Accounting Policies of FCS Software Solutions Ltd. Company
Mar 31, 2023
1. COROPORATE INFORMATION
FCS Software Solutions Limited (hereinafter referred to as âthe companyâ) is primarily engaged in providing a rage of IT and business services, engineering and product & platform service. The company business consists of software development and marketing and providing support services mainly for corporate business entities in the BPO sectors, software development, e-learning service and other related Information Technology Enabled Services. The company also carries business of leasing or letting out all kind of immovable property including IT Infrastructural property whether freehold, leasehold to any type of person.
The company is a public limited company incorporate and domiciled in India and has its registered office at 205, 2nd Floor, Aggarwal Chamber IV, 27, Veer Sawarkar Block, Vikas Marg, Shakarpur, Delhi - 110092. The Company has its primary listings on the BSE Ltd. and National Stock Exchange of India Limited.
The standalone financial statements for the year ended 31st March 2023 were approved and authorized for issue by the Board of Directors on May 29, 2023.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES2.1 Basis of Preparation of Financial Statements
These financial statements are prepared in accordance with the Indian Accounting Standards (Ind AS) under the historical cost convention on the accrual basis, except for certain financial instruments which are measured at fair values, the provisions of the Companies Act, 2013 (âthe Actâ) (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and the relevant amendment rules issued thereafter.
Accounting policies have been consistently applied except where a newly-issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
These standalone financial statements are prepared in Indian Rupees (âINRâ) which is also the Companyâs functional currency. All Amount is reported in Lakhs of Indian Rupees unless otherwise stated.
The preparation of the financial statements in conformity with Ind AS requires the management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. These estimates are based on the managementâs best knowledge of current events, historical experience, actions that the Company may undertake in the future and on various other assumptions that are believed to be reasonable underthe circumstances. Accounting estimates could change from period to period. Actual results could differfrom those estimates. Appropriate changes in estimates are made as the Management becomes aware of changes in circumstances surrounding the estimates. Changes in 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.
The Company uses the following critical accounting estimates in preparation of its standalone financial statements:
The Companyâs contracts with customers include promises to transfer multiple products and services to a customer. Revenues from customer contracts are considered for recognition and measurement when the contract has been approved, in writing, by the parties to the contract, the parties to contract are committed to perform their respective obligations under the contract, and the contract is legally enforceable. The Company assesses the services promised in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligations to determine the deliverables and the ability of the customer to benefit independently from such deliverables, and allocation of transaction price to these distinct performance obligations involve significant judgment.
b) Useful lives of Property, Plant and Equipment
Property, plant and equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an assetâs expected useful life and the expected residual value at the end of its life. The useful lives and residual values of the Companyâs assets are determined by the Management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology.
c) Fair Value Measurement of Financial Instruments
When the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree ofjudgement is required in establishing fairvalues. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
d) Provision of Income Tax and Tax Assets
The major tax jurisdiction for the Company is India. Significant judgments are involved in determining the provision for income taxes including judgment on whether tax positions are probable of being sustained in tax assessments.
Deferred tax is recorded on temporary differences between the tax bases of assets and liabilities and their carrying amounts, The ultimate realization of deferred tax assets is dependent upon the generation of future taxable profits during the periods in which those temporary differences and tax loss carry forwards become deductible. The Company considers the expected reversal of deferred tax liabilities and projected future taxable income in making this assessment. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry-forward period are reduced.
e) Provisions and Contingent Liabilities
The Company estimates the provisions that have present obligations as a result of past events and it is probable that outflow of resources will be required to settle the obligations. These provisions are reviewed at the end of each reporting period and are adjusted to reflect the current best estimates.
The Company uses significant judgements to disclose contingent liabilities. Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot
be made. Contingent assets are neither recognized nor disclosed in the standalone financial statements.
The accounting of employee benefit plans in the nature of defined benefit requires the Company to use assumptions.
The Company derives revenues primarily from IT services comprising software development and related services, maintenance, consulting and package implementation, and from licensing of software products and platforms across the Companyâs core and digital offerings (together called as âsoftware related servicesâ). Contracts with customers are either on a time-and-material, fixed-price or on a fixed-timeframe basis.
Revenue on time-and-material and unit-of-work-based contracts, are recognized as the related services are performed. Fixed-price maintenance revenue is recognized ratably either on a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period or ratably using a percentage-of-completion method when the pattern of benefits from the services rendered to the customer and the Companyâs costs to fulfil the contract is not even through the period of contract because the services are generally discrete in nature and not repetitive. Revenue from other fixed-price, fixed-timeframe contracts, where the performance obligations are satisfied overtime is recognized using the percentage-of-completion method. Efforts or costs expended have been used to determine progress towards completion as there is a direct relationship between input and productivity. Progress towards completion is measured as the ratio of costs or efforts incurred to date (representing work performed) to the estimated total costs or efforts. Estimates of transaction price and total costs or efforts are continuously monitored over the term of the contracts. Revenues and the estimated total costs or efforts are subject to revision as the contract progresses.
Rental Income comprising of rent and other related services from operating lease is recognized in the Statement of Profit and Loss on accrual basis.
Advance received for services and products are reported as client deposits until all conditions for revenue recognition are met. Revenue from subsidiaries is recognized based on transaction price which is at armâs length.
The company presents revenues net of indirect taxes in its Statement of Profit & Loss Account.
