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Accounting Policies of Zylog Systems Ltd. Company

Mar 31, 2015

1.01 Basis of preparation

The financial statements are prepared under historical cost convention on the accrual basis of accounting and comply with the mandatory accounting standards recommended by The Institute of Chartered Accountants of India (ICAI) and prescribed by the Central Government and comply with the relevant provisions of the Companies Act, 1956.

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

1.02 Use of Estimates

The preparation of the financial statements in conformity with the Generally Accepted Accounting Principles requires the Management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent assets and liabilities as at the date of the financial statements and the reported amounts of income and expenses during the period. Examples of such estimates include provisions for doubtful debts, future obligations under employee retirement benefit plans, income taxes, post-sales customer support and the useful lives of fixed assets and intangible assets.

1.03 Revenue recognition

The company derives its revenues primarily from software development services, consultancy services, projects and e-governance projects.

Revenue from software services and projects comprise income from time-and-material contracts, fixed price/fixed time contracts, technical services and annual maintenance contracts. Revenue from time- and-material contracts is recognized on the basis of man hours spent and materials utilized for the development of software and billable in accordance with the terms of the contracts with clients. Revenue from fixed price/fixed time contract is recognized as per the proportionate completion method. Revenue from technical service for software application is recognized on completion of the service.

Cost incurred on unfinished projects that are yet to be billed and earnings in excess of billings are classified as unbilled revenue.

Interest on deployment of surplus funds is recognized on the accrual basis, based on underlying interest rates.

1.04 Fixed assets including intangible assets

Tangible assets are stated at cost, less accumulated depreciation. Cost includes cost of acquisition including material cost, freight, installation cost, duties and taxes, and other incidental expenses, incurred up to the installation stage, related to such acquisition. Intangible assets are stated at cost of acquisition less accumulated amortization.

1.05 Leased Assets

Assets acquired under finance lease are recognized at the lower of the fair value of the leased assets at inception and the present value of minimum lease payments. Lease payments are apportioned between the finance charge and the outstanding liability. The finance charge is allocated over the period of lease at a constant periodic rate of interest on the remaining balance of the liability.

Lease arrangements where the risks and rewards incidental to the ownership is vested with less or, are recognized as operating lease. Lease rental are recognized in the statement of profit and loss on a straight line basis.

1.06 Inventories

Inventories comprise of consumables utilized in E-Governance Projects are valued at lower of cost and net realizable value.

1.07 Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets.

1.08 Depreciation & Amortization

Depreciation is provided on tangible assets in the written down value method, at the rates and in the manner specified by schedule XIV to the Companies Act, 1956. Depreciation is charged from the date of acquisition/installation and on assets sold, up to the date of sale. Assets Individually costing Rs, 5000 or less are fully depreciated in the year of purchase.

The cost and the accumulated depreciation of assets sold, retired or otherwise disposed off is removed from the stated values and the resulting gains and losses are included in the profit and loss account.

Leasehold land is amortized over the lease period of 99 years excluding any refundable deposit.

In respect of businesses acquired, the excess of purchase consideration over the tangible and intangible assets is deemed to have been paid for human resources, clientele and other related benefits such as non-compete agreements and is being amortized over 5 years.

The other intangible assets are being mortised as follows:

Computer software

Software for own use over 3 years

Product Development Cost over 5 years

1.09 Investments

Investments are either classified as current or long term, based on the management's intention at the time of purchase. Current investments are carried at the lower of cost and market value. Long-term investments are carried at cost less provisions recorded to recognize any decline other than temporary, in the carrying value of investment.

1.10 Impairment of assets

The Management periodically assesses using external and internal sources whether there is an indication that an asset may be impaired. All the fixed assets are assessed for any indication of impairment at the end of each financial year. On such indication, the impairment (being excess of carrying value or the recoverable value of asset) is charged to profit and loss account in the respective financial year. The impairment loss recognized in the prior years is reversed where the recoverable value exceeds the carrying value of the asset upon reassessment in the subsequent years.

