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Accounting Policies of Sonata Software Ltd. Company

Mar 31, 2016

1: Corporate information

Sonata Software Limited ("SSL" or the "Company") is a Company registered in India with its registered office at Mumbai and
operationally headquartered at Bengaluru. The Company is listed on The National Stock Exchange Limited and The Bombay Stock
Exchange Limited. The Company is primarily engaged in the business of providing IT Services and Solutions to its customers in
the US, Europe, Middle East and India.

2: Significant accounting policies

a. Basis of accounting and preparation of financial statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in
India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 and the
relevant provisions of the Companies Act, 2013 ("the 2013 Act") / Companies Act, 1956 ("the 1956 Act"), as applicable. The
financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in
the preparation of the financial statements are consistent with those followed in the previous year.

b. Use of estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and
assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported
income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements
are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and
the estimates are recognized in the periods in which the results are known / materialize.

c. Depreciation / Amortization

Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.

Depreciation has been provided on buildings and plant and equipments on the straight-line method and on furniture and fixtures,
vehicles and office equipments on the written down method, as per the useful life prescribed in Schedule II to the 2013 Act.

Leasehold land and leasehold improvements are amortized over primary lease period.

Intangible assets are amortized over their estimated useful life on straight-line method as follows:

- Computer software- 3 years

- Goodwill acquired on purchase of business- 5 years

The estimated useful life of the intangible assets and the amortization period are reviewed at the end of each Financial Year and
the amortization period is revised to reflect the changes, if any.

d. Revenue recognition

Revenues from contracts priced on a time and material basis are recognized when services are rendered and related costs are
incurred.

Revenues from fixed price contracts are recognized over the life of the contract using the proportionate completion method, with
contract costs determining the degree of completion. Foreseeable losses on such contracts are recognized when probable.

Revenues from sale of product and licenses are recognized on transfer of significant risks and rewards of ownership to the
buyers, which generally coincides with delivery where there is no customization required. In case of customization the same is
recognized over the life of the contract using the proportionate completion method, with contract costs determining the degree of
completion. Foreseeable losses on such contracts are recognized when probable.

Revenues from maintenance contracts are recognized pro- rata over the period of the contract.

Revenues are reported net of discounts.

Dividend income is recognized when the right to receive it is established. Interest income is accounted on accrual basis.

e. Fixed Assets (Tangible/Intangible)

Fixed assets are carried at cost less accumulated depreciation / amortization and impairment losses, if any. The cost of fixed
assets comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those
subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its
intended use. Subsequent expenditure, if any, on fixed assets after its purchase / completion is capitalized only if such
expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

Capital work-in-progress

Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost,
related incidental expenses and attributable interest.

Intangible assets under development:

Expenditure on Research and development (Refer Note 2 (f )) eligible for capitalization are carried as Intangible assets under
development where such assets are not yet ready for their intended use.

f. Research and development expenses

Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are also
charged to the Statement of Profit and Loss unless a product''s technical feasibility has been established, in which case such
expenditure is capitalized. The amount capitalized comprises expenditure that can be directly attributed or allocated on a
reasonable and consistent basis to creating, producing and making the asset ready for its intended use.

g. Foreign currency transactions and translations

Initial recognition

Company: Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the
date of the transaction or at rates that closely approximate the rate at the date of the transaction.

Integral foreign operations: Transactions in foreign currencies entered into by the Company''s integral foreign operations are
accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the
date of the transaction.

Measurement at the Balance Sheet date

Company: Foreign currency monetary items (other than derivative contracts) of the Company, outstanding at the Balance Sheet date
are restated at the year-end rates. Non- monetary items of the Company are carried at historical cost.

Integral foreign operations: Foreign currency monetary items (other than derivative contracts) of the Company''s integral foreign
operations outstanding at the Balance Sheet date are restated at the year-end rates. Non-monetary items of the Company''s integral
foreign operations are carried at historical cost.

Treatment of exchange differences

Company: Exchange differences arising on settlement / restatement of foreign currency monetary assets and liabilities of the
Company are recognized as income or expense in the Statement of Profit and Loss.

Integral foreign operations: Exchange differences arising on settlement / restatement of foreign currency monetary assets and
liabilities of the Company''s integral foreign operations are recognized as income or expense in the Statement of Profit and Loss.