Other income is comprised primarily of interest income, gain / loss on investments and exchange gain / loss on foreign exchange contracts and on translation of other assets and liabilities. Interest income is recognized using the effective interest method.
2.5 Property, Plant and Equipment
Property, plant and equipment are stated at cost of acquisition including incidental costs related to acquisition and installation less accumulated depreciation and impairment loss, if any. All direct costs are capitalized till the assets are ready to be put to use, as intended by the management. During the year, the company has reclassified certain Property, Plant & Equipment to Investment Property on account of change in management intention to use such properties for the purpose of rental yield and/ or capital appreciation (Refer Point No. 2.7 & Note No. 6)
Subsequent expenditures relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognized in statement of profit or loss as incurred. The Company identifies and determines cost of each component/ part of the asset separately, if the component/ part have a cost which is significant to the total cost of the asset and has useful life that is materially different from that of the remaining asset. The cost and related accumulated depreciation are eliminated from the financial statements upon sale or retirement of the asset and the resultant gains or losses are recognized in the Statement of Profit and Loss.
Advances paid towards the acquisition of property, plant and equipment outstanding at each Balance Sheet date is classified as capital advances and the cost of assets not ready to use before such date are disclosed under âCapital work-in-progress''.
The company depreciates property, plant and equipment over their estimated useful lives using the written down value method. The estimated useful lives of all property, plant & equipment is as prescribed in schedule II of The Companies Act, 2013. (Refer Note No. 3)
Property, plant and equipment 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.
If such assets are considered to be impaired, the impairment to be recognized 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 depreciation) had no impairment loss been recognized for the asset in prior years.
Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognized in the statement of profit or loss as ''other incomeâ or âother expensesâ, as the case may be, on the date of disposal.
Where, during any financial year, any addition has been made to any asset, or where any asset has been sold, discarded, demolished or destroyed, or significant components replaced; depreciation on such assets is calculated on a pro rata basis as individual assets with specific useful life from the date of such addition or, as the case may be, up to the date on which such asset has been sold, discarded, demolished or destroyed or replaced
Intangible assets are stated at cost of acquisition less accumulated amortization and impairment loss, if any. Intangible fixed assets are capitalized where they are expected to provide future enduring economic benefits. Capitalization costs include license fees and cost of implementation/ system integration services. The costs are capitalized in the year in which the software is fully implemented for use. Intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number of factors including the effects of obsolescence, demand, competition, and other economic factors (such as the stability of the industry, and known technological advances), and the level of maintenance expenditures required to obtain the expected future cash flows from the asset. Amortization methods and useful lives are reviewed periodically including at each financial year end.
Research costs are expensed as incurred. Software product development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, future economic benefits are probable, the Company has an intention and ability to complete and use or sell the software and the costs can be measured reliably. The costs which can be capitalized
include the cost of material, direct labour, overhead costs that are directly attributable to preparing the asset for its intended use.
Intangible 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 assets basis unless the asset does not generate cash flows that are largely independent of those from other assets.
Investment properties are properties held to earn rentals or for capital appreciation or both. Investment properties are measured initially at their cost of acquisition, including transaction costs. On transition to Ind AS, the Company had elected to measure all of its investment properties at the previous GAAP carrying value (deemed cost). Investment properties are subsequently measured at fair value less accumulated depreciation and accumulated impairment losses if any. Fair values are determined based on an evaluation performed by an accredited external independent valuer in FY 2018-19. - The Company obtains independent valuation for its investment property in every 5 years and fair value measurements are categorized as level 3 measurement in the fair value hierarchy. The valuation has been taken considering sales comparable method, which compares the price or price per unit area of similar properties being sold in the marketplace. Depreciation on investment properties is provided on the written down value method over the useful lives of the assets as prescribed in schedule II of The Companies Act, 2013.
The cost comprises purchase price, cost of replacing parts, borrowing cost, if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price. When significant parts of the investment property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognized in profit or loss as incurred.
Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company. All other repair and maintenance costs are recognised in statement of profit or loss as incurred. The residual values, useful lives and method of depreciation are reviewed at the end of each financial year and adjusted prospectively.
Investment properties are de-recognized either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in the statement profit or loss in the period of de-recognition.
2.8 Foreign Currency Transactions and Translation2.8.1 Functional and Presentation Currency:
The functional currency of the Company is the Indian rupee. These financial statements are presented in lakh of Indian rupees.
2.8.2 Foreign Currency Transactions and Translations:
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 historical cost are translated at the exchange rate prevalent at the date of the Balance sheet.
Transaction gains or losses realized upon settlement of foreign currency transactions are included in determining net profit for the period in which the transaction is settled. Revenue,
expense and cash flow items denominated in foreign currencies are translated into the relevant functional currencies using the exchange rate in effect on the date of the transaction
Income tax expense comprises current and deferred income tax. Income tax expense is recognized in net profit in the Statement of Profit and Loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in other comprehensive income. Current income tax for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted at the Balance Sheet date. Deferred income tax assets and liabilities are recognized for all temporary timing differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements as prescribed in Ind-AS-12. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Deferred income tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on deferred income tax assets and liabilities is recognized as income or expense in the period that includes the enactment or the substantive enactment date. A deferred income tax asset is recognized to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilized. Deferred income taxes are not provided on the undistributed earnings of subsidiaries and branches where it is expected that the earnings of the subsidiary or branch will not be distributed in the foreseeable future. The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur.