1.11 Foreign currency transactions

The company has a US based branch which is an integral operation.

The transactions of the Head Office in foreign currency are accounted at the rates of exchange prevailing on the date of the transactions. The exchange difference between the rates prevailing on the date of transaction and the date of settlement are recognized in the profit and loss account.

Foreign currency denominated monetary assets and liabilities are translated using exchange rate as at Balance sheet date. The gains and losses resulting from such translations are included in the profit and loss account. Non-monetary assets and liabilities denominated in foreign currency are translated at historical rate.

For the purposes of incorporation of the financial statements of the US branch into the Head Office financial statements, all income and expenditure are translated at the average rate, the monetary assets and liabilities translated at the yearend rate and non-monetary assets and liabilities translated at the date of transactions the resultant gain or loss being recognized in the profit and loss account.

1.12 Retirement benefits

a) Provident Fund (Defined contribution scheme):

Eligible employees receive benefit from defined benefit plan covered under the Provident Fund Act. Both employees and the company make monthly contributions. The employer contribution is charged off to Profit & Loss Account as an expense.

b) Gratuity (Defined Benefit Scheme):

The company provides for a non-funded gratuity, based on actuarial valuation.

c) Leave encashment:

The leave encashment liability upon retirement would not arise as the accumulated leave is reimbursed every year and accounted at actual.

1.13 Research and development cost

Expenditure incurred on research and development is charged off to Profit & Loss Account as incurred till the time the techno-commercial viability is established.

1.14 Provisions

A provision is recognized when an enterprise has a present obligation as a result of past event; 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 are not discounted to its present value and are determined based on 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. Contingencies are recorded when it is probable that a liability will be incurred and the amount can be reasonably estimated.

1.15 Accounting for Taxes

The company is accounting for taxes in accordance with the Accounting Standard (AS) 22 - "Accounting for taxes" notified under sub section 3 (c) of section 211 of companies Act 1956. Consequently, the tax provision includes the income tax payable on the estimated taxable income as well as the tax impact arising on account of timing differences, thus ensuring that the income and taxes thereon are matched.

Income tax is provided after taking into account deductions available under Chapter III of the Income Tax Act, 1961, the Minimum Alternate Tax as prescribed by section 115JB of the Income Tax Act, 1961 and the foreign taxes paid which are available for set off under the relevant Double Taxation Avoidance Agreements.

In the situations where the company is entitled to a tax holiday under the income tax act, 1961enacted in India or tax laws prevailing in the respective tax jurisdictions where it operates, no deferred tax (asset or liability) is recognized in respect of timing difference which reverse during the tax holiday period, to the extend the company's gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of timing difference which reverse after the tax holiday period is recognized in the year in which the timing differences originate.

Pursuant to Accounting Standard 22 'Accounting for Taxes on Income' as prescribed in Companies Accounting Standard Rules, 2006, the Company has recorded the Cumulative Net Deferred Tax Liabilities as at 31st Mar 2015 of Rs. 1,714.98 lakhs and Rs. 1,139.62 lakhs has been credited to the profit & Loss account.


Mar 31, 2014

1.01 Basis of preparation

The financial statements are prepared under historical cost convention on the accrual basis of accounting and comply with the mandatory accounting standards recommended by The Institute of Chartered Accountants of India (ICAI) and prescribed by the Central Government and comply with the relevant provisions of the Companies Act, 1956.

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

1.02 Use of Estimates

The preparation of the financial statements in conformity with the Generally Accepted Accounting Principles requires the Management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent assets and liabilities as at the date of the financial statements and the reported amounts of income and expenses during the period. Examples of such estimates include provisionsfor doubtful debt''s, future obligations under employee retirement benefit plans, income taxes, post-sales customer support and the useful lives of fixed assets and intangible assets.

1.03 Revenue recognition

The company derives its revenues primarily from software development services, consultancy services, projects and-e-governance projects.