Accounting for forward contracts

Premium / discount on forward exchange contracts, which are not intended for trading or speculation purposes, are amortized over
the period of the contracts if such contracts relate to monetary items as at the Balance Sheet date.

Exchange difference on such contracts are recognized in the Statement of Profit and Loss of the reporting period in which the
exchange rate changes. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognized as
income or as expense in the period in which such cancellation or renewal is made.

h. Investments

Long-term investments are carried individually at cost less provision for diminution, other than temporary, in the value of such
investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments includes
acquisition charges such as brokerage, fees and duties.

i. Employee benefits

Employee benefits include provident fund, superannuation fund, foreign defined contribution fund, employee state insurance
scheme, gratuity and compensated absences.

Defined contribution plans

The Company''s contribution to provident fund, superannuation fund, foreign defined contribution fund and employee state insurance
are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be
made and when services are rendered by the employees.

Defined benefit plan

For defined benefit plan in the form of gratuity, the cost of providing benefit 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 the
Statement of Profit and Loss in 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, as reduced by the fair value of scheme assets. Any asset
resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in
future contributions to the schemes.

Long-term employee benefits

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee
renders the related service are recognized as a liability at the present value of the defined benefit obligation as at the
Balance Sheet date.

Short-term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by


employees are recognized during the year when the employees render the service. These benefits include performance incentive and
compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders
the related service.

The cost of short-term compensated absences is accounted as under:

(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future
compensated absences; and

(b) in case of non-accumulating compensated absences, when the absences occur.

j. Leases

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the less or are
recognized as operating leases. Lease rentals under operating leases are recognized in the Statement of Profit and Loss on a
straight-line basis over the lease term.

k. Earnings per share

Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary
items, if any) by the weighted average number of equity shares outstanding during the year. For the purpose of computing diluted
earnings per share, profit / (loss) after tax (including the post tax effect of extraordinary items, if any) and the weighted
average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

l. Taxes on income

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax
rates and the provisions of the Income tax Act, 1961 and other applicable tax laws.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment
to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income
tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is highly probable that future economic benefit
associated with it will flow to the Company.

Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that
originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax
rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognized for all
timing differences. Deferred tax assets are recognized for timing differences of items other than unabsorbed depreciation and
carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available
against which these can be realized. However, if there is unabsorbed depreciation and carry forward of losses and items relating
to capital losses, deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that
there will be sufficient future taxable income available to realize the assets. Deferred tax assets and liabilities are offset
if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for
such set off. Deferred tax assets are reviewed at each Balance Sheet date for their reliability.

Current and deferred tax relating to items directly recognized in reserves and not in the Statement of Profit and Loss.

m. Impairment of assets

The carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment. If any indication
of impairment exists, the recoverable amount of such assets is estimated and impairment is recognized, if the carrying amount of
these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in
use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount
factor. When there is indication that an impairment loss recognized for an asset in earlier accounting periods no longer exists
or may have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss.

n. Provisions and contingencies

A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an outflow
of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding
retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle
the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best
estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognized in the financial statements.

o. Hedge accounting

The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to
firm commitments/ highly probable forecast transactions. The Company designates such forward contracts in a cash flow hedging
relationship by applying the hedge accounting principles set out in "Accounting Standard 30 Financial Instruments: Recognition
and Measurement" issued by the Institute of Chartered Accountants of India. These forward contracts are stated at fair value at
each reporting date. Changes in the fair value of these forward contracts that are designated and effective as hedges of future
cash flows are recognized directly in "Hedging reserve" under Reserves and surplus, net of applicable deferred income taxes and
the ineffective portion is recognized immediately in the Statement of Profit and Loss. Amounts accumulated in the "Hedging
reserve" are reclassified to the Statement of Profit and Loss in the same periods during which the committed/ forecasted
transaction affects profit or loss. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated,
or exercised, or no longer qualifies for hedge accounting. For committed/ forecasted transaction, any cumulative gain or loss on
the hedging instrument recognized in "Hedging reserve" is retained until the committed/ forecasted transaction occurs. If the
committed/ forecasted transaction is no longer expected to occur, the net cumulative gain or loss recognized in "Hedging reserve"
is immediately transferred to the Statement of Profit and Loss.

p. Operating cycle

Based on the nature of products/ activities of the Company and the normal time between acquisition of assets and their
realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of
classification of its assets and liabilities as current and non-current.

ii) Details of rights, preferences and restrictions attached to each class of shares

The Company has equity shares having a par value of Rs, 1. Each shareholder is entitled for one vote per share. The shareholders
have the right to receive interim dividends declared by the Board of directors and final dividends proposed by the Board and
approved by the shareholders.

