Accounting Policies of Blue Star Infotech Ltd. Company

Mar 31, 2015

(a) Basis of accounting and preparation of financial statements

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP) to comply in all material aspects with the Accounting Standards specified under Section 133 of the Companies Act, 2013 (the ''Act''), read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended). These financial statements have been prepared under the historical cost convention on accrual basis of accounting. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year except as stated in Note 1(b) below.

(b) Change in accounting policy

Effective 1 April 2014, the Company has retrospectively changed its method of providing depreciation on furniture & fixtures from the ''Written Down Value'' method to the ''Straight Line'' method, at the rates prescribed in Schedule II to the Companies Act, 2013. Management believes that this change will result in more appropriate presentation of the financial statements of the Company. Accordingly, the Company has recorded reversal of accumulated depreciation charge of Rs. 70.70 Lakhs in current year.

(c) Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Key estimates include estimate of useful life of fixed assets, unbilled revenue, income taxes, provision for bad and doubtful debts, estimated gain/loss on foreign exchange contracts and future obligations under employee retirement benefit plans. Actual results could differ from those estimates. Any revision to accounting estimates will be recognised prospectively in the current and future periods.

(d) Fixed assets, Capital work-in-progress and Depreciation

(i) Fixed assets are stated at cost less accumulated depreciation. Cost includes inward freight, taxes and expenses incidental to acquisition and installation, up to the point the asset is ready for its intended use.

(ii) Depreciation is provided on Building, Plant and Equipment, Furniture & Fixtures and Office Equipment under the Straight-Line Method and on other fixed assets, other than Leasehold Building improvements, under the Written Down Value Method. Depreciation is provided on a pro-rata basis using the useful lives and in the manner prescribed under Schedule II of the Companies Act, 2013, which also represent the useful life of fixed assets.

(iii) Leasehold building improvements are written off over the period of lease or their estimated useful life, whichever is lower, on a straight-line basis.

(iv) Assets acquired but not ready for use or assets under construction are classified under Capital Work in Progress.

(v) Management evaluates at regular intervals, using external and internal sources, the need for impairment of any asset. Impairment occurs where the carrying value exceeds the present value of future cash flows expected to arise from the continuing use of the asset and its net realisable value on its eventual disposal. Any loss on account of impairment is expensed as the excess of the carrying amount over the higher of the asset''s net sales price or present value as determined.

After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

A previously recognised impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

(e) Intangible assets

costs relating to acquisition of computer software are capitalised as ''Intangible assets'' and amortised on a straight line basis over a period of three years, which is the management''s estimate of the useful life of such software.

(f) Intangible assets under development

The Company recognizes the cost of developing intellectual property rights as an intangible asset, which in its opinion would result in commercial benefits over several financial years.

The initial investment towards development or the cost of creation of the intellectual property rights is treated as capital expenditure. The same would be amortized over the commercial life of intellectual property rights so created.

(g) Borrowing Cost

Borrowing cost attributable to the acquisition or setting-up of qualifying assets is capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.

(h) Investments

Investments are classified into long-term investments and current investments. Long-term investments are carried at cost. Provision for diminution in the value of long-term investments is not made unless it is considered other than temporary. Current investments are valued at lower of cost and net realisable value.

(i) Foreign currency transactions

(i) Initial Recognition - Transactions denominated in foreign currencies are recorded at the rates of exchange prevailing on the date of the transaction.

(ii) Conversion - Monetary assets and liabilities denominated in foreign currency are converted at the rate of exchange prevailing on the date of the Balance Sheet.

(iii) Exchange Differences - All exchange differences arising on settlement/conversion of foreign currency transactions are included in the Statement of Profit and Loss in the year in which they arise.

(iv) Forward Cover - The Company uses foreign exchange forward contracts and option contracts to hedge its exposure on foreign currency fluctuations. Any profit or loss arising on cancellation or renewal of foreign exchange forward contracts/ option contracts is recognised as income or expense for the year.

(v) Pursuant to the Announcement ''Accounting for Derivatives'' by the Institute of Chartered Accountants of India, the Company has adopted Accounting Standard 30, Financial Instruments: Recognition and Measurement, prescribed by the Institute of Chartered Accountants of India, with effect from 1 April 2008.

Consequently, outstanding forward contracts have been treated as highly probable forecast transactions based on historic trends. Accordingly, gains / losses arising on ''mark to market'' of such open forward contracts have been accumulated in ''Hedging Reserve Account''. The Company uses forward contracts as economic hedges and not for trading or speculative purposes.