Revenue from, software services and projects comprise income from time-and-material contracts, fixed price/fixed time contracts, technical services and annual maintenance contracts. Revenue from time-and- material contracts is recognized on the basis of man hours spent and materials utilized for the development of software and billable in accordance with the terms of the contracts with clients. Revenue from fixed price/fixed time contract is recognized as per the proportionate completion method. Revenue from technical service for software application is recognized on completion of the service.

Cost incurred on unfinished projects that are yet to be billed and earnings in excess of billings are classified as unbilled revenue.

Interest on deployment of surplus funds is recognized on the accrual basis, based on underlying interest rates.

1.04 Fixed assets including intangible assets

Tangible assets are stated at cost, less accumulated depreciation. Cost includes cost of acquisition including material cost, freight, installation cost, duties and taxes, and other incidental expenses, incurred up to the installation stage, related to such acquisition. Intangible assets are stated at cost of acquisition less accumulated amortization.

1.05 Leased Assets

Assets acquired under finance lease are recognized at the lower of the fair value of the leased assets''at inception and the present value of minimum lease payments. Lease payments are apportioned between the finance charge and the outstanding liability. The finance charge is allocated over the period of lease at a constant periodic rate of interest on the remaining balance of the liability.

Lease arrangements where the risks and rewards incidental to''the ownership is vested with lessor, are recognized as operating lease. Lease rental are recognized in the statement of profit and loss on a straight Kne basis.

1.06 Inventories

Inventories comprise of consumables utilized in E-Governance Projects are valued at lower of cost and net realizable value.

1.07 Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets.

1.08 Depreciation & Amortization

Depreciation is provided on tangible assets in the written down value method, at the rates and in the manner specified by schedule XIV to the Companies Act, 1956. Depreciation is charged from the date of acquisition/installation and on assets sold, up to the date of sale. Assets Individually costing Rs. 5000 or less are fully depreciated in the year of purchase.

The cost and the accumulated depreciation of assets sold, retired or otherwise disposed off is removed from the stated values and the resulting gains and losses are included in the profit and loss account.

Leasehold land is amortized over the lease period of 99 years excluding any refundable deposit.

In respect of businesses acquired, the excess of purchase consideration over the tangible and intangible assets is deemed to have been paid for human resources, clientele and other related benefits such as non- compete agreements and is being amortized over 5 years.

The other intangible assets are being amortized as follows: Computer software

Software for own use over 3 years

Product Development Cost over 5 years

1.09 Investments

Investments are either classified as current or long term, based on the management''s intention at the time of purchase. Current investments are carried at the lower of cost and market value. Long-term investments are carried at cost less provisions recorded to recognize any decline other than temporary, in the carrying value of investment.

1.10 Impairment of assets

The Management periodically assesses using external and internal sources whether there is an indication that an asset may be impaired. All the fixed assets are assessed for any indication of impairment at the end of each financial year. On such indication, the impairment (being excess of carrying value or the recoverable value of asset) is charged to profit and loss account in the respective financial year. The impairment loss recognized in the prior years is reversed where the recoverable value exceeds the carrying value of the asset upon reassessment in the subsequent yea rs.

1.11 Foreign currency transactions

The company has a US based branch which is an''integral operation.

The transactions of the Head Office in foreign currency are accounted at the rates of exchange prevailing on the date of the transactions. The exchange difference between the rates prevailing on the date of transaction and the date of settlement are recognized in the profit and loss account.

Foreign currency denominated monetary assets and liabilities are translated using exchange rate as at Balance sheet date. The gains and losses resulting from such translations are included in the profit and loss account. Non-monetary assets and liabilities denominated in foreign currency are translated at historical rate.

For the purposes of incorporation of the financial statements of the US branch into the Head Office financial statements, all income and expenditure are translated at the average rate, the monetary assets and liabilities translated at the yearend rate and non-monetary assets and liabilities translated at the date of transactions the resultant gain or loss being recognized in the profit and loss account.