In the event of liquidation by the Company, the holders of the equity shares will be entitled to receive in proportion to the
number of equity shares held by them, the remaining assets of the Company.

The shareholders have all other rights as available to equity shareholders as per the provisions of the 1956 Act/the 2013 Act,
read together with the Memorandum of Association and Articles of Association of the Company, as applicable.


Details of disputed demands of Income-tax by issue and by year are as below:

(i) Disallowance of claims made under Section 10A of the Income-tax Act, 1961

The Company does its business of software exports through multiple operating units or undertakings registered under the Software
Technology Park Scheme of India. In computing taxable profit from the export of software, the Company claims exemptions provided
to registered software technology parks undertakings and units as provided under Section 10A of the Income-tax Act, 1961 ("Act").

The Income-tax department in its assessments has been denying or limiting the benefits of Section 10A of the Act to the multiple
undertakings of the Company on the ground that they were in fact one single unit and thus the benefits claimed were in excess of
permissible limits, and had raised a demand of Rs, 336,003,062 (As at 31.03.15 - Rs, 336,003,062) for Financial Year 2007-08 and
2009-10. The Company had challenged the decision of Assessing Officer and had preferred appeals to the Commissioner of Income-tax
(Appeals).

Rs,Nil (As at 31.03.15- Rs,384,295,136) for the Financial Year 2006-07 and 2008-09. For the Financial Year 2006-07, the Company
received favorable orders from Income-tax Appellate Tribunal (ITAT) and the department has preferred an appeal before the
Honorable High Court of Mumbai which is yet to be admitted. For the Financial Year 2008-09, the Company has received favorable
order from Commissioner of Income-tax (Appeals).

For the Financial Year 2001-02, ITAT had given a favorable order on the ground of income accrued under Section 10A of the Act
against which the department had filed an appeal before the Honorable High Court of Mumbai Rs, 14,863,703 (As at 31.03.15 - Rs,
14,863,703).

(ii) Inter-unit set-off of losses

As discussed in point (i) above, the Company operates multiple operating units and undertakings under the Software Technology
Park Scheme of India. While computing its taxable profits, losses from one undertaking were set off against profits of another or
carried forward to the subsequent years. The Income-tax department had disallowed such carry forward of losses. The Company
received favorable orders from ITAT and the department had preferred an appeal before the Honorable High Court of Mumbai which is
yet to be admitted for Financial Years 2004- 05 and hence there is no contingent liability.

Rs,Nil (As at 31.03.15 Rs, 12,321,813) for the Financial Year 2002- 03 and 2003-04. During the year, the Company received
favorable orders from ITAT. The department has preferred an appeal before the Honorable High Court of Mumbai which is yet to be
admitted.


(iii)Disallowance of Inter-Company Service Charges

The Company charges Sonata Information Technology Limited, its wholly owned subsidiary, for certain support services rendered.
During assessments, the Income-tax department denied Section 10A of the Act benefits on such support services and assessed the
same as normal business income and raised demand of Rs, 233,708,329 (As at 31.03.15 - Rs, 233,708,329) for Financial Years
2001-02, 2002-03, 2003- 04 and 2004-05. The Company had received favorable orders from ITAT. However, the department preferred an
appeal on the said orders before the Honorable High Court of Mumbai.

Rs, 11,635,577 (As at 31.03.15- Rs, 11,635,577) for the Financial Year 2010-11. The Company had filed an appeal before the
Commissioner of Income-tax (Appeals).

(iv) Transfer Pricing Adjustment

Rs, 116,162,422 (As at 31.03.15 - Rs, Nil) for the Financial Year 2011-12. The Income-tax department has recommended the upward
adjustment in the value of Investment in subsidiary and sale of services to associated enterprises as Transfer Pricing Adjustment
in the International transactions in order to consider them to be at arm''s length price. The Company has preferred an appeal
before Commissioner of Income-tax (Appeals).