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing costs also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
2.11 Financial Instruments2.11.1 Initial Recognition
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are recognized at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. 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 measured on initial recognition of financial asset or financial liability. Regular way purchase and sale of financial assets are accounted for at trade date.
a) Non- Derivative financial instruments
(i) Financial Assets Carried at Amortized Cost
A financial asset is subsequently measured at amortized 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 (FVOCI)
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. 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 fair value through profit or loss
A financial asset which is not classified in any of the above categories is subsequently fair valued through profit or loss.
Financial liabilities are subsequently carried at amortized cost using the effective interest method. Fortrade and other payables maturing within one yearfrom the Balance Sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments
(v) Investment in Subsidiaries and others
Investments in subsidiaries are carried at cost as per Ind AS 27 âSeparate Financial Statementsâ. Flowever, the provision for impairment on these investments is recognized as per the valuation report taken from the registered valuer as prescribed u/s 247 of The Companies Act, 2013 read with Companies (Registered Valuers & Valuation) Rules 2018 is considered in compliance of the provisions of Companies Act, 2013.
b) Derivative Financial Instruments
The Company is exposed to foreign currency fluctuations on foreign currency assets, liabilities, net investment in foreign operations and forecasted cash flows denominated in foreign currency. Flowever, The Company does not holds any derivative financial instruments such as foreign exchange forward and options contracts to mitigate the risk of changes in exchange rates on foreign currency exposures.
2.11.3 Derecognition of Financial Instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Companyâs Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.
2.11.4 Fair value of Financial Instruments
The Company records certain financial assets and liabilities at fair value on a recurring basis. The Company determines fair values based on the price it would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market for that asset or liability.
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:
Level 1 - Quoted inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 - Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations, in which all significant inputs are directly or indirectly observable in active markets.
Level 3 - Valuations derived from valuation techniques, in which one or more significant inputs are unobservable inputs which are supported by little or no market activity.
In accordance with Ind AS 113, assets and liabilities are to be measured based on the following valuation techniques:
(a) Market approach - Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.
(b) Income approach - Converting the future amounts based on market expectations to its present value using the discounting method.
(c) Cost approach-Replacement cost method
The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss. 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 recognized is recognized as an impairment gain or loss in the Statement of Profit and Loss.
2.12 Impairment of Non-Financial Assets
The carrying amounts of the Company''s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment considering the provisions of Ind AS 36 Impairment of Assets''. If any such indication exists, then the assetâs recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs to disposal and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the âcash-generating unit", or âCGUâ).
An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses recognized in respect of CGUs are reduced from the carrying amounts of the assets of the CGU.
Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assetâs carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
2.13 Provisions, Contingent Liabilities and Contingent Assets
The Company estimates the provisions that have present obligations as a result of past events and it is probable that outflow of resources will be required to settle the obligations. These provisions are reviewed at the end of each reporting date and are adjusted to reflect the current best estimates.
The Company uses significant judgment to disclose contingent liabilities. Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.
Contingent assets are neither recognized nor disclosed in the financial statements. However, when inflow of economic benefit is probable, related asset is disclosed.
2.14 Employee Benefits2.14.1 Gratuity
The Company provides for gratuity, a defined benefit retirement plan (''the Gratuity Planâ) covering eligible employees of FCS. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employeeâs base salary and the tenure of employment with the Company (subject to a maximum of'' 20 lacs per employee).
Actuarial gains/losses are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through other comprehensive income in the year in which they occur.
Eligible Employees of the Company receive benefits under the provident fund, a defined benefit plan. Both the eligible employee and the Company make monthly contributions to the provident fund plan equal to a specified percentage of the covered employeeâs salary. Amounts collected underthe provident fund plan are deposited in a government administered provident fund. The companies have no further obligation to the plan beyond its monthly contributions.
The employees of the Company are entitled to compensated absences which are both accumulating and non-accumulating in nature. The employees can carry forward up to the specified portion of the unutilized accumulated compensated absences and utilize it in future periods or receive cash at retirement or termination of employment. The expected cost of accumulating compensated absences is determined by actuarial valuation (using the projected unit credit method) based on the additional amount expected to be paid as a result of the unused entitlement that has accumulated at the balance sheet date. The expense on non-accumulating compensated absences is recognized in the statement of profit and loss in the year in which the absences occur. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred.
Basic earnings per share is computed by dividing the net profit attributable to the equity holders of the Company by weighted average number of equity shares outstanding during the year in conformity with the lnd-AS-33.
Diluted EPS amounts are computed by dividing the net profit attributable to the equity holders of the Company by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The diluted potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. the average market value of the outstanding shares). Dilutive potential equity shares are deemed converted as at the beginning of the year, unless issued at a later date. Dilutive potential equity shares are determined independently for each year presented.
The number of shares and potentially dilutive equity shares are adjusted retrospectively for all periods presented for bonus shares.
2.16 Recently issued Accounting Pronouncements
The 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 31,2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2023, as below:
a) Ind AS 1 - Presentation of Financial Statements
This amendment requires the entities to disclose their material accounting policies rather than their significant accounting policies. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The Company has evaluated the amendment and the impact of the amendment is insignificant in the standalone financial statement.
b) Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Error
This amendment has introduced a definition of âaccounting estimates'' and included amendments to Ind AS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates. The effective date for adoption of this amendment is annual periods beginning on orafterApril 1,2023. The Company has evaluated the amendment and there is no impact on its Standalone financial statements.
