Accounting Policies of Cyient Ltd. Company
Mar 31, 2023
2.2 Basis of preparation and presentation
Cyient Limited (''Cyient'' or ''the Companyâ) is engaged in providing global technology services and solutions specialising in geospatial, engineering design, IT solutions and data analytics. The Company is a public limited Company incorporated in India and has its headquarters and development facilities in India and serves a global customer base through its subsidiaries in the United States of America (''USA''), United Kingdom (''UK''), Germany, Japan, Australia Singapore, Portugal and Finland. The Company''s range of services include digitisation of drawings and maps, photogrammetry, computer aided design/engineering (''CAD/CAE''), design and modelling, repair development engineering, reverse engineering application software development, software products development, consulting, analytics and implementation. Cyient specialises in software services and solutions for the manufacturing, utilities, telecommunications, transportation & logistics, local government and financial services markets.
The Company''s shares are listed on the BSE Limited and National Stock Exchange of India Limited. The registered office of the Company is located at 4th Floor, "A" Wing, Plot No. 11, Software Units Layout, Infocity, Madhapur, Hyderabad 500 081, India.
The financial statements were authorised for issue in accordance with a resolution of the directors on April 20, 2023.
2. Significant accounting policies2.1 Statement of compliance
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (''Ind ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III), as applicable to the financial statements.
These financial statements have been prepared on a historical cost basis except for the following assets and liabilities which have been measured at fair value a) Derivative financial instruments and b) Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments) and consistent with previous year subject to changes in accounting policies. The financial statements are presented in Indian Rupees (''INR'') and all values are rounded to the nearest millions, except when otherwise indicated.
Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it is:
⢠Expected to be realised or intended to be sold or consumed in normal operating cycle;
⢠Held primarily for the purpose of trading;
⢠Expected to be realised within twelve months after the reporting period; or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
⢠It is expected to be settled in normal operating cycle;
⢠It is held primarily for the purpose of trading;
⢠It is due to be settled within twelve months after the reporting period; or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
2.3 Use of estimates andjudgements
The preparation of the financial statements in conformity with Ind AS requires the management to make judgements, estimates and assumptions considered in the reported amounts of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statements and the reported amounts of income and expenditure for the periods presented. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable.
Future results could differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. The effects of changes in accounting estimates are reflected in the financial statements in the period in which results are known and, if material, are disclosed in the financial statements.
Significant areas ofestimation of uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements such as:
⢠Impairment assessment of investments and intangible assets under development;
⢠Revenue recognition and related cost estimation;
⢠Share-based payments;
⢠Provision for income tax and recoverability of deferred tax assets;
⢠Fair Value measurement of financial instruments;
⢠Determination of purchase price allocation and valuation of intangible assets; and
The Company accounts for its business combinations under the acquisition method of accounting. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition date fair value of the assets transferred by the Company, liabilities incurred by the Company to the former owners of the acquiree and the equity interest issued by the Company in exchange of control of the acquiree. Acquisition related costs are generally recognised in the statement of profit and loss as incurred.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any noncontrolling interests in the acquiree, and the fair value of the acquirer''s previously held equity interest in the acquiree, if any over the net of the acquisition date amounts of the identifiable assets acquired and the liabilities assumed.
If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognised in other comprehensive income and accumulated in equity as capital reserve provided there is clear evidence of the underlying reasons for classifying the business combination as a bargain purchase. In other cases, the bargain purchase gain is recognised directly in equity as capital reserve.
When the consideration transferred by the Company in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition date fair value and included as part of the consideration transferred in business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill or capital reserve, as the case may be. Measurement period adjustments are adjustments that arise from the additional information obtained during the ''measurement periodâ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed as on the acquisition date.
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments and are classified as an asset or liability and are remeasured at fair value at subsequent reporting dates with the corresponding gain or loss being recognised in the statement of profit and loss.
Acquisition of some or all of the NCI is accounted for as a transaction with equity holders in their capacity as equity holders. Consequently, the difference arising between the fair value of the purchase consideration paid and the carrying value of the NCI is recorded as an adjustment to retained earnings that is attributable to the Company. No goodwill is recognised as a result of such transactions.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entityâs incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.
Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to each of the Companyâs cash generating units that is expected to benefit from the synergies of the combination.
A cash generating unit to which goodwill has been allocated is tested for impairment annually or more frequently when there is an indication that the unit may be impaired. Any impairment loss for goodwill is recognised directly in statement of profit and loss. An impairment loss recognised for goodwill is not reversed in the subsequent periods.
2.5 Foreign currency translationi) Functional and presentation currency
These financial statements are presented in INR, which is the functional and presentation currency of the Company.
Foreign currency denominated monetary assets and liabilities are translated into the relevant functional currency at exchange rates in effect at the balance sheet date. The gains or losses resulting from such translations are included in net profit in the statement of profit and loss. Non-monetary assets and non-monetary liabilities denominated in a foreign currency and measured at fair value are translated at the exchange rate prevalent at the date when the fair value was determined. Nonmonetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Transaction gains or losses realised upon settlement of foreign currency transactions are included in determining net profit for the period in which the transaction is settled.
2.6 Property, plant and equipment
Property, plant and equipment are stated at cost, less accumulated depreciation and impairment, if any. Costs directly attributable to the acquisition are capitalised until the property, plant and equipment are ready for use, as intended by management. Capital work-in-progress is stated at cost, net of accumulated impairment loss, if any.
The Company depreciates property, plant and equipment over their estimated useful lives using the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets has been assessed based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support. Freehold land is not depreciated.
|
Type of asset |
Useful lives |
|
Buildings |
28 years |
|
Leasehold |
Shorter of lease period or |
|
improvements |
estimated useful lives |
|
Computers |
3-5 years |
|
Plant and equipment |
10 years |
|
Office equipment |
5 years |
|
Furniture and fixtures |
10 years |
|
Electrical installations |
10 years |
|
Vehicles |
8 years |
Depreciation methods, useful lives and residual values are reviewed periodically including at each financial year end.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in ''other incomeâ of the statement of profit and loss.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
Intangible assets are stated at cost less accumulated amortisation and impairment.
Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets are amortised over their estimated useful life on a straight-line basis as follows:
|
Type of asset |
Useful lives |
|
Computer software |
3 years/ Over the period of the respective project |
|
Customer contracts |
10 years |
|
Other intangible |
Over the period of the |
|
assets |
respective project |
An intangible asset is de-recognised on disposal, or when no future economic benefits are expected from use. Gains or losses arising from de-recognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in ''other incomeâ of the statement of profit and loss when the asset is derecognised.
Expenditure incurred towards development is eligible for capitalisation are carried as intangible assets under development where such assets are not yet ready for their intended use.
Amortisation methods and useful lives are reviewed periodically at each financial year end.
Research and development costs
Research costs are expensed as incurred. Development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, future economic benefits are probable, availability of resources to complete the asset is established, the Company has intention and ability to complete and use the asset and the costs are reliably measured, in which case such expenditure is capitalised. The amount capitalised comprises expenditure that can be directly attributed or allocated on a reasonable and consistent basis for creating, producing and making the asset ready for its intended use.
Amortisation and impairment of development cost
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated
impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised over the period of expected future benefit. Amortisation expense is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
During the period of development, the asset is tested for impairment annually.
The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
At the date of commencement of the lease, the Company recognises a right of use asset (''ROU'') and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease.
Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The right of use assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of lease liabilities.
Right of use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. The right of use assets are also subject to impairment.
|
ROU asset |
Useful lives |
|
Leasehold land |
15-33 years |
|
Buildings |
3-15 years |
|
Computers |
2-5 years |
The lease liability is initially measured at amortised cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of the leases. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made or a change in the assessment of extension or termination options. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments).
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
For operating leases, rental income is recognised on a straight-line basis over the term of the relevant lease.
The income tax expense or credit for the period is the tax payable on the taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
Current and deferred tax is recognised in the statement of profit and loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
The current tax and deferred tax is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period where the Company operates and generate taxable income.
Deferred tax is provided in full, using the balance sheet method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit/loss.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in subsidiaries, branches and interest in joint arrangements where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle
on a net basis, or to realise the asset and settle the liability simultaneously.
Minimum alternate tax (''MAT'') paid in a year is charged to the statement of profit and loss as current tax for the year. MAT credit is recognised in accordance with tax laws in India as a deferred tax asset only to the extent that is probable that the Company will pay normal income tax during the specified period i.e. the period for which MAT credit is allowed to be carried forward. The Company reviews the MAT credit at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal income tax during the specified period.
In the situations where one or more units in the Company are entitled to a tax holiday under the Income-tax Act, 1961 enacted in India or tax laws prevailing in the respective tax jurisdictions where they operate, no deferred tax (asset or liability) is recognised in respect of temporary differences which reverse during the tax holiday period, to the extent the concerned unit''s gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of temporary differences which reverse after the tax holiday period is recognised in the year in which the temporary differences originate. However, the Company restricts recognition of deferred tax assets to the extent it is probable that sufficient future taxable income will be available against which such deferred tax assets can be realized. For recognition of deferred taxes, the temporary differences which originate first are considered to reverse first.
2.10 Cash and cash equivalents
Cash comprises cash on hand, in bank, demand deposits with banks and with financial institutions. The Company considers all highly liquid financial instruments, which are readily convertible into cash and have original maturities of three months or less from the date of purchase, to be cash equivalents. Such cash equivalents are subject to insignificant risk of changes in value.
Cash flows are reported using indirect method, whereby profit / (loss) after tax is adjusted for the effects of transaction of non- cash nature and any deferrals or accruals of past or future cash receipts or payments for the year. The cash flows from operating, investing
and financing activities of the Company are segregated based on the available information.
Ordinary shares are classified as equity. Shares bought back are shown as a deduction from equity. No gain or loss is recognised in the statement of profit and loss on purchase, sale, issue or cancellation of equity instruments, except in case of employee stock options. Incremental costs directly attributable to the issuance of equity shares or buyback of equity shares are recognised as a deduction from equity, net of taxes.