1.12 Retirement benefits

a) Provident Fund (Defined contribution scheme):

Eligible employees receive benefit from defined benefit plan covered under the Provident Fund Act. Both employees and the company make monthly contributions. The employer contribution is charged off to Profit & Loss Account as an expense.

c) Gratuity (Defined Benefit Scheme):

The company provides for a non-funded gratuity, based on actuarial valuation.

d) Leave encashment:

The leave encashment liability upon retirement would not arise as the accumulated leave is reimbursed every year and accounted at actual.

1.13 Research and development cost

Expenditure incurred on research and development is charged off to Profit & Loss Account as incurred till the time the techno-commercial viability is established.

1.14 Provisions

A provision is recognized when an enterprise has a present obligation as a result of past event; 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 are not discounted to its present value and are determined based on 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. Contingencies are recorded when it is probable that a liability will be incurred and the amount can be reasonably estimated.

1.15 Accounting for Taxes

The company is accounting for taxes in accordance with the Accounting Standard (AS) 22 - "Accounting for taxes" notified under sub section 3 (c) of section 211 of companies Act 1956. Consequently, the tax provision includes the income tax payable on the estimated taxable income as well as the tax impact arising on account of timing differences, thus ensuring that the income and taxes thereon are matched. Income tax is provided after taking into account deductions available under Chapter III of the Income Tax Act, 1961, the Minimum Alternate Tax as prescribed by section 115JB of the Income Tax Act, 1961 and the foreign taxes paid which are available for set .off under the relevant Double Taxation Avoidance Agreements.

In the situations where the company is entitled to a tax holiday under the income tax act, 1961enactedln India or tax laws prevailing in the respective tax jurisdictions where it operates, no deferred tax(asset or liability) is recognized in respect of timing difference which reverse during the tax holiday period, to the extend the company''s gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of timing difference which reverse after the tax holiday period is recognized in the year in which the timing differences originate.


Mar 31, 2013

1.01 Basis of preparation

The financial statements are prepared under historical cost convention on the accrual basis of accounting and comply with the mandatory accounting standards recommended by The Institute of Chartered Accountants of India (ICAI) and prescribed by the Central Government and comply with the relevant provisions of the Companies Act, 1956.

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

1.02 Use of Estimates

The preparation of the financial statements in conformity with the Generally Accepted Accounting Principles requires the Management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent assets and liabilities as at the date of the financial statements and the reported amounts of income and expenses during the period. Examples of such estimates include provisions for doubtful debts, future obligations under employee retirement benefit plans, income taxes, post-sales customer support and the useful lives of fixed assets and intangible assets.

1.03 Revenue recognition

The company derives its revenues primarily from software development services, consultancy services, projects and e-governance projects.

Revenue from software services and projects comprise income from time-and-material contracts, fixed price/fixed time contracts, technical services and annual maintenance contracts. Revenue from time-and-material contracts is recognized on the basis of man hours spent and materials utilized for the development of software and billable in accordance with the terms of the contracts with clients. Revenue from fixed price/fixed time contract is recognized as per the proportionate completion method. Revenue from technical service for software application is recognized on completion of the service.

Cost incurred on unfinished projects that are yet to be billed and earnings in excess of billings are classified as unbilled revenue.

1.04 Fixed assets including intangible assets

Tangible assets are stated at cost, less accumulated depreciation. Cost includes cost of acquisition including material cost, freight, installation cost, duties and taxes, and other incidental expenses, incurred up to the installation stage, related to such acquisition. Intangible assets are stated at cost of acquisition less accumulated amortization.

1.05 Leased Assets

Assets acquired under finance lease are recognised at the lower of the fair value of the leased assets at inception and the present value of minimum lease payments. Lease payments are apportioned between the finance charge and the outstanding liability. The finance charge is allocated over the period of lease at a constant periodic rate of interest on the remaining balance of the liability.

Lease arrangements where the risks and rewards incidental to the ownership is vested with lessor, are recognised as operating lease. Lease rental are recognised in the statement of profit and loss on a straight line basis.

1.06 Inventories

Inventories comprise of consumables utilised in E-Governance Projects are valued at lower of cost and net realisable value.

1.07 Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets.