This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences. The effective date for adoption of this amendment is annual periods beginning on orafterApril 1, 2023. The Company has evaluated the amendment and there is no impact on its Standalone financial statements.
Mar 31, 2022
1. COROPORATE INFORMATION
FCS Software Solutions Limited (hereinafter referred to as âthe companyâ) is primarily engaged in providing a rage of IT and business services, engineering and product & platform service. The company business consists of software development and marketing and providing support services mainly for corporate business entities in the BPO sectors, software development, e-learning service and other related Information Technology Enabled Services. The company also carries business of leasing or letting out all kind of immovable property including IT Infrastructural property whether freehold, leasehold to any type of person.
The company is a public limited company incorporate and domiciled in India and has its registered office at 205, 2nd Floor, Aggarwal Chamber IV, 27, Veer Sawarkar Block, Vikas Marg, Shakarpur, Delhi - 110092. The Company has its primary listings on the BSE Ltd. and National Stock Exchange of India Limited.
The standalone financial statements for the year ended 31st March 2022 were approved and authorized for issue by the Board of Directors on May 30, 2022.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES2.1 Basis of Preparation of Financial Statements
These financial statements are prepared in accordance with the Indian Accounting Standards (Ind AS) under the historical cost convention on the accrual basis, except for certain financial instruments which are measured at fair values, the provisions of the Companies Act, 2013 (âthe Actâ) (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and the relevant amendment rules issued thereafter.
Accounting policies have been consistently applied except where a newly-issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
These standalone financial statements are prepared in Indian Rupees (âINRâ) which is also the Company''s functional currency. All Amount is reported in Lakhs of Indian Rupees unless otherwise stated.
The preparation of the financial statements in conformity with Ind AS requires the management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. These estimates are based on the managementâs best knowledge of current events, historical experience, actions that the Company may undertake in the future and on various other assumptions that are believed to be reasonable underthe circumstances. Accounting estimates could change from period to period. Actual results could differfrom those estimates. Appropriate changes in estimates are made as the Management becomes aware of changes in circumstances surrounding the estimates. Changes in 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.
The Company uses the following critical accounting estimates in preparation of its standalone financial statements:
The Companyâs contracts with customers include promises to transfer multiple products and services to a customer. Revenues from customer contracts are considered for recognition and measurement when the contract has been approved, in writing, by the parties to the contract, the parties to contract are committed to perform their respective obligations under the contract, and the contract is legally enforceable. The Company assesses the services promised in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligations to determine the deliverables and the ability of the customerto benefit independently from such deliverables, and allocation of transaction price to these distinct performance obligations involve significant judgment.
b) Useful lives of Property, Plant and Equipment
Property, plant and equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an assetâs expected useful life and the expected residual value at the end of its life. The useful lives and residual values of the Companyâs assets are determined by the Management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology.
c) Fair Value Measurement of Financial Instruments
When the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fairvalues. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
d) Provision of Income Tax and
The major tax jurisdiction for the Company is India. Significant judgments are involved in determining the provision for income taxes including judgment on whether tax positions are probable of being sustained in tax assessments.
Deferred tax is recorded on temporary differences between the tax bases of assets and liabilities and their carrying amounts, The ultimate realization of deferred tax assets is dependent upon the generation of future taxable profits during the periods in which those temporary differences and tax loss carry forwards become deductible. The Company considers the expected reversal of deferred tax liabilities and projected future taxable income in making this assessment. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry-forward period are reduced.
f) Provisions and Contingent Liabilities
The Company estimates the provisions that have present obligations as a result of past events and it is probable that outflow of resources will be required to settle the obligations. These provisions are reviewed at the end of each reporting period and are adjusted to reflect the current best estimates.
The Company uses significant judgements to disclose contingent liabilities. Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot
be made. Contingent assets are neither recognized nor disclosed in the standalone financial statements.
The accounting of employee benefit plans in the nature of defined benefit requires the Company to use assumptions.
h) Impact of COVID-19 (Pendemic)
The Company has taken into account all the possible impacts of COVID-19 in preparation of these standalone financial statements, including but not limited to its assessment of, liquidity and going concern assumption, recoverability of receivables, unbilled receivables, intangible assets, recoverable values of its financial and non-financial assets, impact on revenue recognition and assessment of cost. The Company has carried out this assessment based on available internal and external sources of information upto the date of ap proval of these standalone financial statements and believes that the impact of COVID-19 is not material to these financial statements and expects to recover the carrying amount of its assets. The impact of COVID-19 on the standalone financial statements may differ from that estimated as at the date of approval of these standalone financial statements owing to the nature and duration of COVID-19.
The Company derives revenues primarily from IT services comprising software development and related services, maintenance, consulting and package implementation, and from licensing of software products and platforms across the Companyâs core and digital offerings (together called as âsoftware related servicesâ). Contracts with customers are either on a time-and-material, fixed-price or on a fixed-timeframe basis.