(v) Withholding tax demand

The Income-tax department has been contending that amounts paid by the Company for buying the software products is in the nature
of ''Royalty'' and hence had to withhold Income-tax on the same as per the Act and had raised demand of Rs, 284,187,956 (As at
31.03.15 -

Rs, 284,187,956) for the Financial Years 1999-00, 2000-01 and 2001-02. The Company''s contention has been that the payments were
made for purchase of ''Goods'' and hence was under no obligation to withhold Income-tax on the same. The Company had received
favorable orders from the ITAT which were reversed by the Honorable High Court of Karnataka. The Company had preferred a Special
Leave Petition Appeal on the said order to the Honorable Supreme Court of India, which had been admitted. However, for these
years one of the principal suppliers of software to the Company had paid taxes of Rs, 87,904,913 out of the above demand. The
amount included as disputed demand is excluding the amount paid by the supplier.

(vi)Deductions claimed under section 80 O

Prior to the enactment of Section 10A of the Act, the Company claimed deduction for exports made, under Section 80 O of the Act.
The department had re-opened the assessments and disallowed certain aspects of the claims made on the contention that cost
allocation principles followed for the claim are erroneous and raised a demand of Rs, 8,283,288 (As at 31.03.15 - Rs, 8,283,288)
for the Financial Year 1994-95. The Company had received favorable orders from Income-tax Appellate Tribunal. The department had
preferred an appeal on the said order before the Honorable High Court of Mumbai.

e) In addition, the Company in the ordinary course of business receives various claims from its customers and other business
partners. Based on review of such matters and the information available at this time, the Company does not anticipate that any of
these will result in a settlement that will have a material impact on its financial statements.

Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of
information collected by the Management. This has been relied upon by the auditors.



Mar 31, 2015

A. Basis of accounting and preparation of financial statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act") / Companies Act, 1956 ("the 1956 Act"), as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

b. Use of estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.

c. Depreciation / Amortisation

Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.

Depreciation has been provided on buildings and plant and equipments on the straight-line method and on furniture and fixtures, vehicles and office equipments on the written down method, as per the useful life prescribed in Schedule II to the 2013 Act.

Leasehold land and leasehold improvements are amortised over primary lease period.

Intangible assets are amortized over their estimated useful life on straightline method as follows:

- Computer software- 3 years

- Goodwill acquired on purchase of business- 5 years

The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial year and the amortisation period is revised to reflect the changes, if any.

d. Revenue recognition

Revenues from contracts priced on a time and material basis are recognised when services are rendered and related costs are incurred.

Revenues from fixed price contracts are recognised over the life of the contract using the proportionate completion method, with contract costs determining the degree of completion. Foreseeable losses on such contracts are recognised when probable.

Revenues from sale of product and licenses are recognised on transfer of significant risks and rewards of ownership to the buyers, which generally coincides with delivery where there is no customisation required. In case of customisation the same is recognised over the life of the contract using the proportionate completion method with contract costs determining the degree of completion. Foreseeable losses on such contracts are recognised when probable.

Revenues from maintenance contracts are recognised pro- rata over the period of the contract.

Revenues are reported net of discounts.

Dividend income is recognised when the right to receive it is established. Interest income is accounted on accrual basis.

e. Fixed Assets (Tangible/Intangible)

Fixed assets are carried at cost less accumulated depreciation / amortization and impairment losses, if any. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use. Subsequent expenditure, if any, on fixed assets after its purchase / completion is capitalized only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

Capital work-in-progress

Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

f. Foreign currency transactions and translations Initial recognition

Company: Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.

Integral foreign operations: Transactions in foreign currencies entered into by the Company''s integral foreign operations are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.

Measurement at the balance sheet date Company: Foreign currency monetary items (other than derivative contracts) of the Company, outstanding at the balance sheet date are restated at the year-end rates. Non- monetary items of the Company are carried at historical cost.

Integral foreign operations: Foreign currency monetary items (other than derivative contracts) of the Company''s integral foreign operations outstanding at the balance sheet date are restated at the year-end rates. Non-monetary items of the Company''s integral foreign operations are carried at historical cost.

Treatment of exchange differences

Company: Exchange differences arising on settlement / restatement of foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profit and Loss.

Integral foreign operations: Exchange differences arising on settlement / restatement of foreign currency monetary assets and liabilities of the Company''s integral foreign operations are recognised as income or expense in the Statement of Profit and Loss.