1.08 Depreciation & Amortization

Depreciation is provided on tangible assets in the written down value method, at the rates and in the manner specified by schedule XIV to the Companies Act, 1956. Depreciation is charged from the date of acquisition/installation and on assets sold, up to the date of sale. Assets Individually costing Rs. 5000 or less are fully depreciated in the year of purchase.

The cost and the accumulated depreciation of assets sold, retired or otherwise disposed off is removed from the stated values and the resulting gains and losses are included in the profit and loss account.

Leasehold land is amortized over the lease period of 99 years excluding any refundable deposit.

In respect of businesses acquired, the excess of purchase consideration over the tangible and intangible assets is deemed to have been paid for human resources, clientele and other related benefits such as non-compete agreements and is being amortised over 5 years.

The other intangible assets are being amortised as follows:

Computer software

Software for own use over 3 years

Product Development Cost over 5 years

1.09 Investments

Investments are either classified as current or long term, based on the management''s intention at the time of purchase. Current investments are carried at the lower of cost and market value. Long-term investments are carried at cost less provisions recorded to recognise any decline other than temporary, in the carrying value of

1.10 Impairment of assets

The Management periodically assesses using external and internal sources whether there is an indication that an asset may be impaired. All the fixed assets are assessed for any indication of impairment at the end of each financial year. On such indication, the impairment (being excess of carrying value or the recoverable value of asset) is charged to profit and loss account in the respective financial year. The impairment loss recognised in the prior years is reversed where the recoverable value exceeds the carrying value of the asset upon reassessment in the subsequent years.

1.11 Foreign currency transactions

The company has a US based branch which is an integral operation.

The transactions of the Head Office in foreign currency are accounted at the rates of exchange prevailing on the date of the transactions. The exchange difference between the rates prevailing on the date of transaction and the date of settlement are recognized in the profit and loss account.

Foreign currency denominated monetary assets and liabilities are translated using exchange rate as at Balance sheet date. The gains and losses resulting from such translations are included in the profit and loss account. Non- monetary assets and liabilities denominated in foreign currency are translated at historical rate.

For the purposes of incorporation of the financial statements of the US branch into the Head Office financial statements, all income and expenditure are translated at the average rate, the monetary assets and liabilities translated at the yearend rate and non-monetary assets and liabilities translated at the date of transactions the resultant gain or loss being recognized in the profit and loss account

1.12 Retirement benefits

a) Provident Fund (Defined contribution scheme):

Eligible employees receive benefit from defined benefit plan covered under the Provident Fund Act. Both employees and the company make monthly contributions. The employer contribution is charged off to Profit & Loss Account as an expense.

b) Gratuity (Defined Benefit Scheme):

The company provides for a non-funded gratuity, based on actuarial valuation.

c) Leave encashment:

The leave encashment liability upon retirement would not arise as the accumulated leave is reimbursed every year and accounted at actual.

1.13 Research and development cost

Expenditure incurred on research and development is charged off to Profit & Loss Account as incurred till the time the techno-commercial viability is established.

1.14 Provisions

A provision is recognized when an enterprise has a present obligation as a result of past event; 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 are not discounted to its present value and are determined based on 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. Contingencies are recorded when it is probable that a liability will be incurred and the amount can be reasonably estimated.

1.15 Accounting for Taxes

The company is accounting for taxes in accordance with the Accounting Standard (AS) 22 - "Accounting for taxes" notified under sub section 3 (c) of section 211 of companies Act 1956. Consequently, the tax provision includes the income tax payable on the estimated taxable income as well as the tax impact arising on account of timing differences, thus ensuring that the income and taxes thereon are matched.

Income tax is provided after taking into account deductions available under Chapter III of the Income Tax Act, 1961, the Minimum Alternate Tax as prescribed by section 115JB of the Income Tax Act, 1961 and the foreign taxes paid which are available for set off under the relevant Double Taxation Avoidance Agreements.

