods.
1.2 Fixed assets and depreciation Tangible assets
Fixed assets are stated at cost less accumulated depreciation. Cost
includes inward freight, duties, taxes and incidental expenses related
to acquisition and installation of the asset. Depreciation is provided
on Written Down Value fWDV1). For additions and disposals, depreciation
is provided pro-rata for the period of use. The rate of depreciation is
based on Schedule XIV of the Companies Act,l956.
Intangible assets
Intangible assets are amortized over their respective individual
estimated useful economic life on a straight line basis. Intangible
assets comprise Goodwill, which is not being amortized.
1.3 Leases
In accordance with Accounting Standard 19 "Accounting for leases",
lease arrangements, where the risks and rewards incidental to ownership
of an asset substantially vests with the lessor, are recognised as
operating leases. Lease payments under operating lease are recognised
as an expense in the profit and loss account.
1.4 Inventories
Inventories comprising of resalable licenses are valued at lower of
cost and net realizable value. Cost is determined on the basis of FIFO
method and includes all costs incurred in bringing the inventories to
their present location and condition. Net realisable value is the
estimated selling price in the ordinary course of business, less
selling expenses.
1.5 Revenue and cost recognition
The Company derives its revenues primarily from software technology and
IT enabled services. Revenue from time-and-material contracts is
recognised as related services are rendered. Revenue from fixed-price
contracts is recognised on a percentage of completion basis. In case of
sale of software, revenue is recognised when right to use the software
is transferred to the customer.
The asset "Unbilled revenue", represents revenues recognised in excess
of amounts billed. These amounts are billed after the milestones
specified in the agreement are achieved and the customer acceptance
for the same is received.
Revenue from maintenance contracts is recognised ratably over the term
of maintenance.
Warranty costs on sale of services are accrued based on management's
estimates and historical data at the time related revenues are
recorded.
Dividend income is recognised when the Company's right to receive
dividend is established. Interest income is recognised on the time
proportion basis.
1.6 Employee retirement and other benefits Defined Contribution Plans:
Defined Benefit Plans-
Gratuity and leave encashment schemes are defined benefits. The present
value of the obligation under such defined benefit plans is determined
based on actuarial valuation carried out by an independent actuary at
the balance sheet date using the Projected Unit Credit Method, which
recognises each period of service as giving rise to one additional unit
of employee benefit entitlement and measures each unit separately to
build up the final obligation.
The obligation is measured at the present value of the estimated future
cash flows. The discount rates used for determining the present value
of the obligation under defined benefit plans, is based on the market
yields on Government securities as at the balance sheet date.
Actuarial gains and losses are recognised immediately in the Profit and
loss account.
1.7 Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of the transaction. Foreign currency
denominated monetary assets and monetary liabilities at the year end
are translated at the year-end exchange rate. Exchange rate differences
resulting from foreign exchange transactions settled during the year,
including year-end translation of monetary assets and liabilities are
recognised in the profit and loss account.
1.8 Investments
Investments, which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other invetsments are
classified as long term investments.
Long-term investments are stated at cost, and provision for diminution
is made when, in the management's opinion, there is a decline, other
than temporary, in the carrying value of such investments. Current
investments are carried at lower of cost and fair value.
1.9 Taxation
Income tax expense comprises current tax expense and deferred tax
expense or credit computed in accordance with the relevant provisions
of the Income Tax Act, 1961. Provision for current taxes is recognised
under the taxes payable method based on the estimated tax liability
computed after taking credit for allowances and exemptions in
accordance with the Indian Income tax Act, 1961.
Deferred tax assets and liabilities are recognised for the future tax
consequences attributable to timing differences that result between the
profits offered for income taxes and the profits as per the financial
statements of the Company. Deferred tax assets and liabilities are
measured using the tax rates and the tax laws that have been enacted or
substantively enacted by the balance sheet date. The effect on deferred
tax assets and liabilities of a change in tax rates is recognised in
the period that includes the enactment rate. Deferred tax assets in
respect of carry forward losses are recognised only to the extent that
there is virtual certainty that sufficient future taxable income will
be available against which such deferred tax asset can be realised.
Other deferred tax assets are recognised only if there is a reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised. Deferred tax
assets are reviewed as at each balance sheet date and written down or
written-up to reflect the amount that is reasonably / virtually certain
(as the case may be) to be realised.
