Mar 31, 2013
I. BASIS OF ACCOUNTING AND PREPERATION OF FINANCIAL STATEMENTS:
The Financial Statements of the Company have been prepared in accordance with Indian Generally Accepted Accounting Principles (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the Companies Act, 1956 except for rates of Depreciation as fully described in Note vi below.
ii. SYSTEM OF ACCOUNTING:
The Financial Statements are 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.
iii. USE OF ESTIMATES:
The preparation of Financial Statements in conformity with the Indian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities on the date of financial statements and reported amounts of revenues and expenses during the period reported. Actual results could differ from those estimates.
The Company deals mainly in Computer Software Development and allied services and does not carry any inventory.
v. CASH AND CASH EQUIVALENTS (FOR PURPOSES OF CASH FLOW STATEMENT):
Cash comprises cash on hand, current accounts and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
vi. CASH FLOW STATEMENT:
Cash flows are reported using indirect method, whereby net profits before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts and payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
Depreciation on fixed assets is provided using the WDV method based on the useful life as estimated by the management. Depreciation is charged on pro rata basis for assets purchased / sold during the year.
1. Computers and Software @ 45%
2. Office and Electrical Equipment @ 25%
3. Furniture @ 20%
viii. REVENUE RECOGNITION:
Revenue from consultancy and software development is recognized as per the terms of specific contracts.
ix. OTHER INCOME:
Interest income and income on sale of any asset are accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.
x. FIXED ASSETS:
Fixed assets are carried at cost of acquisition and subsequent improvement thereto (including taxes, duties, freight and other incidental expenses relates to acquisition, construction and installation of asset/s concerned) less accumulated depreciation and impairment losses, if any. Subsequent expenditure relating to fixed assets is capitalised 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 is carried at cost, comprising direct cost and related incidental expenses.
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.
xii. EMPLOYEE RETIREMENT BENEFITS:
In respect of provisioning for terminal benefits, like gratuity and leave salary, the Company had no employee on roll as at the end of the financial year 31-03-2013 and hence no liability is recognized.
xiii. SEGMENT REPORTING:
The Company operates primarily in India and provides services (ITeS). Hence, the disclosures under Segment Reporting do not apply to the Company.
xiv. EARNINGS PER SHARE:
The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the year.
The diluted earnings per share has been computed by dividing the Net Profit After Tax available for Equity Shareholders by the weighted average number of equity shares, after giving dilutive effect of the outstanding Warrants, Stock Options and Convertible bonds for the respective periods.
xv. INCOME TAXES:
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 recognised 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 recognised 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 substantially enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise such assets. Deferred tax assets are recognised for timing differences of other items only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. The Company has recognized Deferred Tax Liability and necessary provisions are made.
xvi. PROVISIONS AND CONTINGENT LIABILITIES:
The Company creates a provision when there is a present obligation as a result of an obligating event that probably requires an out flow of resources and a reliable estimate can be made of the amount of the litigation.
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. The details are furnished in Note No. 24.