In the situations where the company is entitled to a tax holiday under the income tax act, 1961enacted in india or tax laws prevailing in the respective tax jurisdictions where it operates, no deferred tax(asset or liability) is recognised in respect of timing difference which reverse during the tax holiday period, to the extend the company''s gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of timing difference which reverse after the tax holiday period is recognised in the year in which the timing differences originate.


Mar 31, 2012

1.01 Basis of preparation

The financial statements are prepared under historical cost convention on the accrual basis of accounting and comply with the mandatory accounting standards recommended byThe Institute of Chartered Accountants of India (ICAI) and prescribed by the Central Government and comply with the relevant provisions of the Companies Act, 1956. Cash flows are reported using the indirect method whereby profit before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments.The cash flows from regular revenue generating, financing and investing activities of the company are segregated. Consequent to the notification of Revised ScheduleVI under the Companies Act, 1956,the financial statements for the year ended March 31, 2012 are prepared as per Revised ScheduleVI.Accordingly, the previous figures which had been prepared as per the then applicable, pre-revised ScheduleVI to the Companies Act, 1956 for the purpose of financial statements for the year ended March 31, 2011 have also been reclassified to conform to this year's classification.The adoption of Revised ScheduleVI for the previous year figures does not impact recognition and measurement principles.

1.02 Use of Estimates

The preparation of the financial statements in conformity with the Generally Accepted Accounting Principles requires the Management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent assets and liabilities as at the date of the financial statements and the reported amounts of income and expenses during the period. Examples of such estimates include provisions for doubtful debts, future obligations under employee retirement benefit plans, income taxes, post-sales customer support and the useful lives of fixed assets and intangible assets.

1.03 Revenue recognition

The company derives its revenues primarily from software development services, consultancy services, projects and e-governance projects.

Revenue from software services and projects comprise income from time-and-material contracts,fixed price/fixed time contracts, technical services and annual maintenance contracts. Revenue from time-and-material contracts is recognized on the basis of man hours spent and materials utilized for the development of software and billable in accordance with the terms of the contracts with clients. Revenue from fixed price/fixed time contract is recognized as per the proportionate completion method. Revenue from technical service for software application is recognized on completion of the service.

Cost incurred on unfinished projects that are yet to be billed and earnings in excess of billings are classified as unbilled revenue.

1.04 Fixed assets including intangible assets

Tangible assets are stated at cost, less accumulated depreciation. Cost includes cost of acquisition including material cost, freight, installation cost, duties and taxes, and other incidental expenses, incurred up to the installation stage, related to such acquisition. Intangible assets are stated at cost of acquisition less accumulated amortization.

1.05 Leased Assets

Assets acquired under finance lease are recognised at the lower of the fair value of the leased assets at inception and the present value of minimum lease payments. Lease payments are apportioned between the finance charge and the outstanding liability.The finance charge is allocated over the period of lease at a constant periodic rate of interest on the remaining balance of the liability.

Lease arrangements where the risks and rewards incidental to the ownership is vested with lessor, are recognised as operating lease. Lease rental are recognised in the statement of profit and loss on a straight line basis.

1.06 Inventories

Inventories comprise of consumables utilised in E-Governance Projects are valued at lower of cost and net realisable value.

1.07 Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets.

1.08 Depreciation & Amortization

Depreciation is provided on tangible assets in the written down value method,at the rates and in the manner specified by schedule XIV to the Companies Act, 1956. Depreciation is charged from the date of acquisition/installation and on assets sold, up to the date of sale.Assets Individually costing Rs. 5000 or less are fully depreciated in the year of purchase.

The cost and the accumulated depreciation of assets sold, retired or otherwise disposed off is removed from the stated values and the resulting gains and losses are included in the profit and loss account.

Leasehold land is amortized over the lease period of 99 years excluding any refundable deposit.

In respect of businesses acquired, the excess of purchase consideration over the tangible and intangible assets is deemed to have been paid for human resources, clientele and other related benefits such as non-compete agreements and is being amortised over 5 years.