Revenue on time-and-material and unit-of-work-based contracts, are recognized as the related services are performed. Fixed-price maintenance revenue is recognized ratably either on a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period or ratably using a percentage-of-completion method when the pattern of benefits from the services rendered to the customer and the Companyâs costs to fulfil the contract is not even through the period of contract because the services are generally discrete in nature and not repetitive. Revenue from other fixed-price, fixed-timeframe contracts, where the performance obligations are satisfied overtime is recognized using the percentage-of-completion method. Efforts or costs expended have been used to determine progress towards completion as there is a direct relationship between input and productivity. Progress towards completion is measured as the ratio of costs or efforts incurred to date (representing work performed) to the estimated total costs or efforts. Estimates of transaction price and total costs or efforts are continuously monitored over the term of the contracts. Revenues and the estimated total costs or efforts are subject to revision as the contract progresses.
Rental Income comprising of rent and other related services from operating lease is recognized in the Statement of Profit and Loss on accrual basis.
Advance received for services and products are reported as client deposits until all conditions for revenue recognition are met. Revenue from subsidiaries is recognised based on transaction price which is at armâs length.
The company presents revenues net of indirect taxes in its Statement of Profit & Loss Account.
The Company has evaluated the impact of COVID-19 resulting from (i)the possibility of constraints to render services which may require revision of estimations of costs to complete the contract because of additional efforts; (ii) onerous obligations; (iii) penalties relating to breaches of service-level agreements; and (iv) termination or deferment of contracts by customers. The Company has concluded that the impact of COVID-19 is not material based on these estimates. Due to the nature of the pandemic, the Company continues to monitor developments to identify significant
uncertainties relating to revenue in future periods.
Other income is comprised primarily of interest income, gain / loss on investments and exchange gain / loss on foreign exchange contracts and on translation of other assets and liabilities. Interest income is recognized using the effective interest method.
2.5 Property, Plant and Equipment
Property, plant and equipment are stated at cost of acquisition including incidental costs related to acquisition and installation less accumulated depreciation and impairment loss, if any. All direct costs are capitalized till the assets are ready to be put to use, as intended by the management. The company depreciates property, plant and equipment over their estimated useful lives using the written down value method. The estimated useful lives of assets are as follows:
|
Fixed Assets |
Useful life of Assets |
Useful life as per companies act |
|
Buildings |
70 Years |
60 Yea rs |
|
Office equipment |
8 Yea rs |
5 Years |
|
Computer equipment |
3 Yea rs |
3 Years |
|
Furniture and fixtures |
14 Years |
10 Yea rs |
|
Vehicles |
6 Years |
6 Years |
|
Servers and networks |
8 Years |
6 Years |
Property, plant and equipment are being verified by the management at reasonable intervals i.e. once in every three years by rotation.
Advances paid towards the acquisition of property, plant and equipment outstanding at each Balance Sheet date is classified as capital advances and the cost of assets not ready to use before such date are disclosed under âCapital work-in-progressâ. Subsequent expenditures relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably. The cost and related accumulated depreciation are eliminated from the financial statements upon sale or retirement of the asset and the resultant gains or losses are recognized in the Statement of Profit and Loss.
Property, plant and equipment 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.
If such assets are considered to be impaired, the impairment to be recognized 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 depreciation) had no impairment loss been recognized for the asset in prior years.
Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in the statement of profit or loss as âother income'' or âother expensesâ, as the case may be, on the date of disposal.
Where, during any financial year, any addition has been made to any asset, or where any asset has been sold, discarded, demolished or destroyed, or significant components replaced; depreciation
on such assets is calculated on a pro rata basis as individual assets with specific useful life from the date of such addition or, as the case may be, up to the date on which such asset has been sold, discarded, demolished or destroyed or replaced
Intangible assets are stated at cost of acquisition less accumulated amortization and impairment loss, if any. Intangible fixed assets are capitalized where they are expected to provide future enduring economic benefits. Capitalization costs include license fees and cost of implementation/ system integration services. The costs are capitalized in the year in which the software is fully implemented for use. Intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number of factors including the effects of obsolescence, demand, competition, and other economic factors (such as the stability of the industry, and known technological advances), and the level of maintenance expenditures required to obtain the expected future cash flows from the asset. Amortization methods and useful lives are reviewed periodically including at each financial year end.
Research costs are expensed as incurred. Software product development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, future economic benefits are probable, the Company has an intention and ability to complete and use or sell the software and the costs can be measured reliably. The costs which can be capitalized include the cost of material, direct labour, overhead costs that are directly attributable to preparing the asset for its intended use.
Intangible 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 assets basis unless the asset does not generate cash flows that are largely independent of those from other assets.
2.7 Foreign Currency Transactions and Translation2.7.1 Functional and Presentation Currency:
The functional currency of the Company is the Indian rupee. These financial statements are presented in Indian rupees.
2.7.2 Foreign Currency Transactions and Translations:
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 historical cost are translated at the exchange rate prevalent at the date of the Balance sheet.
Transaction gains or losses realized upon settlement of foreign currency transactions are included in determining net profit for the period in which the transaction is settled. Revenue, expense and cash flow items denominated in foreign currencies are translated into the relevant functional currencies using the exchange rate in effect on the date of the transaction
Income tax expense comprises current and deferred income tax. Income tax expense is recognized in net profit in the Statement of Profit and Loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in other comprehensive income. Current income tax for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have
been enacted or substantively enacted at the Balance Sheet date. Deferred income tax assets and liabilities are recognized for all temporary timing differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements as prescribed in lnd-AS-12. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Deferred income tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on deferred income tax assets and liabilities is recognized as income or expense in the period that includes the enactment or the substantive enactment date. A deferred income tax asset is recognized to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilized. Deferred income taxes are not provided on the undistributed earnings of subsidiaries and branches where it is expected that the earnings of the subsidiary or branch will not be distributed in the foreseeable future. The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur.