Accounting for forward contracts

Premium / discount on forward exchange contracts, which are not intended for trading or speculation purposes, are amortised over the period of the contracts if such contracts relate to monetary items as at the balance sheet date. Exchange difference on such contracts are recognised in the Statement of Profit and Loss of the reporting period in which the exchange rate changes. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognised as income or as expense in the period in which such cancellation or renewal is made.

g. Investments

Long-term investments are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments includes acquisition charges such as brokerage, fees and duties.

h. Employee benefits

Employee benefits include provident fund, superannuation fund, employee state insurance scheme, gratuity and compensated absences.

Defined contribution plans

The Company''s contribution to provident fund, superannuation fund and employee state insurance are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.

Defined benefit plan

For defined benefit plan in the form of gratuity, the cost of providing benefit 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 the Statement of Profit and Loss in 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, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.

Long-term employee benefits

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of the defined benefit obligation as at the balance sheet date.

Short-term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.

The cost of short-term compensated absences is accounted as under:

(a) i n case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and

(b) i n case of non-accumulating compensated absences, when the absences occur.

i. 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 on a straight-line basis over the lease term.

j. Earnings per share

Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. For the purpose of computing diluted earnings per share, profit / (loss) after tax (including the post tax effect of extraordinary items, if any) and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

k. Taxes on income

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income tax Act, 1961 and other applicable tax laws.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company.

Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realized. However, if there is unabsorbed depreciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realize the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Balance Sheet date for their realisability.

Current and deferred tax relating to items directly recognized in reserves are recognized in reserves and not in the Statement of Profit and Loss.

l. Impairment of assets

The carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognized, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognized for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss.

m. Provisions and contingencies

A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are

disclosed in the Notes. Contingent assets are not recognized in the financial statements.

n. Hedge accounting

The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to firm commitments/ highly probable forecast transactions. The Company designates such forward contracts in a cash flow hedging relationship by applying the hedge accounting principles set out in "Accounting Standard 30 Financial Instruments: Recognition and Measurement" issued by the Institute of Chartered Accountants of India. These forward contracts are stated at fair value at each reporting date. Changes in the fair value of these forward contracts that are designated and effective as hedges of future cash flows are recognized directly in "Hedging reserve" under Reserves and surplus, net of applicable deferred income taxes and the ineffective portion is recognized immediately in the Statement of Profit and Loss. Amounts accumulated in the "Hedging reserve" are reclassified to the Statement of Profit and Loss in the same periods during which the committed/ forecasted transaction affects profit or loss. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. For committed/ forecasted transaction, any cumulative gain or loss on the hedging instrument recognized in "Hedging reserve" is retained until the committed/ forecasted transaction occurs. If the committed/ forecasted transaction is no longer expected to occur, the net cumulative gain or loss recognized in "Hedging reserve" is immediately transferred to the Statement of Profit and Loss.

o. Operating cycle

Based on the nature of products/activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

ii) Details of rights, preferences and restrictions attached to each class of shares

The Company has equity shares having a par value of '' 1. Each shareholder is entitled for one vote per share. The shareholders have the right to receive interim dividends declared by the Board of directors and final dividends proposed by the Board and approved by the shareholders.

In the event of liquidation by the Company, the holders of the equity shares will be entitled to receive in proportion to the number of equity shares held by them, the remaining assets of the Company.

The shareholders have all other rights as available to equity shareholders as per the provisions of the 1956 Act/the 2013 Act, read together with the Memorandum of Association and Articles of Association of the Company, as applicable.


Mar 31, 2013

A. Basis for preparation of financial statements

The financial statements of the Company have been prepared under the historic cost convention, on the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (''GAAP'') in India to comply with the Accounting Standards notified under the Companies (Accounting Standard) Rule, 2006 (as amended) and the relevant provisions of the Companies Act.

b. Use of Estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.

c. Depreciation

Depreciation has been provided on Plant & Machinery, on straight line basis and on other assets on written down value at the rate specified in Schedule XIV of the Companies Act, 1956, (as amended), or at the rate based on useful lives as estimated by the Management :

Assets costing less than Rs. 5,000/- each are fully depreciated in the year of capitalization.

d. Revenue Recognition

Revenues from contracts priced on a time and material basis are recognised when services are rendered and related costs are incurred.

Revenues from fixed price contracts, are recognised over the life of the contract using the proportionate completion method, with contract costs determining the degree of completion. Foreseeable losses on such contracts are recognised when probable.

Revenues from sale of product and licenses are recognised upon delivery where there is no customisation required. In case of customisation the same is recognised over the life of the contract using the proportionate completion method.

Revenues from maintenance contracts are recognised pro-rata over the period of the contract.