A substantial portion of profits of the Company are exempted from
Indian income tax, being profit from undertakings situated at Special
Economic Zones ("SEZ") in India. One of the Company's undertaking is
eligible for a tax holiday as a Special Economic Zone unit commencing
from 2010 onwards in respect of 100% of the export profits for a period
of 5 years, 50% of such profits for next 5 years and 50% of the profits
for further period of 5 years subject to satisfaction of certain
capital investments requirements.
In this regard, the Company recognises deferred taxes in respect of
those originating timing differences, which reverse after the tax
holiday year resulting in tax consequences. Timing differences, which
originate and reverse within the tax holiday year do not result in tax
consequence and therefore no deferred taxes are recognised in respect
of the same. For this purpose, the timing differences, which originate
first are considered to reverse first.
1.10 Earnings pershare
The basic earnings per share is computed by dividing the net profit
attributable to the equity shareholders for the year by the weighted
average number of equity shares outstanding during the year. Diluted
earnings per share is computed using the weighted average number of
equity shares and also the weighted average number of equity shares
that could have been issued on the conversion of all dilutive potential
equity shares. The dilutive potential equity shares are adjusted for
the proceeds receivable, had the shares been actually issued at fair
value. Dilutive potential equity shares are deemed converted as of the
beginning of the year, unless they have been issued at a later date.
1.11 Provisions and contingent liabilities
The Company creates a provision when there is 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 fora 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 the likelihood of outflow
of resources is remote, no provision or disclosure is made.
Provisions are reviewed at each balance sheet date and adjusted to
reflect the current best estimate. If it is no longer probable that an
outflow of resources would be required to settle the obligation, the
provision is reversed.
Contingent assets are not recognised in the financial statements.
However, contingent assets are assessed continually and if it is
virtually certain that an inflow of economic benefits will arise, the
asset and related income are recognised in the period in which the
change occurs.
1.12 Impairment of assets
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash generating unit which the asset belongs to, is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognised in the 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 depreciable
historical cost.
Mar 31, 2011
1.1 Basis of preparation of financial statements
The accompanying financial statements have been prepared in compliance
with the requirements of the Companies Act, 1956, and Generally
Accepted Accounting Principles (GAAP) in India, under the historical
cost convention. GAAP comprises mandatory accounting standards as
specified in the Companies (Accounting Standards) Rules, 2006 issued by
the Central Government, in consultation with National Advisory
Committee on Accounting Standards (NACAS) and relevant provisions of
Companies Act, 1956, to the extent applicable.
The preparation of the financial statements in accordance with
generally accepted accounting principles requires that management makes
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent liabilities as of the date of
financial statements and the reported amounts of revenue and expenses
during the reporting period. Management believes that the estimates
used in the preparation of financial statements are prudent and
reasonable. Actual results could differ from these estimates. Any
revision to accounting estimates is recognized prospectively in the
current and future periods.
2.2 Fixed assets and depreciation
Tangible assets
Fixed assets are stated at cost less accumulated depreciation. Cost
includes inward freight, duties, taxes and incidental expenses related
to acquisition and installation of the asset. Depreciation is provided
on Written Down Value (WDV). For additions and disposals,
depreciation is provided pro-rata for the period of use. The rate of
depreciation is based on Schedule XIV of the Companies Act,1956.
Intangible assets
Intangible assets are amortized over their respective individual
estimated useful lives on a straight line basis. Intangible assets
comprise Goodwill, which is not being amortized.
2.3 Leases
In accordance with Accounting Standard 19 "Accounting for leases",
lease arrangements, where the risks and rewards incidental to ownership
of an asset substantially vests with the lessor, are recognized as
operating leases. Lease payments under operating lease are recognized
as an expense in the profit and loss account.
2.4 Revenue and cost recognition
The Company derives its revenues primarily from software technology and
IT enabled services. Revenue from time-and-material contracts is
recognized as related services are rendered. Revenue from fixed-price
contracts is recognized on a percentage of completion basis, measured
by the percentage of costs incurred to-date to estimated total costs
for each contract. This method is used because management considers
costs to be the best available measure of progress on these contracts.
In case of sale of software, revenue is recognized when right to use
the software is transferred to the customer.
The asset "Unbilled revenue", represents revenues recognized in excess
of amounts billed. These amounts are billed after the milestones
specified in the agreement are achieved and the customer acceptance for
the same is received.
Revenue from maintenance contracts is recognized ratably over the term
of maintenance.
Warranty costs on sale of services are accrued based on managements
estimates and historical data at the time related revenues are
recorded.