2.12 Provisions and contingent liabilities Provisions
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.
Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as an interest expense. Provisions are not recognised for future operating losses.
Provisions for onerous contracts are recognised when the expected benefits to be desired by the company from a contract are lower than unavoidable costs of meeting to future obligations under the contract and are measured at the present value of lower than expected net cost of fulfilling the contract and expected cost of terminating the contract.
Contingent liabilities are not recognised in the financial statements. A contingent asset is neither recognised nor disclosed in the financial statements.
The Company derives revenue primarily from services and solutions specialising in geospatial, engineering design, analytics, network and operations solutions. Revenue is measured based on the consideration specified in a contract with a customer. The Company recognises revenue when it transfers control over a product or a service to a customer. The method for recognising revenues and costs depends on the nature of services rendered as mentioned below:
a) Time and material: Revenue from time and material contracts are recognised as the related services are performed, which is pursued based on the efforts spent and agreed rate with the customer. Revenue from the end of the last invoicing to the reporting date is recognised as unbilled revenue.
b) Fixed price contracts: Revenue from fixed price contracts is recognised as per the ''percentage-of-completion'' method, where the performance obligations are satisfied over time and when there is no uncertainty as to measurement or collectability of consideration. When there is uncertainty as to measurement or ultimate collectability, revenue recognition is postponed until such uncertainty is resolved. Percentage of completion is determined based on the project costs incurred to date as a percentage of total estimated project costs required to complete the project. The input method has been used to measure the progress towards completion as there is direct relationship between input and productivity. In certain projects, a fixed quantum of service or output units is agreed at a fixed price for a fixed term. In such contracts, revenue is recognised with respect to the actual output achieved till date as a percentage of total contractual output. Any residual service unutilised by the customer is recognised as revenue on completion of the term.
c) Maintenance contracts: Revenue from fixed price maintenance contracts are recognised pro-rata over the term of the maintenance arrangement.
Revenue from contract with customers is recognised by applying revenue recognition criteria specified in Ind AS 115 ''Revenue from Contracts with Customers'' for each distinct performance obligation. The arrangement with customer specify services to be rendered which meet criteria of performance obligations. Revenue towards satisfaction of a performance obligation is
measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation.
Contract modifications are accounted for when additions, deletions or changes are approved either to the contract scope or contract price. The accounting for modifications of contracts involves assessing whether the services added to an existing contract are distinct and whether the pricing is at the standalone selling price. Services that are not distinct are accounted for on a cumulative catchup basis, while those that are distinct are accounted for prospective, either as a separate contract, if the additional services are priced at the standalone selling price, or as a termination of existing contract and creation of a new contract if not priced at the standalone selling price.
The Company classifies the right to consideration in exchange for deliverables as either a receivable or as unbilled revenue. A receivable is a right to consideration that is unconditional upon passage of time. Revenue in excess of invoicing are classified as contract assets (unbilled revenue) while invoicing in excess of revenue are classified as contract liabilities (unearned revenue).
The Company accounts for the deferred contract costs, upfront costs incurred for the contract, on a systematic amortisation that is consistent with the transfer to the customer of the goods or services to which the asset relates.
The Company accounts for volume discounts and pricing incentives to customers as a reduction of revenue based on the ratable allocation of discounts/incentives to each of the underlying performance obligation that corresponds to the progress by the customer towards earning the discount/incentive.
The Company presents revenues net of indirect taxes in the statement of profit and loss.
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably.
Interest income is recognised on a time proportion basis taking into account the amount outstanding and rate applicable in the transaction.
Dividend income is recognised when the Companyâs right to receive dividend is established.
Foreign currency gains and losses are reported on net basis. This includes the changes in the fair value of foreign exchange derivative instruments, which are accounted at fair value through statement of profit and loss.
2.15 Government grants/incentives
Government grants are recognised when there is a reasonable assurance that:
a) The Company will comply with the conditions attached to them; and
b) The grant will be received.
Export entitlements from government authorities are recognised in the statement of profit and loss when the right to receive credit as per the terms of the scheme is established in respect of the exports made by the Company, and where there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds. Grants are recognised net of attributable expenses.
Employee benefits include provident fund, superannuation fund, employeeâs state insurance scheme, gratuity fund and compensated absences.
The Company accounts for its liability towards gratuity based on actuarial valuation made by an independent actuary as at the balance sheet date using projected unit credit method. The liability recognised in the balance sheet in respect of the gratuity plan is the
present value of the defined benefit obligation at the end of the reporting period less the fair value of the plan assets.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation. The net interest cost is calculated by applying the discount rate to the net balance of the defined obligation and the fair value of plan assets. This cost is included in the employee benefit expense in the statement of profit and loss. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in the statement of profit and loss as past service cost.
The employees of the Company are entitled to compensated absences. The employees can carry-forward a portion of the unutilised accrued compensated absence and utilise it in future periods or receive cash compensation at retirement or termination of employment. The Company records an obligation for compensated absences in the period in which the employee renders the services that increase this entitlement. The Company measures the expected cost of compensated absence based on actuarial valuation made by an independent actuary as at the balance sheet date on projected unit credit method.
Contributions in respect of provident fund and pension fund which are defined contribution schemes, are made to a fund administered and managed by the Government of India and are charged as an expense based on the amount of contribution required to be made and when service are rendered by the employees.
Contributions under the superannuation plan which is a defined contribution scheme, are made to a fund
administered and managed by the Life Insurance Corporation of India and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.
Other short-term employee benefits
Other short-term employee benefits, including overseas social security contributions and performance incentives expected to be paid in exchange for the services rendered by employees are recognised during the period when the employee renders service.
The Company recognises compensation expense relating to share-based payments in the statement of profit and loss, using fair value in accordance with Ind AS 102 ''Share-based Paymentsâ. The Company issues equity-settled and cash-settled share-based options to eligible employees under various stock option schemes established after June 19, 1999.
These stock options are measured at the fair value of the equity instruments at the grant date, based on option valuation model (Black Scholes model). The fair value determined at the grant date of the stock options is expensed on a straight-line basis over the vesting period, based on the Companyâs estimate of the equity instruments that will eventually vest, with a corresponding increase in share-based payments reserve in equity.
At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the original estimates, if any, is recognised in the statement of profit and loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the share-based payments reserve in equity.
The equity settlement component is not remeasured at each reporting date. The cash settlement component is remeasured at each reporting date and at settlement date based on the fair value of the liability with any changes in the fair value recognised in the statement of profit and loss.
The dilutive effect of outstanding options if any is reflected as additional share dilution in the computation of diluted earnings per share.
The Company presents basic and diluted earnings per share (''EPS'') data for its ordinary shares. Basic EPS is calculated by dividing the profit attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year.
Diluted EPS is determined by adjusting the statement of profit and loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which includes all stock options granted to employees and Restricted Share Units (''RSU''s'') outstanding.
The Company''s Chief Operating Decision maker is the Executive Vice Chairman and Managing Director who evaluates Company''s performance and allocates resources based on analysis of various performance indicators by business verticals and geographical segmentation of customers. The Company has only one reportable business segment, which is rendering of Services. Segment information has been presented in the consolidated financial statements in accordance with Ind AS 108 ''Operating Segmentsâ notified under the Companies (Indian Accounting Standards) Rules, 2015.
2.20 Financial instruments (A) Initial recognition
Financial assets and financial liabilities are recognised when a Company becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value and subsequently measured at amortised cost, fair value through other comprehensive income (''FVTOCI'') and fair value through profit or loss (''FVTPL''). The classification of financial assets at initial recognition depends on the financial asset''s contractual cash flow
characteristics and the Company''s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient, the Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognised immediately in the statement of profit and loss. Trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient are measured at the transaction price determined under Ind AS 115. Refer to the accounting policies for revenue in note 2.13.
(B) Subsequent measurementa. Non-derivative financial instruments
i) Financial assets carried at amortised cost: A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
ii) Financial assets at FVTOCI: A financial asset is subsequently measured at FVTOCI if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The Company has made an irrevocable election for its investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model.
iii) Financial assets at FVTPL: Financial assets which are not classified in any of the above categories are subsequently fair valued through profit or loss.
iv) Financial liabilities: Financial liabilities are subsequently carried at amortised cost using the effective interest method, except for contingent consideration recognised in a business combination which is subsequently measured at fair value through statement of profit and loss. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
v) Investment in subsidiaries: Investment in subsidiaries is carried at cost in the separate financial statements.
b. Derivative financial instruments:
The Company enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including foreign exchange forward contracts.
Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in the statement of profit and loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in the statement of profit and loss depends on the nature of the hedging relationship and the nature of the hedged item.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income/expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in the statement of profit and loss and is included in ''Other incomeâ.
The Company designates derivative contracts in a cash flow hedging relationship by applying the hedge accounting principles designated in a hedging relationship, used to hedge its risks associated with foreign currency fluctuations relating to certain highly probable forecast transactions.
At the inception of the hedge relationship, the Company documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Company documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk.
These derivative contracts are stated at the fair value at each reporting date.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated under cash flow hedge reserve. The gain or loss relating to the ineffective portion is recognised immediately in the statement of profit and loss.
Amounts previously recognised in other comprehensive income and accumulated in equity relating to (effective portion as described above) are reclassified to the statement of profit and loss in the periods when the hedged item affects profit or loss.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting. Any gain or loss recognised in other comprehensive income and accumulated in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the statement of profit and loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in the statement of profit and loss.
d. De-recognition of financial assets and liabilities Financial assets
The Company de-recognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On de-recognition of a financial asset in its entirety, the difference between the assetâs carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in the statement of profit and loss if such gain or loss would have otherwise been recognised in the statement of profit and loss on disposal of that financial asset.
Financial liabilities
The Company de-recognises financial liabilities when, and only when, the Companyâs obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability de-recognised and the consideration paid and payable is recognised in the statement of profit and loss.
e. Foreign exchange gains and losses
⢠For foreign currency denominated financial assets measured at amortised cost and FVTPL, the exchange differences are recognised in the statement of profit and loss except for those which are designated as hedging instruments in a hedging relationship.