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing costs also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
2.10 Financial Instruments2.10.1 Initial Recognition
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are recognized at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. 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 measured on initial recognition of financial asset or financial liability. Regular way purchase and sale of financial assets are accounted for at trade date.
a) Non- Derivative financial instruments
(i) Financial Assets Carried at Amortized Cost
A financial asset is subsequently measured at amortized 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.
(ii) Financial Assets at fair value through other comprehensive income (FVOCI)
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 ofthe financial assetgive rise on specified datesto cash flows. 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 fair value through profit or loss
A financial asset which is not classified in any of the above categories is subsequently fair valued through profit or loss.
Financial liabilities are subsequently carried at amortized cost using the effective interest method. 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 and others
Investments in subsidiaries are carried at cost as per Ind AS 27 âSeparate Financial Statementsâ. However, the provision for impairment on these investments is recognized as per the valuation report taken from the registered valuer as prescribed u/s 247 of The Companies Act, 2013 read with Companies (Registered Valuers & Valuation) Rules 2018 is considered in compliance of the provisions of Companies Act, 2013.
b) Derivative Financial Instruments
The Company is exposed to foreign currency fluctuations on foreign currency assets, liabilities, net investment in foreign operations and forecasted cash flows denominated in foreign currency. However, The Company does not holds any derivative financial instruments such as foreign exchange forward and options contracts to mitigate the risk of changes in exchange rates on foreign currency exposures.
2.10.3 Derecognition of Financial Instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Companyâs Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.
2.10.4 Fair value of Financial Instruments
The Company records certain financial assets and liabilities at fair value on a recurring basis. The Company determines fair values based on the price it would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market for that asset or liability.
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:
Level 1 - Quoted inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 - Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations, in which all significant inputs are directly or indirectly observable in active markets.
Level 3 - Valuations derived from valuation techniques, in which one or more significant inputs are unobservable inputs which are supported by little or no market activity.
In accordance with Ind AS 113, assets and liabilities are to be measured based on the following valuation techniques:
(a) Market approach - Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.
(b) Income approach - Converting the future amounts based on market expectations to its present value using the discounting method.
(c) Cost approach-Replacement cost method
The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss. 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 recognized is recognized as an impairment gain or loss in the Statement of Profit and Loss.
2.11 Impairment of Non-Financial Assets
The carrying amounts of the Companyâs non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment considering the provisions of Ind AS 36 âImpairment of Assetsâ. If any such indication exists, then the assetâs recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs to disposal and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the âcash-generating unit", or âCGU").
An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses recognized in respect of CGUs are reduced from the carrying amounts of the assets of the CGU.
Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assetâs carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
2.12 Provisions, Contingent Liabilities and Contingent Assets
The Company estimates the provisions that have present obligations as a result of past events and it is probable that outflow of resources will be required to settle the obligations. These provisions are reviewed at the end of each reporting date and are adjusted to reflect the current best estimates.
The Company uses significant judgment to disclose contingent liabilities. Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.
Contingent assets are neither recognized nor disclosed in the financial statements. Flowever, when inflow of economic benefit is probable, related asset is disclosed.
2.13 Employee Benefits2.13.1 Gratuity
The Company provides for gratuity, a defined benefit retirement plan (âthe Gratuity Planâ) covering eligible employees of FCS. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employeeâs base salary and the tenure of employment with the Company (subject to a maximum of'' 20 lacs per employee).
Actuarial gains/losses are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through other comprehensive income in the year in which they occur.
Eligible Employees of the Company receive benefits under the provident fund, a defined benefit plan. Both the eligible employee and the Company make monthly contributions to the provident fund plan equal to a specified percentage of the covered employeeâs salary. Amounts collected underthe provident fund plan are deposited in a government administered provident fund. The companies have no further obligation to the plan beyond its monthly contributions.
The employees of the Company are entitled to compensated absences which are both accumulating and non-accumulating in nature. The employees can carry forward up to the specified portion of the unutilized accumulated compensated absences and utilize it in future periods or receive cash at retirement or termination of employment. The expected cost of accumulating compensated absences is determined by actuarial valuation (using the projected unit credit method) based on the additional amount expected to be paid as a result of the unused entitlement that has accumulated at the balance sheet date. The expense on non-accumulating compensated absences is recognized in the statement of profit and loss in the year in which the absences occur. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred.
Basic earnings per share is computed by dividing the net profit attributable to the equity holders of the Company by weighted average number of equity shares outstanding during the year in conformity with the lnd-AS-33.
Diluted EPS amounts are computed by dividing the net profit attributable to the equity holders of the Company by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The diluted potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. the average market value of the outstanding shares). Dilutive potential equity shares are deemed converted as at the beginning of the year, unless issued at a later date. Dilutive potential equity shares are determined independently for each year presented.
The number of shares and potentially dilutive equity shares are adjusted retrospectively for all periods presented for bonus shares.