Revenues are reported net of discounts.

Dividends are recorded when the right to receive payment is established. Interest income is recognised on time proportion basis taking into account the amount outstanding and the rate applicable.

e. Tangible & Intangible Fixed Assets

Fixed assets are carried at cost less accumulated depreciation / amortization and impairment losses, if any. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use. Subsequent expenditure, if any, on fixed assets after its purchase / completion is capitalized only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

f. Foreign Currency Transactions

Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the exchange rate prevalent at the date of Balance Sheet. Exchange differences arising on foreign currency transactions are recognized as income or expense in the year which they arise.

g. Investments

Long-term investments are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties.

h. Employee Benefits

Employee benefits include provident fund, superannuation fund, employee state insurance scheme, gratuity fund and compensated absences.

Defined Contribution Plans

Contribution to defined retirement benefit schemes are recognized as an expense when employees have rendered services entitling them to contribution required to be made.

Defined Benefit Plans

For defined benefit plans, 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 the Statement of Profit and Loss in 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, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.

Long term liability for compensated absence is provided based on actuarial valuation of the accumulated leave credit outstanding to the employees as on Balance Sheet date.

i. 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 on a straight-line basis.

j. Earnings Per Share

Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. For the purpose of computing diluted earnings per share, profit / (loss) after tax (including the post tax effect of extraordinary items, if any) and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

k. Taxes on Income

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company,

Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realized. However, if there is unabsorbed depreciation and carry forward of losses, deferred tax assets are recognized only if there is

virtual certainty that there will be sufficient future taxable income available to realize the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Balance Sheet date for their realizability,

l. Impairment of Assets

The carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognized, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognized for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss.

m. Provisions and Contingencies

A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognized in the financial statements.

n. Hedge Accounting

The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to highly probable forecast transactions. The Company designates such forward contracts in a cash flow hedging relationship by applying the hedge accounting principles set out in "Accounting Standard 30 Financial Instruments: Recognition and Measurement" issued by the Institute of Chartered Accountants of India. These forward contracts are stated at fair value at each reporting date. Changes in the fair value of these forward contracts that are designated and effective as hedges of future cash flows are recognized directly in "Hedging reserve account" under Reserves and Surplus, net of applicable deferred income taxes and the ineffective portion is recognized immediately in the Statement of Profit and Loss. Amounts accumulated in the "Hedging reserve account" are reclassified to the Statement of Profit and Loss in the same periods during which the forecasted transaction affects profit or loss. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. For forecasted transactions, any cumulative gain or loss on the hedging instrument recognized in "Hedging reserve account" is retained until the forecasted transaction occurs. If the forecasted transaction is no longer expected to occur, the net cumulative gain or loss recognized in "Hedging reserve account" is immediately transferred to the Statement of Profit and Loss.


Mar 31, 2012

1. (i) Basis for preparation of financial statements

The financial statements are prepared in accordance with the Indian Generally Accepted Accounting Principles ('GAAP') under the historical cost convention on accrual basis.

a) TANGIBLE & INTANGIBLE FIXED ASSETS AND DEPRECIATION

Fixed assets are stated at cost less depreciation and impairment, if any. For this purpose cost comprises of cost of acquisition and all costs directly attributable to bringing the asset to the present condition for its intended use.

Depreciation has been provided on Building & Plant & Machinery, on straight-line basis and on other assets on written down value at the rate specified in Schedule XIV of the Companies Act, 1956 or at the rates as per company's depreciation policy for the following items:

Rates of Depreciation Sch. XIV Rate Rate Adopted

Computers & Software 16.21 % 33.33 %

Leasehold improvements and Leasehold land are stated at cost and are amortized over the lease period.

b) INVESTMENTS

Long-term Investments are stated at cost. Provision for diminution in long-term investments is made, if it is permanent.