⢠Changes in the carrying amount of investments in equity instruments at FVTOCI relating to changes in foreign currency rates are recognised in other comprehensive income.
⢠For the purposes of recognising foreign exchange gains and losses, FVTOCI debt instruments are treated as financial assets measured at amortised cost. Thus, the exchange differences on the
amortised cost are recognised in the statement of profit and loss and other changes in the fair value of FVTOCI financial assets are recognised in other comprehensive income.
⢠For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments and are recognised in the statement of profit and loss.
⢠The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognised in the statement of profit and loss.
2.21 Determination of fair values
In determining the fair value of its financial instruments, the Company uses a variety ofmethods and assumptions that are based on market conditions and risks existing at each reporting date. The methods used to determine fair value include discounted cash flow analysis, available quoted market prices and dealer quotes. All methods of assessing fair value result in general approximation of value, and such value may never actually be realised.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of asset or liability of market participants when pricing the asset or liability at the measurement date.
Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of Ind AS 102, leasing transactions that are within the scope of Ind AS 116 ''Leasesâ, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 ''Inventoriesâ or value in use in Ind AS 36 '' Impairment of Assetsâ.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the asset or liability.
2.22 Impairment of assets a. Financial assets
The Company recognises loss allowances using the expected credit loss (''ECL'') model for the financial assets which are not fair valued through statement of profit and loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the 12 months ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised as an impairment gain or loss in the statement of profit and loss.
For trade receivables, the Company applies the simplified approach permitted by Ind AS 109 ''Financial Instruments'', which requires expected lifetime losses to be recognised from initial recognition of the receivables. As a practical expedient, the Company uses a provision matrix to determine impairment loss of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. The ECL loss allowance (or reversal) during the year is recognised in the statement of profit and loss.
Other intangible assets, intangible assets under development, property, plant and equipment, capital work-in-progress and ROU assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the cash generating unit (''CGU'') to which the asset belongs. Intangible assets under development are tested for impairment annually. The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Company''s CGUs to which the individual assets are allocated.
If such assets are considered to be impaired, the impairment to be recognised in the statement of profit and loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the statement of profit and loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in prior years.
2.23 Cash dividend to equity holders
The Company recognises a liability to make cash distributions to equity holders when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
The Company has created an Employee Benefit Trust (''EBT'') for providing share-based payment to its
employees. The Company uses EBT as a vehicle for distributing shares to employees under the employee remuneration schemes. The EBT buys shares of the Company from the market, for giving shares to employees. The Company treats EBT as its extension and shares held by EBT are treated as treasury shares.
Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Companyâs own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognised in capital reserve. Share options exercised during the reporting period are satisfied with treasury shares.
2.25 New and amended standards
The Company applied for the first-time certain standards and amendments, which are effective for annual periods beginning on or after April 1, 2022. The Company has not early adopted any other standard or amendment that has been issued but is not yet effective:
(i) Onerous contracts - Costs of fulfilling a contract -Amendments to Ind AS 37 ''Provisions, Contingent Liabilities and Contingent Assetsâ
An onerous contract is a contract under which the unavoidable of meeting the obligations under the contract costs (i.e., the costs that the Company cannot avoid because it has the contract) exceed the economic benefits expected to be received under it.
The amendments specify that when assessing whether a contract is onerous or loss-making, an entity needs to include costs that relate directly to a contract to provide goods or services including both incremental costs (e.g., the costs of direct labour and materials) and an allocation of costs directly related to contract activities (e.g., depreciation of equipment used to fulfil the contract and costs of contract management and supervision). General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract.
(ii) Reference to the conceptual framework - Amendments to Ind AS 103 ''Business Combinationsâ
The amendments replaced the reference to the ICAIâs "Framework for the Preparation and Presentation of Financial Statements under Indian Accounting Standards" with the reference to the "Conceptual Framework for Financial Reporting under Indian Accounting Standard" without significantly changing its requirements.
The amendments also added an exception to the recognition principle of Ind AS 103 to avoid the issue of potential ''day 2â gains or losses arising for liabilities and contingent liabilities that would be within the scope of Ind AS 37 or Appendix C, Levies, of Ind AS 37, if incurred separately. The exception requires entities to apply the criteria in Ind AS 37 or Appendix C, Levies, of Ind AS 37, respectively, instead of the Conceptual Framework, to determine whether a present obligation exists at the acquisition date.
The amendments also add a new paragraph to Ind AS 103 to clarify that contingent assets do not quali
Mar 31, 2022
1. Corporate information
Cyient Limited (''Cyient'' or ''the Companyâ) is engaged in providing global technology services and solutions specialising in geospatial, engineering design, IT solutions and data analytics. The Company is a public limited Company incorporated in India and has its headquarters and development facilities in India and serves a global customer base through its subsidiaries in the United States of America (USA), United Kingdom (UK), Germany, Japan, Australia, Singapore and India. Cyient''s range of services include digitisation of drawings and maps, photogrammetry, computer aided design/engineering (CAD/CAE), design and modelling, repair development engineering, reverse engineering application software development, software products development, consulting, analytics and implementation. Cyient specialises in software services and solutions for the manufacturing, utilities, telecommunications, transportation & logistics, local government and financial services markets.
The Company''s shares are listed on the BSE Limited and National Stock Exchange of India Limited.
The registered office of the Company is located at 4th Floor, "A" Wing, Plot No. 11, Software Units Layout, Infocity, Madhapur, Hyderabad 500 081, India.
The financial statements were authorised for issue in accordance with a resolution of the directors on April 21, 2022.
2. Significant accounting policiesi. Statement of compliance
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III), as applicable to the financial statements.
ii. Basis of preparation and presentation
These financial statements have been prepared on a historical cost basis except for the following assets and liabilities which have been measured at fair value
a) Derivative financial instruments and b) Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments) and consistent with previous year subject to changes
in accounting policies. The financial statements are presented in INR and all values are rounded to the nearest millions, except when otherwise indicated.
Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it is:
⢠Expected to be realised or intended to be sold or consumed in normal operating cycle.
⢠Held primarily for the purpose of trading
⢠Expected to be realised within twelve months after the reporting period, or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
⢠It is expected to be settled in normal operating cycle
⢠It is held primarily for the purpose of trading
⢠It is due to be settled within twelve months after the reporting period, or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
iii. Use of estimates and judgements
The preparation of the financial statements in conformity with Ind AS requires the management to make judgements, estimates and assumptions considered in the reported amounts of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statements and the reported amounts of income and expenditure for the periods presented. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable.
Future results could differ from these estimates. Estimates and underlying assumptions are reviewed on
an ongoing basis. The effects of changes in accounting estimates are reflected in the financial statements in the period in which results are known and, if material, are disclosed in the financial statements.
Significant areas of estimation of uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements such as:
⢠Impairment assessment of Investments and Intangible assets under development
⢠Revenue recognition and related cost estimation
⢠Share based payments
⢠Provision for income tax and recoverability of deferred tax assets
⢠Fair Value measurement of financial instruments
⢠Allowance for credit losses on receivables and unbilled revenue
Estimation of uncertainties relating to the global health pandemic from COVID-19
The Company has considered the possible effects that may result from the pandemic relating to COVID-19 on the carrying amounts of receivables, unbilled revenues, investments and intangible assets. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of this pandemic, the Company, as at the date of approval of these financial statements, has used internal and external sources of information including credit reports and related information, economic forecasts and consensus estimates from market sources on the expected future performance of the Company. The Company has performed sensitivity analysis on the assumptions used and, based on the current estimates, expects the carrying amount of these assets will be recovered. The impact of COVID-19 on the Companyâs financial statements may differ from that estimated as at the date of approval of these financial statements.
iv. Foreign currency translationFunctional and presentation currency
The financial statements are presented in Indian rupees, which is the functional and presentation currency of the Company.
In preparing the financial statements of the Company, transactions in currencies other than the entityâs functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. Foreign-currency denominated monetary assets and liabilities are translated at the exchange rate prevailing on the balance sheet date. Exchange
gains and losses arising on settlement and restatement are recognised in the statement of profit and loss. Non-monetary assets and non-monetary liabilities denominated in a foreign currency and measured at fair value are translated at the exchange rate prevalent at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Transaction gains or losses realised upon settlement of foreign currency transactions are included in determining net profit for the period in which the transaction is settled.
v. Property, plant and equipment
Property, plant and equipment are stated at cost, less accumulated depreciation and impairment, if any. Costs directly attributable to the acquisition are capitalised until the property, plant and equipment are ready for use, as intended by management. Capital work in progress is stated at cost, net of accumulated impairment loss, if any.
The Company depreciates property, plant and equipment over their estimated useful lives using the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets has been assessed, based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support. Freehold land is not depreciated.
|
Type of asset |
Useful life |
|
Building |
28 years |
|
Plant and equipment |
10 years |
|
Computers |
3 years |
|
Leasehold |
Shorter of lease period or |
|
Improvements |
estimated useful lives |
|
Furniture and fixtures |
10 years |
|
Electrical installations |
10 years |
|
Vehicles |
8 years |
Depreciation methods, useful lives and residual values are reviewed periodically including at each financial year-end.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in other income of the statement of profit and loss.
An intangible asset is de-recognised on disposal, or when no future economic benefits are expected from use. Gains or losses arising from de-recognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in ''other incomeâ of statement of profit and loss when the asset is de-recognised.
Expenditure incurred towards development is eligible for capitalisation are carried as intangible assets under development where such assets are not yet ready for their intended use.
Amortisation methods and useful lives are reviewed periodically at each financial year end.
Research and development costs
Research costs are expensed as incurred. Development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, future economic benefits are probable, availability of resources to complete the asset is established, the Company has intention and ability to complete and use the asset and the costs are reliably measured, in which case such expenditure is capitalised. The amount capitalised comprises expenditure that can be directly attributed or allocated on a reasonable and consistent basis for creating, producing and making the asset ready for its intended use.