2.15 Recently issued Accounting Pronouncements
The 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:
a) Ind AS 16 - Property, Plant and Equipment
The amendments mainly prohibit an entity from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, an entity will recognize such sales proceeds and related cost in profit or loss. The Company does not expect the amendments to have any impact in its recognition of its property, plant and equipment in its financial statements.
b) Ind AS 37- Provisions, Contingent Liabilities and Contingent Assets
The amendments specify that that the âcost of fulfillingâ a contract comprises the âcosts 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. The amendment is essentially a clarification and the Company does not expect the amendment to have any significant impact in its financial statements.
c) Ind AS 109- Financial Instruments
The amendment clarifies which fees an entity includes when it applies the â10 percentâ test of Ind AS 109 in assessing whether to derecognize a financial liability. The Company does not expect the amendment to have any significant impact in its financial statements.
The amendments remove the illustration of the reimbursement of leasehold improvements by the lessor in order to resolve any potential confusion regarding the treatment of lease incentives that might arise because of how lease incentives were described in that illustration. The Company does not expect the amendment to have any significant impact in its financial statements.
Mar 31, 2018
NOTES TO STANDALONE FINANCIAL STATEMENTS
1. COMPANY OVERVIEW AND SIGNIFICANT ACCOUNTING POLICIES
1.1 Company Overview:
FCS Software Solutions Limited (âthe company'') was incorporated on 5th May, 1993 in India. The company is listed on two stock exchanges in India namely National Stock Exchange and Bombay Stock Exchange.
The Company has its wholly owned subsidiaries in USA, Germany, UAE and India (the company and its subsidiaries constitute âthe group''). The company business consists of software development and marketing and providing support services mainly for corporate business entities in the BPO, software development and e-learning service sector.
1.2 Basis of preparation of financial statements
These financial statements are prepared in accordance with the Indian Accounting Standards (Ind AS) under the historical cost convention on the accrual basis, except for certain financial instruments which are measured at fair values, the provisions of the Companies Act, 2013 (âthe Act'') (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and the relevant amendment rules issued thereafter.
Effective April 1, 2016, the Company has adopted all the Ind AS standards and the adoption was carried out in accordance with Ind AS 101, First Time Adoption of Indian Accounting Standards, with April 1, 2015 as the transition date. The transition was carried out from Indian Accounting Principles generally accepted in India as prescribed under Section 133 of the Act, read with Rule
7 of the Companies (Accounts) Rules, 2014 (IGAAP), which was the previous GAAP.
Accounting policies have been consistently applied except where a newly-issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
As the year-end figures are taken from the source and rounded to the nearest Lakhs. The figures reported for the previous quarters might not always add up to the year-end figures reported in this statement.
1.3 Use of estimates
The preparation of the financial statements in conformity with Ind AS requires the Management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as the Management becomes aware of changes in circumstances surrounding the estimates. Changes in 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.
1.4 Revenue recognition
Revenue from IT Enabled Service including software development services and other projects on as time-and material basis is recognized based on service rendered and billed to clients as per the terms of specific contracts. In the case of fixed-price contracts, revenue is recognized based on the milestones achieved, as specified in the contracts, on a percentage of completion basis.
Unbilled revenue represents amount recognized based on services performed in advance of billing in accordance with contract terms. Revenue from Business Process Services contracts priced on the basis of time and material or unit of delivery is recognized as services are rendered or the related obligation is performed. Interest on development of surplus funds is recognized using the time-proportion method, based on interest rates implicit in the transaction. However, those expenses on which revenue had not recognized was considered as work in process.
Advance Received for services and products are reported as client deposits until all conditions for revenue recognition are met.
The company presents revenues net of indirect taxes in its Statement of Profit & Loss Account.
1.5 Recent Accounting Pronouncements
Appendix B to Ind AS 21, Foreign currency transactions and advance consideration:
On March 28, 2018, the Ministry of Corporate Affairs (âthe MCA'') notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency.
The amendment will come into force from April 1, 2018. The Company has evaluated the effect of this on the financial statements and the impact is not material.
Ind AS 115, Revenue from Contract with Customers:
On March 28, 2018, the MCA notified the Ind AS 115. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further, the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity''s contracts with customers.
The standard permits two possible methods of transition:
- Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors.
- Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach)
The effective date for adoption of Ind AS 115 is financial period beginning on or after April 1, 2018.
The Company will adopt the standard on April 1, 2018 by using the cumulative catch-up transition method and accordingly, comparatives for the year ending or ended March 31, 2018 will not be retrospectively adjusted. The effect on adoption of Ind AS 115 is expected to be insignificant.
1.6 Property, plant and equipment
Property, plant and equipment are stated at cost of acquisition including incidental costs related to acquisition and installation less accumulated depreciation and impairment loss, if any. All direct costs are capitalized till the assets are ready to be put to use. Fixed assets under construction, advances paid towards acquisition of fixed assets and cost of assets not put to use before the period/year end, are disclosed as capital work in progress. The company depreciates property, plant and equipment over their estimated useful lives using the written down value method.