Dividend income is recognized when the Companys right to receive
dividend is established. Interest income is recognized on the time
proportion basis.
2.5 Employee retirement and other benefits Defined Contribution Plans:
Defined Benefit Plans÷
Gratuity and leave encashment schemes are defined benefits. The present
value of the obligation under such defined benefit plans is determined
based on actuarial valuation carried out by an independent actuary at
the balance sheet date using the Projected Unit Credit Method, which
recognizes each period of service as giving rise to one additional unit
of employee benefit entitlement and measures each unit separately to
build up the final obligation.
The obligation is measured at the present value of the estimated future
cash flows. The discount rates used for determining the present value
of the obligation under defined benefit plans, is based on the market
yields on Government securities as at the balance sheet date.
Actuarial gains and losses are recognized immediately in the Profit and
loss account.
2.6 Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of the transaction. Foreign currency denominated
monetary assets and monetary liabilities at the year end are translated
at the year-end exchange rate. Exchange rate differences resulting from
foreign exchange transactions settled during the year, including
year-end translation of monetary assets and liabilities are recognized
in the profit and loss account.
2.7 Investments
Long-term investments are stated at cost, and provision for diminution
is made when, in the managements opinion, there is a decline, other
than temporary, in the carrying value of such investments. Current
investments are carried at lower of cost and fair value.
2.8 Taxation
Income tax expense comprises current tax expense and deferred tax
expense or credit computed in accordance with the relevant provisions
of the Income Tax Act, 1961. Provision for current taxes is recognised
under the taxes payable method based on the estimated tax liability
computed after taking credit for allowances and exemptions in
accordance with the Indian Income tax Act, 1961.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to timing differences that result between the
profits offered for income taxes and the profits as per the financial
statements of the Company. Deferred tax assets and liabilities are
measured using the tax rates and the tax laws that have been enacted or
substantively enacted by the balance sheet date. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in
the period that includes the enactment rate. Deferred tax assets in
respect of carry forward losses are recognized only to the extent that
there is virtual certainty that sufficient future taxable income will
be available against which such deferred tax asset can be realized.
Other deferred tax assets are recognized only if there is a reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized. Deferred tax
assets are reviewed as at each balance sheet date and written down or
written-up to reflect the amount that is reasonably / virtually certain
(as the case may be) to be realized.
2.9 Earnings per share
(a) The basic earnings per share is computed by dividing the net profit
attributable to the equity shareholders for the year by the weighted
average number of equity shares outstanding during the year. Diluted
earnings per share is computed using the weighted average number of
equity shares and also the weighted average number of equity shares
that could have been issued on the conversion of all dilutive potential
equity shares. The dilutive potential equity shares are adjusted for
the proceeds receivable, had the shares been actually issued at fair
value. Dilutive potential equity shares are deemed converted as of the
beginning of the year, unless they have been issued at a later date.
(b) Earning per share calculation for the previous year has been
reinstated at the split Equity share face value of Re. 1 each.
2.10 Provisions and contingent liabilities
The Company creates a provision when there is 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 the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Provisions are reviewed at each balance sheet date and adjusted to
reflect the current best estimate. If it is no longer probable that an
outflow of resources would be required to settle the obligation, the
provision is reversed.
Contingent assets are not recognized in the financial statements.
However, contingent assets are assessed continually and if it is
virtually certain that an inflow of economic benefits will arise, the
asset and related income are recognized in the period in which the
change occurs.
2.11 Impairment of assets
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash generating unit which the asset belongs to, is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognized in the 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 depreciable
historical cost.
2.12 Miscellaneous expenditure (to the extent not written off)
During the Financial Year the Company has adjusted expenditure incurred
towards issue of Compulsorily Convertible Preference shares and
Compulsorily Convertible Debentures which are converted into equity
shares against Security Premium.
Mar 31, 2010
1.1 Basis of preparation of financial statements
The accompanyingfinancial statements have been prepared in compliance
with the requirements of the Companies Act, 1956, and Generally
Accepted Accounting Principles (GAAP) in India, under the historical
cost convention. GAAP com prises mandatory accounting standards as
specified in the Companies (Accounting Standards) Rules, 2006 issued by
the Central Government, in consultation with National Advisory
Committee on Accounting Standards (NACAS) and relevant provisions of
Companies Act, 1956, to theextent applicable.