Amortization and impairment of development cost
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised over the period of expected future benefit. Amortisation expense is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
During the period of development, the asset is tested for impairment annually.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
vi. Intangible assets
Intangible assets are stated at cost less accumulated amortisation and impairment.
Intangible assets are amortised over their estimated useful life on a straight line basis as follows:
|
Type of asset |
Useful life |
|
Computer software |
3 years / Over the period of the respective project |
|
Customer contracts |
1 year |
vii. Leases
Company as a lessee
The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
At the date of commencement of the lease, the Company recognizes a right-of-use asset ("ROU") and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
i) Right-of-use assets
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of lease liabilities.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. The right-of-use assets are also subject to impairment.
|
ROU asset |
Useful lives |
|
Leasehold land |
15-33 years |
|
Buildings |
3-15 years |
|
Computers |
2-4 years |
ii) Lease liabilities
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of the leases. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made or a change in the assessment of extension or termination options. Lease liabilities are remeasured with
a corresponding adjustment to the related right of use asset if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments).
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
For operating leases, rental income is recognized on a straight-line basis over the term of the relevant lease.
The income tax expense or credit for the period is the tax payable on the taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
Current and deferred tax is recognised in statement of profit and loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or equity, respectively.
The current tax and deferred tax is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period where the Company operates and generate taxable income.
Deferred tax is provided in full, using the balance sheet method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit / loss.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in subsidiaries, branches and interest in joint arrangements where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax for the year. MAT credit is recognised in accordance with tax laws in India as a deferred tax asset only to the extent that is probable that the Company will pay normal income tax during the specified period i.e. the period for which MAT credit is allowed to be carried forward. The Company reviews the MAT credit at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal income tax during the specified period. In the situations where one or more units in the Company are entitled to a tax holiday under the Income-tax Act, 1961 enacted in India or tax laws prevailing in the respective tax jurisdictions where they operate, no deferred tax (asset or liability) is recognized in respect of temporary differences which reverse during the tax holiday period, to the extent the concerned unitâs gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of temporary differences which reverse after the tax holiday period is recognized in the year in which the temporary differences originate. However, the Company restricts recognition of deferred tax assets to the extent it is probable that sufficient future taxable income will be available against which such deferred tax assets can be realized. For recognition of deferred taxes, the temporary differences which originate first are considered to reverse first.
Cash comprises cash on hand, in bank and demand deposits with banks and with financial institutions. The Company considers all highly liquid financial instruments, which are readily convertible into cash and have original maturities of three months or less from the date of purchase, to be cash equivalents. Such cash equivalents are subject to insignificant risk of changes in value.
Cash flows are reported using indirect method, whereby profit / (loss) after tax is adjusted for the effects of transaction of non- cash nature and any deferrals or accruals of past or future cash receipts or payments for the year. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
Ordinary shares are classified as equity. Shares bought back are shown as a deduction from equity. No gain or loss is recognised in the statement of profit and loss on purchase, sale, issue or cancellation of equity instruments, except in case of employee stock options. Incremental costs directly attributable to the issuance of equity shares or buyback of equity shares are recognised as a deduction from equity, net of taxes.
xi. Provisions and contingent liabilities Provisions
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.
Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as an interest expense. Provisions are not recognised for future operating losses.
Provisions for onerous contracts are recognised when the expected benefits to be desired by the company from a contract are lower than unavoidable costs of meeting to future obligations under the contract and are measured at the present value of lower than expected net cost of fulfilling the contract and expected cost of terminating the contract.
Contingent liabilities are not recognised in the financial statements. A contingent asset is neither recognised nor disclosed in the financial statements.
xii. Revenue
The Company derives revenue primarily from services and solutions specialising in geospatial, engineering design, analytics, network and operations solutions. Revenue is measured based on the consideration specified in a contract with a customer. The Company recognizes revenue when it transfers control over a product or a service to a customer. The method for recognizing revenues and costs depends on the nature of services rendered as mentioned below:
a) Time and material: Revenue from time and material contracts are recognized as the related services are performed, which is pursued based on the efforts spent and agreed rate with the customer. Revenue from the end of the last invoicing to the reporting date is recognized as unbilled revenue.
b) Fixed price contracts: Revenue from fixed-price contracts is recognized as per the ''percentage-of-completionâ method, where the performance obligations are satisfied over time and when there is no uncertainty as to measurement or collectability of consideration. When there is uncertainty as to measurement or ultimate collectability, revenue recognition is postponed until such uncertainty is resolved. Percentage of completion is determined based on the project costs incurred to date as a percentage of total estimated project costs required to complete the project. The input method has been used to measure the progress towards completion as there is direct relationship between input and productivity. In certain projects, a fixed quantum of service or output units is agreed at a fixed price for a fixed term. In such contracts, revenue is recognised with respect to the actual output achieved till date as a percentage of total contractual output. Any residual service unutilised by the customer is recognised as revenue on completion of the term.
c) Maintenance contracts: Revenue from fixed-price maintenance contracts are recognised pro-rata over the term of the maintenance arrangement.
Revenue from contract with customers is recognised by applying revenue recognition criteria specified in Ind AS 115 for each distinct performance obligation. The arrangement with customer specify services to be rendered which meet criteria of performance obligations. For allocation, transaction price, the Company measures the revenue in respect of each performance obligation of a contract at its relative standalone selling price.
Contract modifications are accounted for when additions, deletions or changes are approved either to the contract scope or contract price. The accounting for modifications of contracts involves assessing whether the services added to an existing contract are distinct and whether the pricing is at the standalone selling price. Services that are not distinct are accounted for on a cumulative catchup basis, while those that are distinct are accounted for prospective, either as a separate contract, if the additional services are priced at the standalone selling price, or as a termination of existing contract and creation of a new contract if not priced at the standalone selling price.
The Company classifies the right to consideration in exchange for deliverables as either a receivable or as unbilled revenue. A receivable is a right to consideration that is unconditional upon passage of time. Revenue in excess of invoicing are classified as contract assets (unbilled revenue) while invoicing in excess of revenue are classified as contract liabilities (unearned revenues).
The Company accounts for volume discounts and pricing incentives to customers as a reduction of revenue
based on the ratable allocation of discounts/incentives to each of the underlying performance obligation that corresponds to the progress by the customer towards earning the discount/incentive.
The Company presents revenues net of indirect taxes in the statement of profit and loss.
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably.
Interest income is recognised on a time proportion basis taking into account the amount outstanding and rate applicable in the transaction.
Dividend income is recognised when the Companyâs right to receive dividend is established.
Foreign currency gains and losses are reported on a net basis. This includes the changes in the fair value of foreign exchange derivative instruments, which are accounted at fair value through profit or loss.
xiv. Government grants/incentives
Government grants are recognised when there is a reasonable assurance that:
a) The Company will comply with the conditions attached to them; and
b) The grant will be received.
Export entitlements from government authorities are recognised in the statement of profit and loss when the right to receive credit as per the terms of the scheme is established in respect of the exports made by the Company, and where there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds. Grants are recognised net of attributable expenses.
Employee benefits include provident fund, superannuation fund, employeeâs state insurance scheme, gratuity fund and compensated absences.
Contributions in respect of Employees Provident Fund and Pension Fund which are defined contribution schemes, are made to a fund administered and managed by the Government ofIndia and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.
Contributions under the superannuation plan which is a defined contribution scheme, are made to a fund administered and managed by the Life Insurance Corporation of India and are charged as an expense based
on the amount of contribution required to be made and when services are rendered by the employees.
Defined benefit plans Gratuity
The Company accounts for its liability towards Gratuity based on actuarial valuation made by an independent actuary as at the balance sheet date using projected unit credit method. The liability recognised in the balance sheet in respect of the gratuity plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of the plan assets.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation. The net interest cost is calculated by applying the discount rate to the net balance of the defined obligation and the fair value of plan assets. This cost is included in the employee benefit expense in the statement of profit and loss. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in the statement of profit and loss as past service cost.
The employees of the Company are entitled to compensated absences. The employees can carryforward a portion of the unutilised accrued compensated absence and utilise it in future periods or receive cash compensation at retirement or termination of employment. The Company records an obligation for compensated absences in the period in which the employee renders the services that increase this entitlement. The Company measures the expected cost of compensated absence based on actuarial valuation made by an independent actuary as at the balance sheet date on projected unit credit method.
Other short-term employee benefits
Other short-term employee benefits, including overseas social security contributions and performance incentives expected to be paid in exchange for the services rendered by employees are recognised during the period when the employee renders service.
xvi. Share based payments
The Company recognizes compensation expense relating to share based payments in the statement of profit and loss, using fair value in accordance with Ind AS 102, Share
based payments. The Company issues equity-settled and cash-settled share based options to eligible employees under various stock option schemes established after June 19, 1999.
These stock options are measured at the fair value of the equity instruments at the grant date, based on option valuation model (Black Scholes model). The fair value determined at the grant date of the stock options is expensed on a straight-line basis over the vesting period, based on the Companyâs estimate of the equity instruments that will eventually vest, with a corresponding increase in share based payments reserve in equity.
At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the original estimates, if any, is recognised in statement of profit and loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the share based payments reserve in equity.
The equity settlement component is not remeasured at each reporting date. The cash settlement component is remeasured at each reporting date and at settlement date based on the fair value of the liability with any changes in the fair value recognised in the statement of profit and loss.
The dilutive effect of outstanding options if any is reflected as additional share dilution in the computation of diluted earnings per share.
The Company presents basic and diluted earnings per share ("EPS") data for its ordinary shares. Basic EPS is calculated by dividing net profit attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year.
Diluted EPS is determined by adjusting the net profit attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which includes all stock options granted to employees and RSUâs outstanding.
The Companyâs Chief Operating Decision maker is the Managing Director and Chief Executive Officer who evaluates Companyâs performance and allocates resources based on an analysis of various performance indicators by business verticals and geographical segmentation of customers. The Company has only one reportable business segment, which is rendering of Services. Segment information has been presented in the Consolidated Financial Statements in accordance
with Ind AS 108 notified under the Companies (Indian Accounting Standards) Rules, 2015.