(j) Staff benefits

(i) All short term employee benefits are accounted on undiscounted basis during the accounting period based on services rendered by employees.

(ii) The Company''s contribution to Provident Fund is remitted to a trust established for this purpose based on a fixed percentage of the eligible employees'' salary and charged to Statement of Profit and Loss. The Company has categorised its Provident Fund as a defined contribution plan since it has no further obligations beyond these contributions.

(iii) The Company''s contribution under a defined Superannuation Plan to the trust established for this purpose based on a specified percentage of salary of eligible employees is charged to Statement of Profit and Loss. The Company has categorised Superannuation Plan as a defined contribution plan since it has no further obligations beyond these contributions.

(iv) The Company''s liability towards gratuity and compensated absences, being defined benefit plans is accounted for on the basis of an independent actuarial valuation using the projected unit credit method, done at the year end and actuarial gains/losses are charged to the Statement of Profit and Loss. Gratuity liability is funded by payments to the trust established for the purpose.

(k) Revenue recognition

(i) Revenue from software development with respect to time and material contracts is recognised as related costs are incurred and services are performed in accordance with the terms of specific contracts.

(ii) Revenue from fixed price contracts are recognised based on the milestones achieved as specified in the contracts and for interim stages, until the next milestone is achieved, on the basis of proportionate completion method. Provisions for estimated losses on incomplete contracts are recorded in the period in which such losses become probable based on the current estimates.

(iii) Revenue from sale of traded software licenses and traded hardware is recognised on delivery to the customer.

(iv) Cost and earnings in excess of billings are classified as unbilled revenue while billings in excess of cost and earnings are classified as unearned revenue.

(v) Dividend income is recognized when the right to receive the dividend is established.

(vi) Interest income is recognized on time proportion basis.

(l) Lease rentals

Rent expense is recognised with reference to the terms of lease agreement and other consideration in respect of operating leases on a straight line basis. Assets given on operating lease are included under fixed assets of the Company. Lease income is recognised on straight line basis over the primary period of lease.

(m) Taxes on Income

The provision for current taxation is computed in accordance with the relevant tax regulations. Deferred tax is recognised on timing differences between the accounting and taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as at the Balance Sheet date. Deferred tax assets in respect of unabsorbed depreciation and carry forward losses under tax laws are recognised and carried forward to the extent there is virtual certainty supported by convincing evidence that sufficient future taxable

income will be available against which such deferred tax assets can be realised in future. Where there is no unabsorbed depreciation and/or carry forward losses, other deferred tax assets are recognised only to the extent there is a reasonable certainty of realisation in future. Such assets are reviewed at each Balance Sheet date to reassess realisation.

Tax credit is recognized in respect of Minimum Alternate Tax (''MAT'') as per the provisions of Section 115 JAA of the Income Tax Act, 1961 based on convincing evidence that the Company will pay normal income tax within statutory time frame and is reviewed at each Balance Sheet date.

(n) Provisions and contingent liabilities

Provisions are recognised in the financial statements in respect of present probable obligations, for amounts which can be reliably estimated.

Contingent liabilities are disclosed in respect of possible obligations that arise from past events, whose existence would be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.

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Mar 31, 2014

(a) Basis of accounting and preparation of financial statements

The financial statements which have been prepared under the historical cost convention on the accrual basis of accounting, are in accordance with the applicable requirements of the Companies Act, 1956 (the ''Act'') read with General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 and comply in all material aspects with the Accounting Standards prescribed by the Central Government, in accordance with the Companies (Accounting Standards) Rules, 2006, to the extent applicable.

(b) The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained below.

(c) Change in accounting policy

Effective 1 April 2013, the Company has retrospectively changed its method of providing depreciation on Plant and Equipments and Office Equipments from the ''Written Down Value'' method to the ''Straight Line'' Method, at the rates prescribed in Schedule XIV to the Companies Act, 1956. Management believes that this change will result in more appropriate presentation of the financial statements of the Company. Accordingly, the Company has recognized an additional depreciation charge of Rs.31.24 lakhs in current year.

(d) Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Key estimates include estimate of useful life of fixed assets, unbilled revenue, income taxes, provision for bad and doubtful debts, estimated gain/loss on foreign exchange contracts and future obligations under employee retirement benefit plans. Actual results could differ from those estimates. Any revision to accounting estimates will be recognised prospectively in the current and future periods.

(e) Fixed assets, Capital work-in-progress and Depreciation

(i) Fixed assets are stated at cost less accumulated depreciation. Cost includes inward freight, taxes and expenses incidental to acquisition and installation, up to the point the asset is ready for its intended use.