The other intangible assets are being amortised as follows:

Computer software

Software for own use over 3 years

Product Development Cost over 5 years

1.09 Investments

Investments are either classified as current or long term, based on the management's intention at the time of purchase. Current investments are carried at the lower of cost and market value. Long-term investments are carried at cost less provisions recorded to recognise any decline other than temporary, in the carrying value of investment.

1.10 Impairment of assets

The Management periodically assesses using external and internal sources whether there is an indication that an asset may be impaired.All the fixed assets are assessed for any indication of impairment at the end of each financial year. On such indication, the impairment (being excess of carrying value or the recoverable value of asset) is charged to profit and loss account in the respective financial year.The impairment loss recognised in the prior years is reversed where the recoverable value exceeds the carrying value of the asset upon reassessment in the subsequent years.

1.11 Foreign currency transactions

The company has a US based branch which is an integral operation.

The transactions of the Head Office in foreign currency are accounted at the rates of exchange prevailing on the date of the transactions. The exchange difference between the rates prevailing on the date of transaction and the date of settlement are recognized in the profit and loss account.

Foreign currency denominated monetary assets and liabilities are translated using exchange rate as at Balance sheet date.

The gains and losses resulting from such translations are included in the profit and loss account. Non-monetary assets and liabilities denominated in foreign currency are translated at historical rate.

For the purposes of incorporation of the financial statements of the US branch into the Head Office financial statements, all income and expenditure are translated at the average rate, the monetary assets and liabilities translated at the yearend rate and non-monetary assets and liabilities translated at the date of transactions the resultant gain or loss being recognized in the profit and loss account

1.12 Retirement benefits

a) Provident Fund (Defined contribution scheme):

Eligible employees receive benefit from defined benefit plan covered under the Provident Fund Act. Both employees and the company make monthly contributions. The employer contribution is charged off to Profit & Loss Account as an expense.

b) Gratuity (Defined Benefit Scheme):

The company provides for a non-funded gratuity, based on actuarial valuation.

c) Leave encashment:

The leave encashment liability upon retirement would not arise as the accumulated leave is reimbursed every year and accounted at actual.

1.13 Research and development cost

Expenditure incurred on research and development is charged off to Profit & Loss Account as incurred till the time the techno-commercial viability is established.

1.14 Provisions

A provision is recognized when an enterprise has a present obligation as a result of past event; 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 are not discounted to its present value and are determined based on 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. Contingencies are recorded when it is probable that a liability will be incurred and the amount can be reasonably estimated.


Mar 31, 2011

1. Basis of preparation

The financial statements are prepared under historical cost convention on the accrual basis of accounting and comply with the mandatory accounting standards recommended by The Institute of Chartered Accountants of India (ICAI) and prescribed by the Central Government and comply with the relevant provisions of the Companies Act, 1956.

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

2. Use of estimates

The preparation of the financial statements in conformity with the Generally Accepted Accounting Principles requires the Management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent assets and liabilities as at the date of the financial statements and the reported amounts of income and expenses during the period. Examples of such estimates include provisions for doubtful debts, future obligations under employee retirement benefit plans, income taxes, post- sales customer support and the useful lives of fixed assets and intangible assets.

3. Revenue recognition

The company derives its revenues primarily from software development services, consultancy services, projects and e-governance projects.

Revenue from software services and projects comprise income from time-and-material contracts, fixed price/fixed time contracts, technical services and annual maintenance contracts. Revenue from time-and- material contracts is recognized on the basis of man hours spent and materials utilized for the development of software and billable in accordance with the terms of the contracts with clients. Revenue from fixed price/fixed time contract is recognized as per the proportionate completion method. Revenue from technical service for software application is recognized on completion of the service.

Cost incurred on unfinished projects that are yet to be billed and earnings in excess of billings are classified as unbilled revenue.

Interest on deployment of surplus funds is recognized on the accrual basis, based on underlying interest rates.

4. Fixed assets including intangible assets

Tangible assets are stated at cost, less accumulated depreciation. Cost includes cost of acquisition including material cost, freight, installation cost, duties and taxes, and other incidental expenses, incurred up to the installation stage, related to such acquisition. Intangible assets are stated at cost of acquisition less accumulated amortization.