(A) Initial recognition:
Financial assets and financial liabilities are recognised when a Company becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value and subsequently measured at amortised cost, fair value through other comprehensive income and fair value through profit or loss. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or liabilities at fair value through profit or loss are recognised immediately in statement of profit and loss.
(B) Subsequent measurement
a. Non-derivative financial instruments
i) Financial assets carried at amortised cost: A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
ii) Financial assets at fair value through other comprehensive income: A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The Company may also make an irrevocable election for its investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model.
iii) Financial assets at fair value through profit or loss: Financial assets which are not classified in any of the above categories are subsequently fair valued through profit or loss.
iv) Financial liabilities: Financial liabilities are subsequently carried at amortised cost using the effective interest method, which is subsequently measured at fair value through profit and loss. For trade and other payables maturing within one year from the Balance Sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
v) Investment in subsidiaries: Investment in subsidiaries is carried at cost in the separate financial statements.
b. Derivative financial instruments
The Company enters into a variety of derivative financial instruments to manage its exposure to foreign exchange rate risks, including foreign exchange forward contracts.
Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in statement of profit and loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in statement of profit and loss depends on the nature of the hedging relationship and the nature of the hedged item.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income/ expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in statement of profit and loss and is included in the "Other income".
The Company designates derivative contracts in a cash flow hedging relationship by applying the hedge accounting principles designated in a hedging relationship, used to hedge its risks associated with foreign currency fluctuations relating to certain highly probable forecast transactions.
At the inception of the hedge relationship, the Company documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Company documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk.
These derivative contracts are stated at the fair value at each reporting date. The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated under cash flow hedge reserve. The gain or loss relating to the ineffective portion is recognised immediately in statement of profit and loss.
Amounts previously recognised in other comprehensive income and accumulated in equity relating to (effective portion as described above) are reclassified to statement of profit and loss in the periods when the hedged item affects profit or loss.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting. Any gain or loss recognised in other comprehensive income and accumulated in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in statement of profit and loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in statement of profit and loss.
d. De-recognition of financial assets and liabilities: Financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralized borrowing for the proceeds received.
On de-recognition of a financial asset in its entirety, the difference between the assetâs carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in statement
assessing fair value result in general approximation of value, and such value may never actually be realised.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of asset or liability of market participants when pricing the asset or liability at the measurement date.
Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of Ind AS 102, leasing transactions that are within the scope of Ind AS 116, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the asset or liability.
xxi. Impairment of assets a. Financial assets
The Company recognises loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit and loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised as an impairment gain or loss in statement of profit and loss.
For trade receivables, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments,
of profit and loss if such gain or loss would have otherwise been recognised in statement of profit and loss on disposal of that financial asset.
The Company derecognises financial liabilities when, and only when, the Companyâs obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in statement of profit and loss.
e. Foreign exchange gains and losses
⢠For foreign currency denominated financial assets measured at amortised cost and FVTPL, the exchange differences are recognised in statement of profit and loss except for those which are designated as hedging instruments in a hedging relationship.
⢠Changes in the carrying amount of investments in equity instruments at FVTOCI relating to changes in foreign currency rates are recognised in other comprehensive income.
⢠For the purposes ofrecognising foreign exchange gains and losses, FVTOCI debt instruments are treated as financial assets measured at amortised cost. Thus, the exchange differences on the amortised cost are recognised in statement of profit and loss and other changes in the fair value of FVTOCI financial assets are recognised in other comprehensive income.
⢠For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments and are recognised in the statement of profit and loss.
⢠The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognised in statement of profit and loss.
xx. Determination of fair values
In determining the fair value of its financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The methods used to determine fair value include discounted cash flow analysis, available quoted market prices and dealer quotes. All methods of
which requires expected lifetime losses to be recognised from initial recognition of the receivables. As a practical expedient, the Company uses a provision matrix to determine impairment loss of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. The ECL loss allowance (or reversal) during the year is recognised in the statement of profit and loss.
Property, plant and equipment, ROU assets, Capital work-in-progress, Intangible assets and intangible assets under development are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the CGU to which the asset belongs. Intangible assets under development are tested for impairment annually. The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the CGUs to which the individual assets are allocated.
If such assets are considered to be impaired, the impairment to be recognised in the statement of profit and loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the statement of profit and loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in prior years.
xxii. Cash dividend to equity holders
The Company recognises a liability to make cash distributions to equity holders when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
The Company has created an Employee Benefit Trust (EBT) for providing share-based payment to its employees. The Company uses EBT as a vehicle for distributing shares to
employees under the employee remuneration schemes. The EBT buys shares of the Company from the market, for giving shares to employees. The Company treats EBT as its extension and shares held by EBT are treated as treasury shares.
Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Companyâs own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognised in capital reserve. Share options exercised during the reporting period are satisfied with treasury shares.
xxiv. New and amended standards
The Company applied for the first-time aforesaid new standards and amendments, which are effective for annual periods beginning on or after April 1, 2021. The Company has not early adopted any other standard or amendment that has been issued but is not yet effective.
(i) Interest Rate Benchmark Reform - Phase 2: Amendments to Ind AS 109, Ind AS 107, Ind AS 104 and Ind AS 116
The amendments provide temporary reliefs which address the financial reporting effects when an interbank offered rate (IBOR) is replaced with an alternative nearly risk-free interest rate (RFR). The amendment includes the following practical expedients:
- A practical expedient to require contractual changes, or changes to cash flows that are directly required by the reform, to be treated as changes to a floating interest rate, equivalent to a movement in a market rate of interest
- Permit changes required by IBOR reform to be made to hedge designations and hedge documentation without the hedging relationship being discontinued
- Provide temporary relief to entities from having to meet the separately identifiable requirement when an RFR instrument is designated as a hedge of a risk component
These amendments had no impact on the financial statements of the Company. The Company intends to use the practical expedients in future periods if they become applicable.
(ii) Conceptual framework for financial reporting under Ind AS issued by ICAI
The Framework is not a Standard and it does not override any specific standard. Therefore, this does not form part of a set of standards pronounced by the standard-setters. While, the Framework is primarily meant for the standard-setter for formulating the standards, it has relevance to the preparers in certain situations such as to develop consistent accounting policies for areas that
costs to sell and its value in use" are replaced with "higher of an assetâs fair value less costs of disposal and its value in use". The consequential amendments are made in Ind AS 105, Ind AS 16 and Ind AS 28.
These amendments had no impact on the financial statements of the Company.
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 23, 2022, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2022, as below:
(vi) Ind AS 16 - Property Plant and equipment
The amendment clarifies that excess of net sale proceeds of items produced over the cost of testing, if any, shall not be recognised in the profit or loss but deducted from the directly attributable costs considered as part of cost of an item of property, plant, and equipment. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2022. The Company has evaluated the amendment and there is no significant impact on its consolidated financial statements.
(vii) Ind AS 103 - Business Combinations
The amendments specify that to qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed must meet the definitions of assets and liabilities in the Conceptual Framework for Financial Reporting under Indian Accounting Standards (Conceptual Framework) issued by the Institute of Chartered Accountants of India at the acquisition date. These changes do not significantly change the requirements of Ind AS 103. The Company does not expect the amendment to have any significant impact in its financial statements.
(viii) Ind AS 37 - Provisions, Contingent Liabilities and Contingent Assets
The amendment specifies that the ''cost of fulfillingâ a contract comprises the ''costs that relate directly to the contractâ. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract). The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2022, although early adoption is permitted. The Company has evaluated the amendment and the impact is not expected to be material.
are not covered by a standard or where there is choice of accounting policy, and to assist all parties to understand and interpret the Standards.
The amendments made in following standards due to Conceptual Framework for Financial Reporting under Ind AS includes amendment of the footnote to the definition of an equity instrument in Ind AS 102- Share Based Payments, footnote to be added for definition of liability i.e. definition of liability is not revised on account of revision of definition in conceptual framework in case of Ind AS 37 - Provisions, Contingent Liabilities and Contingent Assets etc.
The MCA has notified the Amendments to Ind AS consequential to Conceptual Framework under Ind AS vide notification dated June 18, 2021, applicable for annual periods beginning on or after April 1, 2021. Accordingly, the Conceptual Framework is applicable for preparers for accounting periods beginning on or after April 1,2021.
These amendments had no impact on the financial statements of the Company.
(iii) Ind AS 116: COVID-19 related rent concessions
MCA issued an amendment to Ind AS 116 Covid-19-Related Rent Concessions beyond June 30, 2021 to update the condition for lessees to apply the relief to a reduction in lease payments originally due on or before June 30, 2022 from June 30, 2021. The amendment applies to annual reporting periods beginning on or after April 1, 2021. In case a lessee has not yet approved the financial statements for issue before the issuance of this amendment, then the same may be applied for annual reporting periods beginning on or after April 1,2020.
These amendments had no impact on the financial statements of the Company.
(iv) Ind AS 103: Business combination
The amendment states that to qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed must meet the definitions of assets and liabilities in the Framework for the Preparation and Presentation of Financial Statements in accordance with Indian Accounting Standards* issued by the Institute of Chartered Accountants of India at the acquisition date. Therefore, the acquirer does not recognise those costs as part of applying the acquisition method. Instead, the acquirer recognises those costs in its post-combination financial statements in accordance with other Ind AS.
These amendments had no impact on the financial statements of the Company.
(v) Amendment to Ind AS 105, Ind AS 16 and Ind AS 28
The definition of "Recoverable amount" is amended such
Mar 31, 2016
1. Corporate Information
(Refer to Note No. 1 of the standalone financial statements)
Cyient Limited (''Cyient'' or ''the Company'') is engaged in providing
global technology services and solutions specialising in geospatial,
engineering design and IT solutions. The Company has its headquarters
and development facilities in India and serves a global customer base
through its subsidiaries in United States of America (USA), United
Kingdom (UK), Germany, Japan, Australia, Singapore and India. Cyient''s
range of services include digitisation of drawings and maps,
photogrammetry, computer aided design/engineering (CAD/CAE), design and
modelling, repair development engineering, reverse engineering
application software development, software products development,
consulting, analytics and implementation. Cyient specialises in
software services and solutions for the manufacturing, utilities,
telecommunications, transportation & logistics, local government and
financial services markets.