(ii) Depreciation is provided on Building, Plant and Equipments and Office Equipments under the Straight- Line Method and on other fixed assets, other than Leasehold building improvements, under the Written Down Value Method. Depreciation is provided on a pro-rata basis at the rates and in the manner prescribed under Schedule XIV of the Companies Act, 1956, which also represent the useful life of fixed assets. Assets costing Rs.5,000/- or less are depreciated in full in the year of purchase.

(iii) Leasehold building improvements are written of over the period of lease or their estimated useful life, whichever is earlier, on a straight-line basis.

(iv) Assets acquired but not ready for use or assets under construction are classified under Capital Work in Progress.

(v) Management evaluates at regular intervals, using external and internal sources, the need for impairment of any asset. Impairment occurs where the carrying value exceeds the present value of future cash lows expected to arise from the continuing use of the asset and its net realisable value on its eventual disposal. Any loss on account of impairment is expensed as the excess of the carrying amount over the higher of the asset''s net sales price or present value as determined.

After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

A previously recognised impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

(f) Intangible assets

Costs relating to acquisition of computer software are capitalised as ''Intangible assets'' and amortised on a straight line basis over a period of three years, which is the management''s estimate of the useful life of such software.

(g) Intangible assets under development

The Company recognizes the cost of developing intellectual property rights as an intangible asset, which in its opinion would result in commercial benefits over several financial years.

The initial investment towards development or the cost of creation of the intellectual property rights is treated as capital expenditure. The same would be amortized over the commercial life of intellectual property rights so created.

(h) Borrowing Cost

Borrowing cost attributable to the acquisition or setting-up of qualifying assets is capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.

(i) Investments

Investments are classified into long-term investments and current investments. Long-term investments are carried at cost. Provision for diminution in the value of long-term investments is not made unless it is considered other than temporary. Current investments are valued at lower of cost and net realisable value.

(j) Foreign currency transactions

(i) Initial Recognition - Transactions denominated in foreign currencies are recorded at the rates of exchange prevailing on the date of the transaction.

(ii) Conversion - Monetary assets and liabilities denominated in foreign currency are converted at the rate of exchange prevailing on the date of the Balance Sheet.

(iii) Exchange Differences - All exchange differences arising on settlement/conversion of foreign currency transactions are included in the Statement of Profit and Loss in the year in which they arise.

(iv) Forward Cover - The Company uses foreign exchange forward contracts and forward option contracts to hedge its exposure to foreign currency fluctuations. The premium or discount arising at the inception of forward option contracts and foreign exchange forward contracts is amortised as expense or income over the life of the contract. Any profit or loss arising on cancellation or renewal of foreign exchange forward contracts is recognised as income or expense for the year.

(v) Pursuant to the Announcement ''Accounting for Derivatives'' by the Institute of Chartered Accountants of India, the Company has adopted Accounting Standard 30, Financial Instruments: Recognition and Measurement, prescribed by the Institute of Chartered Accountants of India, with effect from April 1, 2008. Consequently, outstanding forward contracts have been treated as highly probable forecast transactions based on historic trends. Accordingly, gains / losses arising on ''mark to market'' of such open forward contracts have been accumulated in ''Hedging Reserve Account''. The Company uses forward contracts as economic hedges and not for trading or speculative purposes.

(k) Staff benefits

(i) All short term employee benefits are accounted on undiscounted basis during the accounting period based on services rendered by employees.

(ii) The Company''s contribution to Provident Fund is remitted to a trust established for this purpose based on a fixed percentage of the eligible employees'' salary and charged to Statement of Profit and Loss. The Company has categorised its Provident Fund as a defined contribution plan since it has no further obligations beyond these contributions.

(iii) The Company''s contribution under a defined Superannuation Plan to the trust established for this purpose based on a specified percentage of salary of eligible employees is charged to Statement of Profit and Loss. The Company has categorised Superannuation Plan as a defined contribution plan since it has no further obligations beyond these contributions.

(iv) The Company''s liability towards gratuity and compensated absences, being defined benefit plans is accounted for on the basis of an independent actuarial valuation using the projected unit credit method, done at the year end and actuarial gains/losses are charged to the Statement of Profit and Loss. Gratuity liability is funded by payments to the trust established for the purpose.

(l) Revenue recognition

(i) Revenue from software development with respect to time and material contracts is recognised as related costs are incurred and services are performed in accordance with the terms of specific contracts.