5. Leased Assets

Assets acquired under finance lease are recognised at the lower of the fair value of the leased assets at inception and the present value of minimum lease payments. Lease payments are apportioned between the finance charge and the outstanding liability. The finance charge is allocated over the period of lease at a constant periodic rate of interest on the remaining balance of the liability.

6. Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets.

7. Depreciation & Amortization

Depreciation is provided on tangible assets in the written down value method, at the rates and in the manner specified by schedule XIV to the Companies Act, 1956. Depreciation is charged from the date of acquisition/installation and on assets sold, up to the date of sale.

The cost and the accumulated depreciation of assets sold, retired or otherwise disposed off is removed from the stated values and the resulting gains and losses are included in the profit and loss account.

Leasehold land is amortized over the lease period of 99 years excluding any refundable deposit.

In respect of businesses acquired, the excess of purchase consideration over the tangible and intangible assets is deemed to have been paid for human resources, clientele and other related benefits such as non-compete agreements and is being amortised over 5 years.

The other intangible assets are being amortised as follows:

Computer software

Software for own use over 5 years

Product Development Cost over 5 years

8. Investments

Investments are either classified as current or long term, based on the management's intention at the time of purchase. Current investments are carried at the lower of cost and market value. Long-term investments are carried at cost less provisions recorded to recognise any decline other than temporary, in the carrying value of investment.

9. Impairment of assets

The Management periodically assesses using external and internal sources whether there is an indication that an asset may be impaired. All the fixed assets are assessed for any indication of impairment at the end of each financial year. On such indication, the impairment (being excess of carrying value or the recoverable value of asset) is charged to profit and loss account in the respective financial year. The impairment loss recognised in the prior years is reversed where the recoverable value exceeds the carrying value of the asset upon reassessment in the subsequent years.

10. Foreign currency transactions

The company has a US based branch which is an integral operation.

The transactions of the Head Office in foreign currency are accounted at the rates of exchange prevailing on the date of the transactions. The exchange difference between the rates prevailing on the date of transaction and the date of settlement are recognized in the profit and loss account.

Foreign currency denominated monetary assets and liabilities are translated using exchange rate as at Balance sheet date. The gains and losses resulting from such translations are included in the profit and loss account. Non-monetary assets and liabilities denominated in foreign currency are translated at historical rate.

For the purposes of incorporation of the financial statements of the US branch into the Head Office financial statements, all income and expenditure are translated at the average rate, the monetary assets and liabilities translated at the yearend rate and non-monetary assets and liabilities translated at the date of transactions the resultant gain or loss being recognized in the profit and loss account

11. Retirement benefits

a) Provident Fund (Defined contribution scheme)

Eligible employees receive benefit from defined benefit plan covered under the Provident Fund Act. Both employees and the company make monthly contributions. The employer contribution is charged off to Profit & Loss Account as an expense.

b) Gratuity (Defined Benefit Scheme)

The company provides for a non-funded gratuity, based on actuarial valuation.

c) Leave encashment:

The leave encashment liability upon retirement would not arise as the accumulated leave is reimbursed every year and accounted at actual.

12. Research and development cost

Expenditure incurred on research and development is charged off to Profit & Loss Account as incurred till the time the techno-commercial viability is established.

13. Provisions:

A provision is recognized when an enterprise has a present obligation as a result of past event; 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 are not discounted to its present value and are determined based on 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. Contingencies are recorded when it is probable that a liability will be incurred and the amount can be reasonably estimated.

14. Accounting for Taxes:

The company is accounting for taxes in accordance with the Accounting Standard (AS) 22 - "Accounting for taxes" notified under sub section 3 (c) of section 211 of companies Act 1956. Consequently, the tax provision includes the income tax payable on die estimated taxable income as well as the tax impact arising on account of timing differences, thus ensuring that the income and taxes thereon are matched.


Mar 31, 2010

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