The Company changed its name from Infotech Enterprises Limited to
Cyient Limited w.e.f. May 07, 2014 post approval of the Board of
Directors and the Shareholders through postal ballot.
2. Related Party Transactions
(Refer to Note No. 29 of the standalone financial statements)
Note:
(i) During the previous year, the Company acquired 51% stake in Invati
Insights Private Limited on October 15, 2014. The acquisition was
executed through a share purchase agreement for a consideration of Rs.
87,938,018. Subsequent to the acquisition, Invati Insights Private
Limited acquired 100% stake in Invati Insights LLC, USA on October 16,
2014. Consequent to the acquisition, Invati Insights Private Limited
was renamed to Cyient Insights Private Limited.
(ii) During the previous year, on September 05, 2014, the Company
incorporated a wholly owned subsidiary, Cyient Australia Pty Limited,
in Melbourne, Australia. Cyient Australia Pty Limited commenced
commercial operations during the year. The Company invested an amount
of Rs. 46,265.
(iii) During the previous year, the Company acquired 74% stake in
Rangsons Electronics Private Limited, India and its wholly owned
subsidiary, Techno Tools Precision Engineering Private Limited on
February 04, 2015. The acquisition was executed through a share
purchase agreement for a consideration of Rs. 2,925,310,754.
(iv) During the previous year, with effect from April 01, 2014, the
Company acquired 100% stake in Softential Inc, through its wholly-owned
subsidiary Cyient Inc. (formerly Infotech Enterprises America Inc.).
Softential Inc, merged with Cyient Inc. (formerly Infotech Enterprises
America Inc.) with effect from April 01, 2015.
(v) On May 07, 2015, the Company incorporated a wholly owned
subsidiary, Cyient Singapore Private Limited, in Singapore. Cyient
Singapore Private Limited commenced commercial operations during the
year. The Company invested an amount of Rs. 238,179,600.
(vi) The Company disinvested its 100% stake in Infotech Enterprises
Information Technology Services Private Limited, India and its
wholly-owned subsidiary, Infotech Enterprises Information Technology
Services GmbH, Germany, on September 16, 2015. The Company ceased to
consolidate these entities from its consolidated financial results
w.e.f September 01, 2015 for convenience as the transactions between
September 01, 2015 and September 15, 2015 were not material.
(vii) The Company merged its wholly-owned subsidiary Infotech
Geospatial (India) Private Limited, India with effect from April 1,
2015.
(viii) On March 25, 2016, the Company incorporated a wholly owned
subsidiary, Cyient Engineering (Beijing) Limited, in Beijing, China,
which has not commenced commercial operations during the year.
4. Segment Information
(Refer to Note No. 28 of the standalone financial statements)
Segment information has been presented in the Consolidated Financial
Statements as permitted by Accounting Standard (AS 17) on Segment
Reporting specified under Section 133 of the Companies Act, 2013, read
with Rule 7 of the Companies (Accounts) Rules, 2014.
5. Stock Option Plans
(Refer to Note No. 35 of the standalone financial statements)
Infotech Employee Stock Offer Scheme 1999 (ESOP Plan)
In 1998-99, the Company set up ESOP plan and allotted 80,900 equity
shares of Rs. 10 each at a premium of Rs. 100 per share to the Infotech
ESOP trust. The trust on recommendation of management and upon receipt
of full payment upfront transfers the equity shares in the name of the
selected employees. The Company modified the ESOP Plan and adjusted the
number of options and exercise price on account of bonus issue and
stock split cum bonus issue during 2002-03, 2006-07 and 2010-11
respectively.
Associate Stock Option Plans (ASOP Plan)
The Company currently has three ASOP plans - ASOP 2002, ASOP 2004 and
ASOP 2008. Under each of these schemes, options will be issued to
employees at an exercise price which shall not be less than the market
price on the date of the grant. These options vest over a period
ranging from one to three years from the date of grant, starting with
10% at the end of the first year, 15% at the end of one and half years,
20% after two years, 25% at the end of two and half years and 30% at
the end of the third year.
a. The Company has disputed various demands (including draft notice of
demand) raised by Income Tax authorities for the assessment years
1997-98 to 2010-11 (March 31, 2015 - 1997-98 to 2010-11). The orders
are pending at various stages of appeals. The aggregate amount of
disputed tax not provided for is Rs. 155,897,185 (March 31, 2015 - Rs.
138,351,334). The Company is confident that these appeals will be
decided in its favour.
b. The Company has disputed various demands raised by the Sales Tax
authorities for the financial years 2004-05 to 2009-10 and 2012 - 13
(March 31, 2015 - 2004-05 to 2009-10). The Company has filed appeals,
which are pending with the appropriate authorities. The aggregate
amount of disputed tax not provided for is Rs. 20,098,231 (March 31,
2015 - Rs. 20,096,061). The Company is confident that these appeals
will be decided in its favour. The above does not include show cause
notices received by the Company.
c. The Company has disputed various demands raised by the Service Tax
authorities for the financial years 2006-07 to 2013-14 (March 31, 2015
-2006-07 to 2012-13). The Company has filed appeals, which are pending
with the appropriate authorities. The aggregate amount of disputed tax
not provided for is Rs. 140,104,649 (March 31, 2015 - Rs. 172,263,324).
The Company is confident that these appeals will be decided in its
favour. The above does not include show cause notices received by the
Company.
d. During the previous year, the Company received an order from
Provident Fund (PF) authorities regarding PF payment on certain
allowances given by the Company to its employees for the years 2010-11
to 2012-13. The Company appealed against the order and the same is
pending before Provident Fund Appellate Tribunal. The Company paid Rs.
5,136,244 (March 31, 2015 - Rs. 5,136,244) under protest, being 20% of
the total demand of Rs. 25,681,216 (March 31, 2015 - Rs. 25,681,216).
e. The Government of India notified an amendment to the Payment of
Bonus Act, 1961 whereby the applicable slabs as well as coverage limit
was enhanced. The said amendment was made effective April 1, 2014. The
Company has contested the retrospective applicability of the amendment
for the financial year 2014-15 in the High Court of Judicature at
Hyderabad for the states of Telangana and Andhra Pradesh. The aggregate
amount of liability pertaining to the financial year 2014-15, not
provided for, is Rs. 92,177,948.
f. Corporate guarantee given to subsidiary''s bankers to obtain line of
credit Rs. 5,796,822,286 (March 31, 2015 - Rs. 1,505,387,236).
Note:
(i) Balances with banks include deposits amounting to Rs. 1,991,241
(March 31, 2015 - Rs. 1,663,581) and margin monies amounting to Rs.
6,231,438 (March 31, 2015 - Rs. 1,414,970) which have an original
maturity of more than 12 months from the Balance Sheet Date.
(ii) Includes deposits placed in lien for credit facilities aggregating
Rs. 21,837,628 (March 31, 2015 - Rs. 20,212,938) and margin monies
amounting Rs. 6,231,438 (March 31, 2015 - Rs. 1,414,970).
10. Amalgamation:
(Refer to Note No. 40 of the standalone financial statements)
During the year, Infotech Geospatial (India) Private Limited (IGIL), a
wholly owned subsidiary of Cyient Limited (formerly Infotech
Enterprises Limited) ("the Company") was amalgamated with the Company
w.e.f. April 1, 2015 ("Appointed Date") pursuant to Scheme of
Amalgamation approved by the Hon''ble High Court of Judicature, Andhra
Pradesh & Telangana vide its order dated March 02, 2016 and filed with
Registrar of Companies on March 31, 2016. Consequently all the Assets,
Liabilities and Reserves stand transferred and vested in the Company
retrospectively from April 1, 2015. The amalgamation has been
accounted for under the "Pooling of Interests" method as prescribed by
Accounting Standard - 14. Accordingly, the assets, liabilities and
reserves have been taken over at their book values and in the same
form. As Infotech Geospatial (India) Private Limited was a wholly owned
subsidiary of the Company, no additional shares were issued to effect
the Amalgamation. Increase in Authorised share capital of the Company
on amalgamation is pending filing of relevant documents with Registrar
of Companies.
11. Disposal of Investment in Infotech Enterprises Information
Technology Services Private Limited
(Refer to Note No. 39 of the standalone financials statements)
The Company disinvested its 100% stake in Infotech Enterprises
Information Technology Services Private Limited, India, and its
wholly-owned subsidiary, Infotech Enterprises Information Technology
Services GmbH, Germany, on September 16, 2015. An amount of Rs.
98,184,877, being excess of sale consideration over the investment, was
recognised as Profit on Sale of Long-term investment.
12. Depreciation & amortisation
(Refer to Note No. 41 of the standalone financial statements)
During the previous year ended March 31, 2015, pursuant to the
transition provisions prescribed in Schedule II to the Companies Act,
2013, the Company has fully depreciated the carrying value of assets,
net of residual value, where the remaining useful life of the asset was
determined to be Nil as on April 1, 2014, and has adjusted an amount of
Rs. 11,314,383 (net of deferred tax of Rs. 5,716,126) against the
opening Surplus balance in the Statement of Profit and Loss under
Reserves and Surplus.
The depreciation expense in the Statement ofProfit and Loss for the
year ended March 31, 2015 was lower by Rs. 52,919,089 consequent to the
change in the useful life of the assets.
13. Exceptional Item
(Refer to Note No. 43 of the standalone financial statements)
Exceptional item relates to provision made towards bonus payable for
the period of April to December 2015 amounting to Rs. 71,629,096
consequent to the amendment to the Payment of Bonus Act, 1965 (i.e the
Payment of Bonus (Amendment) Act, 2015). The liability for the year
2014 - 15 has been disclosed as a contingent liability.