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. Current Investments are stated at cost or fair market value whichever is lower. All other investments are classified as long-term investments.

c) INVENTORIES

Software products developed/underdevelopment are stated at cost. Software development cost incurred on products ready for marketing are amortized equally over a period of three years or earlier based on Management's evaluation of expected sales volumes and duration of the products life cycle.

d) REVENUE RECOGNITION

Revenue from Technical Service Contracts/Software Development are recognized on the basis of achievement of prescribed milestones as relevant to each contract or proportionate completion methods as applicable.

e) FOREIGN CURRENCY TRANSACTIONS

Purchases and Services revenue are accounted at daily rates. Exchange fluctuations arising on payment or on realization are dealt with in the Statement of Profit and Loss. Monetary Assets and Monetary Liabilities are restated at the year-end closing rate and any difference arising thereof has been dealt with in the Statement of Profit and Loss to the extent it pertains to the current year,

f) DERIVATIVE INSTRUMENTS AND HEDGE ACCOUNTING

The Company has adopted Accounting Standard 30 (AS 30) "Financial Instruments: Recognition and Measurement" for the year. Based on the Recognition and Measurement principles set out in the AS 30, changes in the fair values of derivative financial instruments designated as effective cash flow hedges are recognized as "Hedging Reserve" directly in the Balance Sheet under Reserves & Surplus and later reclassified into Statement of Profit and Loss upon the occurrence of the hedged transaction. Changes in the fair value of ineffective cash flow hedges are recognized in the Statement of Profit and Loss as they arise.

g) EMPLOYEE BENEFITS

(i) Defined Contribution Plan :

Company's contributions paid/payable during the year to Superannuation Fund, ESIC, Pension Fund and Labour Welfare Fund are recognized in the Statement of Profit and Loss. There are no other obligations other than the contribution payable to the respective trust. Company's Contribution towards Superannuation and ESIC is based on a percentage of salary which is made to an approved fund.

(ii) Defined Benefit Plan :

Company's Contribution towards Provident Fund is based on a percentage of salary which is made to an approved fund.

Company's Contribution towards Gratuity is made to an approved fund as per actuarial valuation certificate obtained from an actuary which is determined using projected unit credit method.

(iii) Short-Term Employee Benefit :

Short term employee benefits are recognized in the Statement of Profit and Loss relating to the year in which the employee has rendered service.

(iv) Long-Term Employee Benefit :

Long-term compensated absences are provided as per actuarial valuation certificate obtained from an actuary which is determined using projected unit credit method.

(v) Actuarial gains/losses are immediately taken to Statement of Profit and Loss and are not deferred.


Mar 31, 2011

1 (i) BASIS FOR PREPARATION OF FINANCIAL STATEMENTS

The financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis.

(ii) SIGNIFICANT ACCOUNTING POLICIES

a) FIXED ASSETS AND DEPRECIATION

Fixed assets are stated at cost less depreciation. For this purpose cost comprises of cost of acquisition and all costs directly attributable to bringing the asset to the present condition for its intended use.

Depreciation has been provided on Building and Plant and Machinery, on straight line basis and on other assets on written down value at the rate specified in Schedule XIV of the Companies Act, 1956, (as amended), or at the rates as per companys depreciation policy for the following items:

Leasehold improvements and Leasehold Land are stated at cost and are amortized over the lease period.

b) INVESTMENTS

Long term investments are stated at cost. Provision for diminution in long term investments is made, if it is permanent.

Investments that are readily realizable and intended to be held for not more than a year are classified as short term investments. Short term investments are stated at cost or fair market value, whichever is lower. All other investments are classified as long-term investments.

c) INVENTORIES

Software products developed/under development are stated at cost. Software development cost incurred on products ready for marketing are amortized equally over a period of three years or earlier based on Managements evaluation of expected sales volumes and duration of the products life cycle.

d) REVENUE RECOGNITION

Revenue from technical Service Contracts/Software Development are recognized on the basis of achievement of prescribed milestones as relevant to each contract or proportionate completion method as applicable.

e) FOREIGN CURRENCY TRANSACTIONS

Purchases and Services revenues are accounted at daily rates. Exchange fluctuations arising on payment or realization are dealt with in the Profit and Loss Account. Monetary Assets and Monetary Liabilities are restated at the year-end closing rate and any differences arising thereof have been dealt within the Profit and Loss Account to the extent it pertains to the current year.

f) DERIVATIVE INSTRUMENTS AND HEDGE ACCOUNTING

The Company has adopted Accounting Standard 30 (AS 30) "Financial Instruments: Recognition and Measurement" for the year. Based on the Recognition and Measurement principles set out in the AS 30, changes in the fair values of derivative financial instruments designated as effective cash

flow hedges are recognized as "Hedging Reserve" directly in the Balance Sheet under Reserves and Surplus and later reclassified into Profit and Loss account upon the occurrence of the hedged transaction. Changes in the fair value of ineffective cash flow hedges are recognized in the Profit and Loss account as they arise.

g) EMPLOYEE BENEFITS

(i) Defined Contribution Plan

Companys contributions paid/payable during the year to Superannuation Fund, ESIC, Pension Fund and Labour Welfare Fund are recognized in the Profit and Loss Account. There are no other obligations other than the contribution payable to the respective trust. Companys contribution towards Superannuation and ESIC is based on a percentage of salary which is made to an approved fund.