The preparation of the financial statements in accordance with
generally accepted accounting principles requires that management makes
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent liabilities as of the date of
financial statements and the reported amounts of revenue and expenses
during the reporting period. Management believes that the estimates
used in the preparation of financial statements are prudent and
reasonable. Actual results could differ from these estimates. Any
revision to accounting estimates is recognised prospectively in the
current and future periods.
1.2 Fixed assets and depreciation
Tangible assets
Fixed assets are stated at cost less accumulated depreciation. Cost
includes inward freight, duties, taxes and incidental expenses related
to acquisition and installation of the asset. During the year ended 31
March, 2010, Opening WDV of Rs. 85,826 has been sold. Also during the
financial year the Company has entered into Asset purchase agreement
with Finasys for Rs. 310,099 on 1st Feb, 2010. According to this
agreement the company has acquired assets having WDV value of Rs.
310,099. Depreciation provided on Written Down Value (WDV) is based on
the estimated useful lives of the assets as determined by the
management. For additions and disposals, depreciation is provided
prorata forthe period of use.
1.3 Leases
In accordance with Accounting Standard 19 "Accounting for leases",
lease arrangements, where the risks and rewards incidental to ownership
of an asset substantially vests with the lessor, are recognised as
operating leases. Lease payments under operating lease are recognised
as an expense in the profit and loss account.
1.4 Revenue and cost recognition
The Company derives its revenues primarily from software technology and
IT enabled services. Revenue from time- and-material contracts is
recognised as related services are rendered. Revenue from fixed-price
contracts is recognised on a percentage of completion basis, measured
by the percentage of costs incurred to-date to estimated total costs
for each contract. This method is used because management considers
costs to be the best available measure of progress on these contracts.
In case of sale of software, revenue is recognised when right to use
the software is transferred to the customer.
The asset "Unbilled revenue", represents revenues recognised in excess
of amounts billed. These amounts are billed after the milestones
specified in the agreement a re achieved and the customer acceptance
for the same is received.
Revenue from maintenance contracts is recognised rateably over the term
of maintenance.Warranty costs on sale of services are accrued based on
managements estimates and historical data at the time related revenues
are recorded.
Dividend income is recognised when the Companys right to receive
dividend is established. Interest income is recognised on the time
proportion basis.
1.5 Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of the transaction. Foreign currency denominated
monetary assets and monetary liabilities at the year end are translated
at the year-end exchange rate. Exchange rate differences resulting from
foreign exchange transactions settled during the year,
includingyear-end translation of monetary assets and liabilities are
recognised in the profit and loss account.
1.6 Investments
Long-term investments are stated at cost, and provision for diminution
is made when, in the managements opinion, there is a decline, other
than temporary, in the carrying value of such investments. Current
investments are carried at lowerofcost and fair value.
1.7 Taxation
Income tax expense comprises current tax expense and deferred tax
expense or credit computed in accordance with the relevant provisions
of the Income Tax Act, 1961. Provision for current taxes is recognised
under the taxes payable method based on the estimated tax liability
computed after taking credit for allowances and exemptions in
accordance with the Indian Income tax Act, 1961.
Deferred tax assets and liabilities are recognised for the future tax
consequences attributable to timing differences that result between the
profits offered for income taxes and the profits as per the financial
statements of .the Company. Deferred tax assets and liabilities are
measured using the tax rates and the tax laws that have been enacted or
substantively enacted by the balance sheet date. The effect on deferred
tax assets and liabilities of a change in tax rates is recognised in
the period that includes the enactment rate. Deferred tax assets in
respect of carry forward losses are recognised only to the extent that
there is virtual certainty that sufficient future taxable income will
be available against which such deferred tax asset can be realised.
Other deferred tax assets are recognised only if there is a reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised. Deferred tax
assets are reviewed as at each balance sheet date and written down or
written-up to reflect the amount that is reasonably/virtually certain
(as the case may be) to be realised.
1.8 Earnings per share
The basic earnings per share is computed by dividing the net profit
attributable to the equity shareholders for the year by the weighted
average number of equity shares outstanding during the year. Diluted
earnings per share is computed using the weighted average number of
equity shares and also the weighted average number of equity shares
that could have been issued on the conversion of all dilutive potential
equity shares. The dilutive potential equity shares are adjusted for
the proceeds receivable, had the shares been actually issued at fair
value. Dilutive potential equity shares are deemed converted as of the
beginning of the year, unless they have been issued at a later date.