14. Corporate Social Responsibility (CSR)
(Refer to Note No. 38 of the standalone financial statements)
The Company contributes towards Corporate Social Responsibility (CSR)
activities through its trust, Cyient Foundation (formerly Infotech
Enterprises Charitable Trust). As per Section 135 of the Companies Act,
2013, a CSR committee has been formed by the Company. The areas for CSR
activities are promoting education, adoption of schools, medical and
other social projects. Expenses incurred on CSR activities are charged
to the Statement of Profit and Loss under ''Operating, administration
and other expenses'' - Rs. 47,567,491 (2014-15 - Rs. 35,118,562)
15. Regrouping/Reclassification
(Refer to note No. 45 of the standalone financial statements)
Previous year''s figures have been regrouped/reclassified wherever
necessary to correspond with the current year''s classification
/disclosures.
Mar 31, 2014
1. Corporate Information
(Refer to Note No. 1 of the standalone financial statements)
Infotech Enterprises Limited (''Infotech'' or ''the Company'') is engaged
in providing global technology services and solutions specialising in
geospatial, engineering design and IT solutions. The Company has its
headquarters and development facilities in India and serves a global
customer base through its subsidiaries in United States of America
(USA), United Kingdom (UK), Germany, Japan and India. Infotech''s range
of services include digitisation of drawings and maps, photogrammetry,
computer aided design/engineering (CAD/CAE), design and modelling,
repair development engineering, reverse engineering application
software development, software products development, consulting and
implementation. Infotech specialises in software services and solutions
for the manufacturing, utilities, telecommunications, transportation &
logistics, local government and financial services markets.
Notes and references included in the abridged financial statements are
extracted from the standalone financial statements.
2. Related Party Transactions
(Refer to Note No.30 of the standalone financial statements)
Note: The Board of Directors on December 07, 2012 approved the increase
in remuneration payable to the Chief Operating Officer effective April
01, 2012 to not exceed Rs.12,000,000 per annum for the first year and the
remuneration may progressively go up with a contingent 25% hike thereon
each year for the next five years, as per industry trends and practices
and an additional variable salary of 30% to 50% of his cost to Company
based on his key performance indicators agreed at the beginning of the
financial year. The members of the Company approved the increase by
passing a special resolution on January 14, 2013. Pending Central
Government approval, no payment was made for the increase in
remuneration. The remuneration paid during the year is based on the
existing approval from the Central Government vide its approval dated
October 27, 2010.
As at March 31, 2014, the Company did not receive the said approval
from the Central Government. Consequently, the provision made earlier
for the increased remuneration of Rs. 7,440,000 has been reversed in the
financial statements as at March 31, 2014.
3. Earnings Per Share (EPS)
4. Segment Information
(Refer to Note No.29 of the standalone financial statements)
Segment information has been presented in the Consolidated Financial
Statements as permitted by Accounting Standard (AS 17) on Segment
Reporting as notified under the Companies (Accounting Standards) Rules,
2006.
5. Associate Stock Option Plans
(Refer to Note No. 36 of the standalone financial statements)
Infotech Employee Stock Offer Scheme 1999 (ESOP Plan)
In 1998-99, the Company set up ESOP plan and allotted 80,900 equity
shares of Rs. 10 each at a premium of Rs. 100 per share to the Infotech
ESOP trust. The trust on recommendation of management and upon receipt
of full payment upfront transfers the equity shares in the name of the
selected employees. The Company modified the ESOP Plan and adjusted the
number of options and exercise price on account of bonus issue and
stock split cum bonus issue during 2002-03, 2006-07 and 2010-11
respectively.
Associate Stock Option Plans (ASOP Plan)
The company currently has three ASOP plans - ASOP 2002, ASOP 2004 and
ASOP 2008. Under each of these schemes, options will be issued to
employees at an exercise price which shall not be less than the market
price on the date of the grant. These options vest over a period
ranging from one to three years from the date of grant, starting with
10% at the end of the first year, 15% at the end of one and half years,
20% after two years, 25% at the end of two and half years and 30% at
the end of the third year.
Mar 31, 2012
1. Corporate Information
(Refer to Note No. 1 of the annual standalone financial statements)
The Company is engaged in providing global technology services and
solutions specialising in geospatial, engineering design and IT
solutions. Infotech Enterprises Limited (hereinafter referred to as
ÃInfotechÃ) has its headquarters and development facilities in India
and serves a global customer base through its subsidiaries in United
States of America (USA), United Kingdom (UK), Germany, Japan and India.
The CompanyÃs range of services include digitisation of drawings and
maps, photogrammetry, computer aided design/engineering (CAD/CAE),
design and modelling, repair development engineering, reverse
engineering application software development, software products
development, consulting and implementation. Infotech specialises in
software services and solutions for the manufacturing, utilities,
telecommunications, transportation & logistics, local government and
financial services markets.
2. Related Party Transactions
(Refer to Note No. 33 of the annual standalone financial statements)
List of related parties on which the Company is able to exercise
control.
a) Subsidiaries
Name of the Subsidiary Companies
Infotech Enterprises Europe Limited, UK. (IEEL)
Infotech Enterprises Benelux BV, Netherlands - A subsidiary of IEEL
Mapcentric Consulting Limited - A subsidiary of IEEL
Dataview Solutions Limited - A subsidiary of IEEL
Infotech Enterprises America Inc., USA(IEAI)
Infotech Software Solutions Canada Inc., Canada - A subsidiary of IEAI
Infotech Enterprises Electronic Design services Inc. - A subsidiary of
IEAI Wellsco Inc., USA - A subsidiary of IEAI
Infotech Enterprises GmbH, Germany (IEG)
Infotech Enterprises AB, Sweden - A subsidiary of IEG
Infotech Geospatial (India) Limited, India (Refer Note (i) below)
Infotech Enterprises Japan KK, Japan
Infotech Enterprises Information Technology Services Private Limited
Notes:
(i) Became wholly owned subsidiary from November 2, 2011
(ii) TTM Institute of Information Technology Private Limited, India, a
wholly owned subsidiary as at March 31, 2011 was merged with IEL w.e.f.
April 01, 2011
b) Associate
Name of the Associate Company
Infotech Aerospace Services Inc., Puerto Rico, USA
c) Joint Venture
Name of the Joint Venture Company
Infotech HAL Limited, India
4. Quantitative details
(Refer to Note No. 42 of the annual standalone financial statements)
The Company is engaged in the development of Computer Software and
Services. The production and sale of such software and services cannot
be expressed in any generic unit. Hence, it is not possible to give the
quantitative details of sales and the information as required under
Paragraphs 3 and 4C of Part II of Schedule VI to the Companies Act,
1956.
5. Segmental Information
(Refer to Note No. 32 of the annual standalone financial statements)
Segment information has been presented in the Consolidated Financial
Statements as permitted by Accounting Standard (AS 17) on Segment
Reporting as notified under the Companies (Accounting Standards) Rules,
2006.
6. Stock Option Plans
(Refer to Note No. 39 of the annual standalone financial statements)
Infotech Employee Stock Offer Scheme 1999 (ESOP Plan)
In 1998-99, the Company set up ESOP plan and allotted 80,900 equity
shares of Rs. 10 each at a premium of Rs. 100 per share to the Infotech
ESOP trust. The trust on recommendation of management and upon receipt
of full consideration transfers the equity shares in the name of the
selected employees. The Company modified the ESOP Plan and adjusted the
number of options and exercise price on account of bonus issue and
stock split cum bonus issue during 2002-03 and 2006-07 respectively.
As this scheme is established prior to the SEBI Guidelines on the stock
options, there is no cost relating to the grant of options under this
scheme.
Associate Stock Option Plans (ASOP Plan)
The company currently has three ASOP plans - ASOP 2002, ASOP 2004 and
ASOP 2008. Under each of these schemes, options will be issued to
employees at an exercise price which shall not be less than the market
price on the date of the grant. These options vest over a period
ranging from one to three years from the date of grant, starting with
10% at the end of the first year, 15% at the end of one and half years,
20% after two years, 25% at the end of two and half years and 30% at
the end of the third year.
Mar 31, 2011
1. Description of Business
(Refer to Note No. 1 of Schedule 15 of the annual standalone financial
statements)
The Company is engaged in providing global technology services and
solutions specialising in geospatial, engineering design and IT
solutions. Infotech Enterprises Limited (hereinafter referred to as
'Infotech') has its headquarters and development facilities in India
and serves a global customer base through its subsidiaries in United
States of America (USA), United Kingdom (UK), Germany, Japan and India.
The Company's range of services include digitisation of drawings and
maps, photogrammetry, computer aided design/engineering (CAD/CAE),
design and modelling, repair development engineering, reverse
engineering application software development, software products
development, consulting and implementation. Infotech specialises in
software services and solutions for the manufacturing, utilities,
telecommunications, transportation & logistics, local government and
financial services markets.
Mar 31, 2010
1. Basis for Preparation of Financial Statements
The Financial Statements are prepared under the historical cost
convention on an accrual basis of accounting in accordance with the
generally accepted accounting principles ("GAAP"), Accounting standards
notified under Section 211(3C) and other relevant provisions of the
Companies Act, 1956 and in conformity with guide lines issued by
Securities and Exchange Board of India (SEBI) from time to time.
2. Use of Estimates
The preparation of financial statements in conformity with the GAAP
requires management to make estimates that affect the reported amounts
of assets and liabilities and disclosure relating to contingent
liabilities as at the date of the financial statements and the reported
amounts of income and expenditure during the reported year. Examples
include provisions for doubtful debts, employee benefits, provision for
income taxes, the useful lives of depreciable assets and provisions for
impairment.
Accounting estimates could change from period to period. Appropriate
changes in estimates are made as the management becomes aware of
changes in circumstances surrounding the estimates. The effects of
changes in accounting estimates are reflected in the financial
statements in the period in which changes are made and, if material,
their effects are disclosed in the notes to the financial statements.
3. Revenue Recognition
Revenue recognition depends on the arrangements with the customers
which are either on "Time and material" or on a "Time bound
fixed-price" basis.