(ii) Revenue from fixed price contracts are recognised based on the milestones achieved as specified in the contracts and for interim stages, until the next milestone is achieved, on the basis of proportionate completion method. Provisions for estimated losses on incomplete contracts are recorded in the period in which such losses become probable based on the current estimates.

(iii) Revenue from sale of traded software licenses and traded hardware is recognised on delivery to the customer.

(iv) Cost and earnings in excess of billings are classified as unbilled revenue while billings in excess of cost and earnings are classified as unearned revenue.

(v) Dividend income is recognized when the right to receive the dividend is established.

(vi) Interest income is recognized on time proportion basis.

(m)Lease rentals

Rent expense is recognised with reference to the terms of lease agreement and other consideration in respect of operating leases on a straight line basis. Assets given on operating lease are included under fixed assets of the Company. Lease income is recognised on straight line basis over the primary period of lease.

(n) Taxes on Income

The provision for current taxation is computed in accordance with the relevant tax regulations. Deferred tax is recognised on timing differences between the accounting and taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as at the Balance Sheet date. Deferred tax assets in respect of unabsorbed depreciation and carry forward losses under tax laws are recognised and carried forward to the extent there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised in future. Where there is no unabsorbed depreciation and/ or carry forward losses, other deferred tax assets are recognised only to the extent there is a reasonable certainty of realisation in future. Such assets are reviewed at each Balance Sheet date to reassess realisation.

Tax credit is recognized in respect of Minimum Alternate Tax (''MAT'') as per the provisions of Section 115 JAA of the Income Tax Act, 1961 based on convincing evidence that the Company will pay normal income tax within statutory time frame and is reviewed at each Balance Sheet date.

(o) Provisions and contingent liabilities

Provisions are recognised in the financial statements in respect of present probable obligations, for amounts which can be reliably estimated.

Contingent liabilities are disclosed in respect of possible obligations that arise from past events, whose existence would be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.

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Mar 31, 2013

(a) Basis of accounting and preparation of fnancial statements

The fnancial statements which have been prepared under the historical cost convention on the accrual basis of accounting, are in accordance with the applicable requirements of the Companies Act, 1956 (the ''Act'') and comply in all material aspects with the Accounting Standards prescribed by the Central Government, in accordance with the Companies (Accounting Standards) Rules, 2006, to the extent applicable.

(b) Use of estimates

The preparation of the fnancial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of fnancial statements and the reported amounts of revenues and expenses during the reporting period. Key estimates include estimate of useful life of fxed assets, unbilled revenue, income taxes, provision for bad and doubtful debts, estimated gain/loss on foreign exchange contracts and future obligations under employee retirement beneft plans. Actual results could differ from those estimates. Any revision to accounting estimates will be recognised prospectively in the current and future periods.

(c) Fixed assets, Capital work-in-progress and Depreciation

(i) Fixed assets are stated at cost less accumulated depreciation. Cost includes inward freight, taxes and expenses incidental to acquisition and installation, up to the point the asset is ready for its intended use.

(ii) Depreciation is provided on Building under the Straight-Line Method and on other fxed assets, other than Leasehold building improvements, under the Written down Value method. Depreciation is provided on a pro-rata basis at the rates and in the manner prescribed under Schedule XIV of the Companies Act, 1956, which also represent the useful life of fxed assets.

(iii) Leasehold building improvements are written off over the period of lease or their estimated useful life, whichever is earlier, on a straight-line basis.

(iv) Assets acquired but not ready for use or assets under construction are classifed under Capital Work in Progress.

(v) Management evaluates at regular intervals, using external and internal sources, the need for impairment of any asset. Impairment occurs where the carrying value exceeds the present value of future cash fows expected to arise from the continuing use of the asset and its net realisable value on its eventual disposal. Any loss on account of impairment is expensed as the excess of the carrying amount over the higher of the asset''s net sales price or present value as determined.

After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

A previously recognised impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

(d) Intangible assets

Costs relating to acquisition of computer software are capitalised as ''Intangible assets'' and amortised on a straight line basis over a period of three years, which is the management''s estimate of the useful life of such software.

(e) Intangible assets under development

The company recognizes the cost of developing intellectual property which in its opinion would result in commercial benefts over several fnancial years.

The initial investment towards development or the cost of creation of the intellectual property rights is treated as capital expenditure. The same would be written/off over the commercial life of intellectual property so created.