1.9 Provisions and contingent liabilities
The Company creates a provision when there is 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 the likelihood of outflow of
resources is remote, no provision ordisclosure is made.
Provisions are reviewed at each balance sheet date and adjusted to
reflectthe current best estimate. If it is no longer probable that an
outflow of resources would be required to settle the obligation, the
provision is reversed.
Contingent assets are not recognised in the financial statements.
However, contingent assets are assessed continually and if it is
virtually certain that an inflow of economic benefits will arise, the
asset and related income are recognised in the period in which the
change occurs.
1.10 Miscellaneous expenditure (to the extent not written off)
During the Financial Year the Company has incurred expenditure which
has impact in more than one financial year. 0 ut of these expenses for
the amount of Rs. 132,965 are towards issue of Preference shares which
are convertible to equity shares after 13 months from its issue date
i.e. 05th January 2010. Hence amount of Rs. 30684 has been written off
on prorata basisfor3 months during current financial year.
Also amount of Rs. 55,150 incurred towards 10% Compulsorily Convertible
Debentures and included above has not been amortised during the year as
the company was at the stage of Application of the debentures and has
been a Noted as on 27th April 2010. The amount will be amortised in 18
months i.e. tenure of the said Convertible debentures from the date of
allotment.
The balance amount of Rs. 1407563 incurred towards equity share
expenses have been written off over a period of 5 years.
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash generating unit which theasset belongs to, is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognised in the 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 theasset is
reflected at the recoverable amount subject to a maximum of depreciable
historical cost.
Mar 31, 2009
BASIS FOR PREPARATION
The financial statements are prepared under the historical cost
convention, in accordance with Indian Generally Accepted Accounting
Principles ("GAAP") comprising the mandatory accounting standards
issued by the Institute of Chartered Accountants of India and the
provisions of the Companies Act, 1956 on the accrual basis, as adopted
consistently by the company.
The preparation of the financial statements in conformity with GAAP
requires that the management of the company (" Management") make
estimates and assumptions that affect the reported amounts of revenue
and expenses of the date of the year, reported balance of assets &
liabilities, and disclosures relating to contingent assets &
liabilities as of the date of the financial statements. Examples of
such estimates include accepted development cost to be incurred to
complete software contracts, provision for doubtful debts, future
applications under employee retirement benefit plans and be useful
lives of fixed assets. Actual results could differ from those
estimates.
REVENUE RECOGNITION
Revenue from software development on time-and-materials contracts is
recognized based on software developed and billed to clients as per the
terms of specifies contracts on fixed - price contracts, revenue is
recognized based on milestones achieved as specified In the contracts
on the proportionate - completion method on basis of the work
completed.
EXPENDITURE
The cost of software purchaseu Hum use in software development &
services is charged to revenue in the year the software is acquired.
Project costs in the nature of salaries, travel and other expenses
incurred on fixed price contracts, where milestones arc yet to be
reached, are classified as "Costs in excess of billings" in the balance
sheet. Provisions are made for all known losses and liabilities, future
unforeseeable factors that may affect the profit on fixed - price
software development contracts, and also towards likely expenses for
providing post-salcs client support on fixed-price contracts. The leave
encashment liability of the company is provided on the basis of an
actuarial valuation.
FIXED ASSETS
fixed assets arc stated at cost, after reducing accumulated
depreciation until the dale of the balance sheet. Direct cost are
capalialsed until the assets are ready for use and include liniuicing
costs relating to any specific borrowing attributable to the
acquisition of the fixed assets.
FOREIGN CURRENCY TRANSACTIONS
Transactions denominated in foreign currencies are recorded at the
exchange rales prevailing on the date of the transaction. Any income or
expenses on account of exchange differences cither on settlement or on
translation of transactions other than those relating to fixed assets
is recognized in the Profit and Loss Accounts.
Monetary items denominated in foreign currencies at the year-end are
translated at the exchange rates prevailing on the date of the Balance
Sheet.
TAXATION
Income taxes consists of current taxes and changes in deferred lax
liability and asset.
Deferred lax asset or liability is recorded for timing differences
between taxable income and accounting income as per financial
statements at the enacted tax rates, liming differences, which the
originate during the lax holiday period but reverse after the tux
holiday are recognized in the year in which the timing differences
originate if they result in taxable amounts.
Deferred lax assets are recognized only if there is a reasonable
certainly that they will be realized and reviewed for the
appropriateness of their respective earn ing values at each balance
sheet date.
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