Revenue from software services performed on a "time and material" basis
is recognised as and when services are performed.
The Company also performs work under "Time bound fixed-price"
arrangements, under which customers are billed, based on completion of
specified milestones and/ or on the basis of man-days/man hours spent
as per terms of the contracts. Revenue from such arrangements is
recognised over the life of the contract using the percentage of
completion method. The cumulative impact of any revision in estimates
of the percentage of work completed is reflected in the year in which
the change becomes known. Provision for estimated losses on such
engagements is made in the year in which such loss becomes probable and
can be reasonably estimated.
Amounts received or billed in advance of services performed are
recorded as unearned revenue. Unbilled revenue, disclosed under loans
and advances, represents amounts recognised based on services performed
in advance of billings in accordance with contract terms.
Income from interest is stated at gross and recognised on a time
proportion basis taking into account the amount outstanding and rate
applicable in the transaction.
Dividend income is recognised when the Companys right to receive
dividend is established.
Revenues from the sale of equipment are recognised upon delivery, which
is when title passes to the customer.
Revenues from fixed-price maintenance contracts are recognised pro-rata
over the period of the contract in which the services are rendered.
Reimbursement of expenditure is recognised under revenue along with
recognition of sale of service to which it relates.
4. Fixed assets, intangible assets and capital work-in- progress
Fixed Assets are stated at actual cost, less accumulated depreciation
and impairment, if any. The actual cost capitalised comprises material
cost, inward freight, installation cost, duties and taxes and other
incidental expenses incurred to acquire/construct/install the assets.
The cost and the accumulated depreciation for fixed assets sold,
retired or otherwise disposed off are removed from the stated values
and the resulting gains and losses are included in the profit and loss
account.
Capital work-in-progress comprises outstanding advances paid to acquire
fixed assets, and the cost of fixed assets that are not yet ready for
their intended use at the reporting date.
Intangible assets are recorded at the consideration paid for
acquisition of such assets and are carried at cost less accumulated
amortisation and impairment, if any.
5. Depreciation and amortisation
Depreciation on fixed assets is provided on the straight- line method
over their estimated useful lives at the rates which are higher than
the rates prescribed under Schedule XIV of the Companies Act, 1956.
Individual assets acquired for less than Rs. 5,000 are fully
depreciated in the year of acquisition.
The estimated useful lives are as follows:
Estimated Useful Lives
Building 28 years
Computers and Software 3 years
Plant and Machinery 10 years
Office Equipment 10 years
Furniture and Fixtures 10 years
Electrical Installation 10 years
Vehicles 5 years
Leasehold Improvements Shorter of lease period or
estimated useful lives
Costs of software purchased for use in the projects are depreciated
over the estimated useful life or over the period of the project
whichever is lower.
6. Investments
Investments are either classified as current or long-term based on
Managements intention at the time of purchase. Current investments
comprising investments in mutual funds are carried at the lower of cost
and fair value. Cost for overseas investments comprises the Indian
rupee value of the consideration paid for the investment translated at
the exchange rate prevalent at the date of investment. Provision is
made to recognise any reduction in the carrying value and any reversal
of such reduction is credited to profit and loss account.
Long-term investments are carried at cost, and provision is made to
recognise any decline, other than temporary, in the value of such
investment.
7. Research and development
Revenue expenditure incurred on research and development is expensed as
incurred. Assets used for research and development activities are
included in fixed assets.
8. Foreign currency transactions
Transactions in foreign currencies are recorded at the exchange rates
prevailing on the date of transaction and exchange differences arising
from foreign currency transactions are recognised in the profit and
loss account. Monetary assets and liabilities denominated in foreign
currency are translated at the rates of exchange at the balance sheet
date and resultant gain or loss is recognised in the profit and loss
account. Non-monetary assets and liabilities are translated at the rate
prevailing on the date of transaction.
The operations of foreign branches of the company are of integral in
nature and the financial statements of these branches are translated
using the same principles and procedures of head office.
The company uses foreign exchange forward contracts to hedge its
exposure to movements in foreign exchange rates. The use of these
foreign exchange forward contracts reduces the risk or cost to the
company and the company does not use those for trading or speculation
purposes.
In case of forward exchange contract or any other financial instruments
that is in substance a forward exchange contract to hedge the foreign
currency risk, the premium or discount arising at the inception of the
contract is amortized as expense or income over the life of the
contract. Exchange differences on such forward exchange contract are
recognised in the statement of profit and loss in the reporting period
in which the exchange rates change.
Gain/Loss on settlement of transaction arising on cancellation or
renewal of such a forward exchange contract is recognised as income or
as expense for the period.
All other derivative exchange contract are valued on a mark to market
basis and any gain or loss on mark to market changes on settlement is
recognised in the profit and loss account.
9. Retirement benefits
Provident fund
Contributions in respect of Employees Provident Fund and Pension Fund
are made to a fund administered and managed by the Government of India
and are charged as incurred on accrual basis.
Superannuation
Contributions under the superannuation plan are made to a fund
administered and managed by the Life Insurance Corporation of India and
are charged as incurred on accrual basis.
Compensated absences
The employees of the Company are entitled to compensated absence. The
employees can carry-forward a portion of the unutilised accrued
compensated absence and utilise it in future periods or receive cash
compensation at retirement or termination of employment for the
unutilised accrued compensated absence. The Company records an
obligation for compensated absences in the period in which the employee
renders the services that increase this entitlement. The Company
measures the expected cost of compensated absence based on actuarial
valuation made by an independent actuary as at the balance sheet date
on projected unit credit method.
Gratuity
The Company also provides for other retirement benefits in the form of
gratuity based on actuarial valuation made by an independent actuary as
at the balance sheet date based on projected unit credit method.
10. Income taxes
Income taxes are accrued in the same period that the related revenue
and expense arise. The Company operates as Export Oriented Unit ("EOU")
and enjoys tax exemptions u/s 10A of Income Tax Act, 1961. A provision
is made for income tax annually, based on tax liability computed, after
considering tax allowances and exemptions. Tax expense for a year
comprises of current tax and deferred tax.
Current income tax expense comprises taxes on income from operations in
India and in foreign jurisdictions. Income tax payable in India is
determined in accordance with the provisions of the Income Tax Act,
1961. Tax expense relating to foreign operations is determined in
accordance with tax laws applicable in countries where such operations
are domiciled.
Deferred tax assets and liabilities are recognised for the future tax
consequences attributable to timing differences that result between the
profit offered for income taxes and the profit as per the financial
statements by each entity in the Company.
Deferred taxes are recognised in respect of timing differences which
originate during the tax holiday period but reverse after the tax
holiday period.
The tax effect is calculated on the accumulated timing differences at
the end of an accounting period based on enacted or substantively
enacted regulations. Deferred tax assets, other than those relating to
unabsorbed depreciation and carry forward business loss, are recognised
only if there is reasonable certainty that they will be realized and
are reviewed for the appropriateness of their respective carrying
values at each reporting date.
MAT paid in accordance with the tax laws, which gives rise to future
economic benefits in the form of tax credit against future income tax
liability, is recognised as an asset in the balance sheet.
11. Operating Lease
Lease rentals in respect of assets taken under operating leases are
charged to profit and loss account on a straight line basis over the
lease term
12. Warranty cost
The Company accrues the estimated cost of warranties at the time when
the revenue is recognised. The accruals are based on the Companys
historical experience of rework hours and service delivery costs.
13. Earnings per share (EPS)
The earnings considered in ascertaining the Companys EPS comprises the
net profit after tax and includes the post tax effect of any extra
ordinary items. The number of shares used in computing Basic EPS is the
weighted average number of shares outstanding during the year. The
number of shares used in computing Diluted EPS comprises of weighted
average shares considered for deriving Basic EPS, and also the weighted
average number of equity shares which could have been issued on the
conversion of all dilutive potential equity shares. Dilutive potential
equity shares are deemed converted as of the beginning of the year,
unless they have been issued at a later date. The diluted potential
equity shares have been adjusted for the proceeds receivable had the
shares been actually issued at fair value (i.e., average market value
of the outstanding shares). The number of shares and potentially
dilutive shares are adjusted for share splits/ reverse share splits and
bonus shares, as appropriate.
14. Employee Stock Options
Stock options granted to the associates of the company and its
subsidiaries under various Stock Option Schemes established after June
19, 1999 are evaluated as per the accounting treatment prescribed under
SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines 1999 issued by Securities Exchange Board of India.
The exercise price is the market price as defined in the SEBI
Guidelines from time to time. i.e. market price equals the latest
available closing price, prior to the date of the meeting of the Board
of Directors in which options are granted/shares are issued, on the
stock exchange on which the shares of the company are listed. If the
shares are listed on more than one stock exchange, then the stock
exchange where there is highest trading volume on the said date is
considered. This methods results in following of Intrinsic Value method
under which no deferred employee compensation is charged to profit and
loss account.
15. Impairment of assets
At each balance sheet date, the management reviews the carrying amounts
of its assets to determine whether there is any indication that those
assets were impaired. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of
impairment loss. Recoverable amount is the higher of an assets net
selling price and value in use. In assessing value in use, the
estimated future cash flows expected from the continuing use of the
asset and from its disposal are discounted to their present value using
a pre-tax discount rate that reflects the current market assessment of
time value of money and the risk specific to the asset.
Reversal of impairment loss is recognised immediately as income in the
profit and loss account.
16. Provisions and contingencies
The company creates a provision if there is a present obligation as a
result of past events, the settlement of which results in an outflow
economic benefits and a reliable estimate can be made of the amount of
obligation. Provisions are determined by the best estimate of the
outflow of economic benefits required to settle the obligation at the
reporting date. A disclosure for a contingent liability is made when
there is a possible obligation or a present obligation that probably
will not require an outflow of resources or where a reliable estimate
of the obligations cannot be made.
17. Cash and cash equivalents
The Company considers all highly liquid financial instruments, which
are readily convertible into cash and have original maturities of three
months or less from the date of purchase, to be cash equivalents.
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