(f) Investments

Investments are classifed into long-term investments and current investments. Long-term investments are carried at cost. Provision for diminution in the value of long-term investments is not made unless it is considered other than temporary. Current investments are valued at lower of cost and net realisable value.

(g) Foreign currency transactions

(i) Initial Recognition - Transactions denominated in foreign currencies are recorded at the rates of exchange prevailing on the date of the transaction.

(ii) Conversion - Monetary assets and liabilities denominated in foreign currency are converted at the rate of exchange prevailing on the date of the Balance Sheet.

(iii) Exchange Differences - All exchange differences arising on settlement/conversion of foreign currency transactions are included in the Statement of Proft and Loss in the year in which they arise.

(iv) Forward Cover - The Company uses foreign exchange forward contracts and forward option contracts to hedge its exposure to foreign currency fuctuations. The premium or discount arising at the inception of forward option contracts and foreign exchange forward contracts is amortised as expense or income over the life of the contract. Any proft or loss arising on cancellation or renewal of foreign exchange forward contracts is recognised as income or expense for the year.

(v) Pursuant to the Announcement ''Accounting for Derivatives'' by the Institute of Chartered Accountants of India, the Company has adopted Accounting Standard 30, Financial Instruments: Recognition and Measurement, prescribed by the Institute of Chartered Accountants of India, with effect from April 1, 2008. Consequently, outstanding forward contracts have been treated as highly probable forecast transactions based on historic trends. Accordingly, gains / losses arising on ''mark to market'' of such open forward contracts have been accumulated in ''Hedging Reserve Account''. The Company uses forward contracts as economic hedges and not for trading or speculative purposes.

(h) Staf benefts

(i) All short term employee benefts are accounted on undiscounted basis during the accounting period based on services rendered by employees.

(ii) The Company''s contribution to Provident Fund is remitted to a trust established for this purpose based on a fxed percentage of the eligible employees'' salary and charged to Statement of Proft and Loss. The Company has categorised its Provident Fund as a defned contribution plan since it has no further obligations beyond these contributions.

(iii) The Company''s contribution under a defned Superannuation Plan to the trust established for this purpose based on a specifed percentage of salary of eligible employees is charged to Statement of Proft and Loss. The Company has categorised Superannuation Plan as a defned contribution plan since it has no further obligations beyond these contributions.

(iv) The Company''s liability towards gratuity and compensated absences, being defned beneft plans is accounted for on the basis of an independent actuarial valuation using the projected unit credit method, done at the year end and actuarial gains/losses are charged to the Statement of Proft and Loss. Gratuity liability is funded by payments to the trust established for the purpose.

(i) Revenue recognition

(i) Revenue from software development with respect to time and material contracts is recognised as related costs are incurred and services are performed in accordance with the terms of specifc contracts.

(ii) Revenue from fxed price contracts are recognised based on the milestones achieved as specifed in the contracts and for interim stages, until the next milestone is achieved, on the percentage of completion basis. Provisions for estimated losses on incomplete contracts are recorded in the period in which such losses become probable based on the current contracts.

(iii) Revenue from sale of traded software licenses and traded hardware is recognised on delivery to the customer.

(iv) Cost and earnings in excess of billings are classifed as unbilled revenue while billings in excess of cost and earnings are classifed as unearned revenue.

(v) Dividend income is recognized when the right to receive the dividend is established.

(vi) Interest income is recognized on time proportion basis.

(j) Lease rentals

Rent expense is recognised with reference to the terms of lease agreement and other consideration in respect of operating leases on a straight line basis. Assets given on operating lease are included under fxed assets of the Company. Lease income is recognised on straight line basis over the primary period of lease.

(k) Taxes on Income

The provision for current taxation is computed in accordance with the relevant tax regulations. Deferred tax is recognised on timing differences between the accounting and taxable income for the year and quantifed using the tax rates and laws enacted or substantively enacted as at the Balance Sheet date. Deferred tax assets in respect of unabsorbed depreciation and carry forward losses under tax laws are recognised and carried forward to the extent there is virtual certainty supported by convincing evidence that suffcient future taxable income will be available against which such deferred tax assets can be realised in future. Other deferred tax assets are recognised only to the extent there is a reasonable certainty of realisation in future. Such assets are reviewed at each Balance Sheet date to reassess realisation.

Tax credit is recognized in respect of Minimum Alternate Tax (''MAT'') as per the provisions of Section 115 JAA of the Income Tax Act, 1961 based on convincing evidence that the Company will pay normal income tax within statutory time frame and is reviewed at each Balance Sheet date.