(ii) Defined Benefit Plan

Companys contribution towards Provident Fund is based on a percentage of salary which is made to an approved fund.

Companys contribution towards Gratuity is made to an approved fund as per actuarial valuation certificate obtained from an actuary which is determined using projected unit credit method.

(iii) Short term employee benefit

Short term employee benefits are recognized in the Profit and Loss account relating to the year in which the employee has rendered service.

(iv) Long term employee benefit

Long term compensated absences are provided as per actuarial valuation certificate obtained from an actuary which is determined using projected unit credit method.

(v) Actuarial gains/losses are immediately taken to Profit and Loss account and are not deferred.


Mar 31, 2010

A) FIXED ASSETS AND DEPRECIATION

Fixed assets are stated at cost less depreciation. For this purpose cost comprises of cost of acquisition and all costs directly attributable to bringing the asset to the present condition for its intended use.

Depreciation has been provided on Building & Plant & Machinery, on straight line basis and on other assets on written down value at the rate specified in Schedule XIV of the Companies Act, 1956, (as amended), or at the rates as per companys depreciation policy for the following items:

Rates of Depreciation

Sch. XIV Rate Rate Adopted

Computers & Software 16.21% 33.33 %

Leasehold improvements and Leasehold Land are stated at cost and are amortized over the lease period.

b) INVESTMENTS

Long term Investments are stated at cost. Provision for diminution in long term investments is made, if it is permanent.

Investments that are readily realisable and intended to be held for not more than a year are classified as short term investments. Short term Investments are stated at cost or fair market value whichever is lower. All other investments are classified as long-term investments.

c) INVENTORIES

Software products developed/under development are stated at cost. Software development cost incurred on products ready for marketing are amortized equally over a period of three years or earlier based on Managements evaluation of expected sales volumes and duration of the products life cycle.

d) REVENUE RECOGNITION

Revenue from technical Service Contracts/Software Development are recognized on the basis of achievement of prescribed milestones as relevant to each contract or proportionate completion method as applicable.

e) FOREIGN CURRENCY TRANSACTIONS

Purchases and Services revenues are accounted at the monthly standard rate. Exchange fluctuations arising on payment or realization are dealt with in the Profit and Loss Account. Current Assets and Current Liabilities are restated at the year- end closing rate and any differences arising thereof have been dealt with in the Profit and Loss Account to the extent it pertains to the current year.

f) DERIVATIVE INSTRUMENTS AND HEDGE ACCOUNTING

The Company has adopted Accounting Standard 30 (AS 30) “Financial Instruments: Recognition and Measurement” for the year. Based on the Recognition and Measurement principles set out in the AS 30, changes in the fair values of derivative financial instruments designated as effective cash flow hedges are recognized as “Hedging Reserve” directly in the Balance Sheet under Reserves & Surplus and later reclassified into Profit and Loss account upon the occurrence of the hedged transaction. Changes in the fair value of ineffective cash flow hedges are recognized in the Profit & Loss account as they arise.

g) EMPLOYEE BENEFITS

(i) Defined Contribution Plan

Companys contributions paid/payable during the year to Superannuation Fund, ESIC and Labour Welfare Fund are recognized in the Profit and Loss Account. There are no other obligations other than the contribution payable to the respective trust. Companys Contribution towards Superannuation and ESIC is based on a percentage of salary which is made to an approved fund.

(ii) Defined Benefit Plan

Companys Contribution towards Provident Fund is based on a percentage of salary which is made to an approved fund.

Companys Contribution towards Gratuity is made to an approved fund as per actuarial valuation certificate obtained from an actuary which is determined using projected unit credit method.

(iii) Short term employee benefits are recognized in the profit and loss account relating to the year in which the employee has rendered service.

(iv) Long term employee benefit

Long term compensated absences are provided as per actuarial valuation certificate obtained from an actuary which is determined using projected unit credit method.

(v) Actuarial gains/losses are immediately taken to profit and loss account and are not deferred.

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