(l) Provisions and contingent liabilities

Provisions are recognised in the fnancial statements in respect of present probable obligations, for amounts which can be reliably estimated.

Contingent liabilities are disclosed in respect of possible obligations that arise from past events, whose existence would be confrmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.

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Mar 31, 2012

(a) Basis of accounting and preparation of financial statements

The financial statements which have been prepared under the historical cost convention on the accrual basis of accounting, are in accordance with the applicable requirements of the Companies Act, 1956 (the 'Act') and comply in all material aspects with the Accounting Standards prescribed by the Central Government, in accordance with the Companies (Accounting Standards) Rules, 2006, to the extent applicable.

(b) Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Key estimates include estimate of useful life of fixed assets, unbilled revenue, income taxes, estimated gain/loss on foreign exchange contracts and future obligations under employee retirement benefit plans. Actual results could differ from those estimates. Any revision to accounting estimates will be recognised prospectively in the current and future periods.

(c) Fixed Assets, Capital Work-in-Progress and Depreciation

(i) Fixed assets are stated at cost less accumulated depreciation. Cost includes inward freight, taxes and expenses incidental to acquisition and installation, up to the point the asset is ready for its intended use.

(ii) Depreciation is provided on Building under the Straight-Line Method and on other fixed assets, other than Leasehold building improvements, under the Written down Value method. Depreciation is provided on a pro-rata basis at the rates and in the manner prescribed under Schedule XIV of the Companies Act, 1956, which also represent the useful life of fixed assets.

(iii) Leasehold building improvements are written off over the period of lease or their estimated useful life, whichever is earlier, on a straight-line basis.

(iv) Assets acquired but not ready for use or assets under construction are classified under capital work-in-progress.

(v) Management evaluates at regular intervals, using external and internal sources, the need for impairment of any asset. Impairment occurs where the carrying value exceeds the present value of future cash flows expected to arise from the continuing use of the asset and its net realisable value on its eventual disposal. Any loss on account of impairment is expensed as the excess of the carrying amount over the higher of the asset's net sales price or present value as determined.

After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

A previously recognised impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

(d) Intangible Assets

Costs relating to acquisition of computer software are capitalised as 'Intangible Assets' and amortised on a straight line basis over a period of three years, which is the management's estimate of the useful life of such software.

(e) Investments

Investments are classified into long-term investments and current investments. Long-term investments are carried at cost. Provision for diminution in the value of long-term investments is not made unless it is considered other than temporary. Current investments are valued at lower of cost and net realisable value.

(f) Foreign Currency Transactions

(i) Initial Recognition - Transactions denominated in foreign currencies are recorded at the rates of exchange prevailing on the date of the transaction.

(ii) Conversion - Monetary assets and liabilities denominated in foreign currency are converted at the rate of exchange prevailing on the date of the Balance Sheet.

(iii) Exchange Differences - All exchange differences arising on settlement/conversion of foreign currency transactions are included in the Statement of Profit and Loss in the year in which they arise.

(iv) Forward Cover - The Company uses foreign exchange forward contracts and forward option contracts to hedge its exposure to foreign currency fluctuations. The premium or discount arising at the inception of forward option contracts and foreign exchange forward contracts is amortised as expense or income over the life of the contract. Any profit or loss arising on cancellation or renewal of foreign exchange forward contracts is recognised as income or expense for the year.

(v) Pursuant to the Announcement 'Accounting for Derivatives' by the Institute of Chartered Accountants of India, the Company has adopted Accounting Standard 30, Financial Instruments: Recognition and Measurement, prescribed by the Institute of Chartered Accountants of India, with effect from April 1, 2008. Consequently, outstanding forward contracts have been treated as highly probable forecast transactions based on historic trends. Accordingly, gains / losses arising on 'mark to market' of such open forward contracts have been accumulated in 'Hedging Reserve Account'. The Company uses forward contracts as economic hedges and not for trading or speculative purposes.

(g) Staff benefits

(i) All short term employee benefits are accounted on undiscounted basis during the accounting period based on services rendered by employees.

(ii) The Company's contribution to Provident Fund is remitted to a trust established for this purpose based on a fixed percentage of the eligible employees' salary and charged to Statement of Profit and Loss. The Company has categorised its Provident Fund as a defined contribution plan since it has no further obligations beyond these contributions.

(iii) The Company's contribution under a defined Superannuation Plan to the trust established for this purpose based on a specified percentage of salary of eligible employees is charged to Statement of Profit and Loss. The Company has categorised Superannuation Plan as a defined contribution plan since it has no further obligations beyond these contributions.

(iv) The Company's liability towards gratuity and compensated absences, being defined benefit plans is accounted for on the basis of an independent actuarial valuation using the projected unit credit method, done at the year end and actuarial gains/losses are charged to the Statement of Profit and Loss. Gratuity liability is funded by payments to the trust established for the purpose.

(h) Revenue recognition

(i) Revenue from software development with respect to time and material contracts is recognised as related costs are incurred and services are performed in accordance with the terms of specific contracts.

(ii) Revenue from fixed price contracts are recognised based on the milestones achieved as specified in the contracts and for interim stages, until the next milestone is achieved, on the percentage of completion basis.

(iii) Revenue from sale of traded software licenses and traded hardware is recognised on delivery to the customer.

(iv) Cost and earnings in excess of billings are classified as unbilled revenue while billings in excess of cost and earnings are classified as unearned revenue.

(v) Dividend income is recognized when the right to receive the dividend is established.

(vi) Interest income is recognized on time proportion basis.

(i) Lease Rentals

Rent expense is recognised with reference to the terms of lease agreement and other consideration in respect of operating leases on a straight line basis. Assets given on operating lease are included under fixed assets of the Company. Lease income is recognised on straight line basis over the primary period of lease.

(j) Taxes on Income

The provision for current taxation is computed in accordance with the relevant tax regulations. Deferred tax is recognised on timing differences between the accounting and taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as at the Balance Sheet date. Deferred tax assets in respect of unabsorbed depreciation and carry forward losses under tax laws are recognised and carried forward to the extent there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised in future. Other deferred tax assets are recognised only to the extent there is a reasonable certainty of realisation in future. Such assets are reviewed at each Balance Sheet date to reassess realisation.

Tax credit is recognized in respect of Minimum Alternate Tax ('MAT') as per the provisions of Section 115 JAA of the Income Tax Act, 1961 based on convincing evidence that the Company will pay normal income tax within statutory time frame and is reviewed at each Balance Sheet date.

(k) Provisions and Contingent Liabilities

Provisions are recognised in the financial statements in respect of present probable obligations, for amounts which can be reliably estimated.

Contingent Liabilities are disclosed in respect of possible obligations that arise from past events, whose existence would be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.

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Mar 31, 2010

A)Basis of accounting and preparation of financial statements The financial statements which have been prepared under the historical cost convention on the accrual basis of accounting,are in accordance with the applicable requirements of the Companies Act,1956 (theAct)and comply in all material aspects with the Accounting Standards prescribed by the Central Government,in accordance with the Companies (Accounting Standards)Rules,2006,to the extent applicable.

b)Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,disclosure of contingent liabilities as at the date of financial statements and the reported amounts of revenues and expenses during the reporting period.Key estimates include estimate of useful life of fixed assets,unbilled revenue,income taxes,estimated gain/loss on foreign exchange contracts and future obligations under employee retirement benefit plans.Actual results could differ from those estimates.Any revision to accounting estimates will be recognised prospectively in the current and future periods.

c)Fixed Assets,Capital Work-in-Progress and Depreciation

i)Fixed assets are stated at cost less accumulated depreciation.Cost includes inward freight,taxes and expenses incidental to acquisition and installation,up to the point the asset is ready for its intended use. ii)Depreciation is provided on Building under the Straight Line Method and on other fixed assets,other than Leasehold building improvements,under the Written Down Value method.Depreciation is provided on a pro-rata basis at the rates and in the manner prescribed under Schedule XIV of the Companies Act,1956,which also represent the useful life of fixed assets.

iii)Leasehold building improvements are written off over the period of lease or their estimated useful life, whichever is earlier,on a straight line basis.

iv)Capital Advances in respect of Capital Work in progress or assets acquired but not ready for use are classified under Capital Work in Progress.

v)Management evaluates at regular intervals,using external and internal sources,the need for impairment of any asset.Impairment occurs where the carrying value exceeds the present value of future cash flows expected to arise from the continuing use of the asset and its net realisable value on its eventual disposal.Any loss on account of impairment is expensed as the excess of the carrying amount over the higher of the assets net sales price or present value as determined.

After impairment,depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

A previously recognised impairment loss is increased or reversed depending on changes in circumstances. However,the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

d)Intangible Assets

Costs relating to acquisition of computer software are capitalised asIntangible Assetsand amortised on a straight line basis over a period of three years,which is the managements estimate of the useful life of such software.

e)Investments

Investments are classified into long-term investments and current investments.Long-term investments are carried at cost.Provision for diminution in the value of long-term investments is not provided for unless it is considered other than temporary.Current investments are valued at lower of cost and net realisable value.

f)Foreign Currency Transactions

i)Initial Recognition -Transactions denominated in foreign currencies are recorded at the rates of exchange prevailing on the date of the transaction.

ii)Conversion -Monetary assets and liabilities denominated in foreign currency are converted at the rate of exchange prevailing on the date of the Balance Sheet.

iii)Exchange Differences -All exchange differences arising on settlement/conversion of foreign currency transactions are included in the Profit and Loss Account in the year in which they arise.

iv)Forward Cover -The Company uses foreign exchange forward contracts and forward option contracts to hedge its exposure to foreign currency fluctuations.The premium or discount arising at the inception of forward option contracts is amortised as expense or income over the life of the contract.Any profit or loss arising on cancellation or renewal of foreign exchange forward contracts is recognised as income or expense for the year.Forward contracts,which are outstanding as at the year end and which represent hedges against recoverable balances in foreign exchange as at the Balance Sheet date are marked to market and the gains / losses arising on the same are recognised in the Profit and Loss Account.

v)Pursuant to the Announcement Accounting for Derivativesby the Institute of Chartered Accountants of India,the Company has adopted Accounting Standard 30,Financial Instruments:Recognition and Measurement, prescribed by the Institute of Chartered Accountants of India,with effect from April 1,2008.,Consequently, outstanding forward contracts for which there are no underlying account balances have been treated as highly probable forecast transactions based on historic trends.Accordingly,gains /losses arising on mark to marketof such open forward contracts have been accumulated in Hedging Reserve Account.The Company uses forward contracts as economic hedges and not for trading or speculative purposes.

g)Staff benefits

i)All short term employee benefits are accounted on undiscounted basis during the accounting period based on services rendered by employees.

ii)The Companys contribution to Provident Fund is remitted to a trust established for this purpose based on a fixed percentage of the eligible employeessalary and charged to Profit and Loss Account.The Company has categorised its Provident Fund as a defined contribution plan since it has no further obligations beyond these contributions.

iii)The Companys contribution under a defined Superannuation Plan to the trust established for this purpose based on a specified percentage of salary of eligible employees is charged to Profit and Loss Account.The Company has categorised Superannuation Plan as a defined contribution plan since it has no further obligations beyond these contributions.

iv)The Companys liability towards gratuity and compensated absences,being defined benefit plans is accounted for on the basis of an independent actuarial valuation done at the year end and actuarial gains/losses are charged to the Profit and Loss Account.Gratuity liability is funded by payments to the trust established for the purpose.

h)Revenue recognition

i)Revenue from software development with respect to time and material contracts is recognised as related costs are incurred and services are performed in accordance with the terms of specific contracts.

ii)Revenue from fixed price contracts are recognised based on the milestones achieved as specified in the contracts and for interim stages,until the next milestone is achieved,on the percentage of completion basis.

iii Revenue from sale of traded software licenses and traded hardware is recognised on delivery to the customer.

iv Cost and earnings in excess of billings are classified as unbilled revenue while billings in excess of cost and earnings is classified as unearned revenue.

v)Dividend income is recognized when the right to receive the dividend is established,

vi)Interest income is recognized on time proportion basis.

i)Lease Rentals

Rent expense is recognised with reference to the terms of lease agreement and other consideration in respect of operating leases on a straight line basis.Assets given on operating lease are included under fixed assets of the Company.Lease income is recognised on straight line basis over the primary period of lease.

j)Taxes on Income

The provision for current taxation is computed in accordance with the relevant tax regulations.Deferred tax is recognised on timing differences between the accounting and taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as at the Balance Sheet date.Deferred tax assets in respect of unabsorbed depreciation and carry forward losses under tax laws are recognised and carried forward to the extent there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised in future.Other deferred tax assets are recognised only to the extent there is a reasonable certainty of realisation in future.Such assets are reviewed at each Balance Sheet date to reassess realisation.

Tax credit is recognized in respect of Minimum Alternate Tax (MAT)as per the provisions of Section 115 JAA of the Income Tax Act,1961 based on convincing evidence that the Company will pay normal income tax within statutory time frame and is reviewed at each Balance Sheet date.

k)Provisions and contingent liabilities

Provisions are recognised in the financial statements in respect of present probable obligations,for amounts which can be reliably estimated.

Contingent Liabilities are disclosed in respect of possible obligations that arise from past events,whose existence would be confirmed by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company.