During the year, the company has increased the useful life of the assets as specified under Schedule II of Companies Act, 2013 which is change in accounting estimate as per Ind AS 8 âAccounting Policies, Accounting Estimates & Errorsâ and accordingly depreciation has been calculated on the basis revised useful life. The total depreciation has been deceased by Rs. 27.90 Lakhs. Further, it is impracticable to estimate the effect in future periods. The estimated useful
1.7 Financial Instruments
1.7.1 Initial recognition
The Group recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized at Transaction Price. Transaction costs that is directly attributable to the acquisition or issue of financial assets and financial liabilities.
1.7.2 Subsequent measurement
a. Non-derivative financial instruments
(i) Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized 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.
(ii) Financial assets at fair value through other comprehensive income (FVOCI)
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 collecting contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows. Investments which are classified as financial asset, the subsequent changes in fair value are recognized through other comprehensive income (OCI).
(iii) Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above categories is subsequently fair valued through profit or loss.
(iv) Financial liabilities
Financial liabilities are subsequently carried at amortized cost 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 are carried at carrying amounts.
(v) Investment in subsidiaries
Investment in subsidiaries are carried as per IND AS-27, âSeparate Financial Statementsâ However, the provisions for impairment on these investments is recognized using the net assets value certificate provided by the independent valuer.
b. Derivative financial instruments
The Group does not holds any derivative financial instruments such as foreign exchange forward and options contracts to mitigate the risk of changes in exchange rates on foreign currency exposures.
1.7.3 De-recognition of financial instruments
The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or become non recoverable and are qualifies for de-recognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Group''s Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.
1.8 Intangible assets
1.8.1 Accounting Policy
Intangible fixed assets comprising of computer servers and networks, are stated at cost of acquisition less accumulated amortization and impairment loss, if any. Intangible fixed assets are capitalized where they are expected to provide future enduring economic benefits. Capitalization costs include license fees and cost of implementation/system integration services. The costs are capitalized in the year in which the software is fully implemented for use. Intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number of factors including the effects of obsolescence, demand, competition, and other economic factors (such as the stability of the industry, and known technological advances). Amortization methods and useful lives are reviewed periodically including at each financial year end.
Research costs are expensed as incurred. Software product development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, future economic benefits are probable, the Company has an intention and ability to complete and use or sell the software and the costs can be measured reliably. The costs which can be capitalized include the cost of material, direct labour, overhead costs that are directly attributable to preparing the asset for its intended use.
1.8.2 Impairment
Intangible 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 assets basis unless the asset does not generate cash flows that are largely independent of those from other assets.
1.9 Provisions
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that is reasonably estimable, and it is probable that an outflow of economic benefits will be required to settle the obligation.
1.10 Impairment
Property, plant and equipment 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.
If such assets are considered to be impaired, the impairment to be recognized in the Consolidated 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 Consolidated 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 depreciation) had no impairment loss been recognized for the asset in prior years.
1.11 Functional & Foreign currency Functional currency:
The functional currency of the Company is the Indian rupee. These financial statements are presented in Indian rupees.
Transactions and translations:
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. Nonmonetary assets and non-monetary liabilities denominated in a foreign currency and measured at historical cost are translated at the exchange rate prevalent at the date of the Balance sheet.
Transaction gains or losses realized upon settlement of foreign currency transactions are included in determining net profit for the period in which the transaction is settled. Revenue, expense and cash flow items denominated in foreign currencies are translated into the relevant functional currencies using the exchange rate in effect on the date of the transaction.
1.12 Earnings per equity share
Basic earnings per share is computed by dividing the net profit attributable to the equity holders of the Company by weighted average number of equity shares outstanding during the year in conformity with the Ind-AS-33. Diluted earnings per share is computed by dividing the net profit attributable to the equity holders of the Company by weighted average number of equity and equivalent diluted equity shares outstanding during the year-end, except where the results would be anti-dilutive.
1.13 Income Taxes
Income tax expense comprises current and deferred income tax. Current income tax for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted at the Balance Sheet date. Deferred income tax assets and liabilities are recognized for all temporary timing differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements as prescribed in Ind-AS-12. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Deferred income tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A deferred income tax asset is recognized to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilized. The Company does not offsets current tax assets and current tax liabilities on net basis, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
1.14 Employee benefits
1.14.1 Gratuity
The Company provides for gratuity, a defined benefit retirement plan (âthe Gratuity Plan'') covering eligible employees of FCS. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment with the Company.
The Company recognizes the net obligation of a defined benefit plan in its Balance Sheet as an asset or liability. Gains and losses through re-measurements of the net defined benefit liability / (asset) are recognized in other comprehensive income.
1.14.2 Provident fund
Eligible employees of the company receive benefits from a provident fund, which is a defined benefit plan. Both the eligible employee and the Company make monthly contributions to the provident fund plan equal to a specified percentage of the covered employee''s salary. Amounts collected under the provident fund plan are deposited in a government administered provident fund. The companies have no further obligation to the plan beyond its monthly contributions.
1.14.3 Compensated absences
The Company has a policy on compensated absences which are both accumulating and no accumulating in nature. The expected cost of accumulating compensated absences is determined by actuarial valuation performed by an independent actuary at each Balance Sheet date using projected unit credit method on the additional amount expected to be paid / availed as a result of the unused entitlement that has accumulated at the Balance Sheet date.
1.15 Cash flow statement
Cash flows are reported using the indirect method, whereby profit/(loss) for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the company are segregated.
Amendment to Ind AS 7:
Effective April 1, 2017, the Company adopted the amendment to Ind AS 7, which require the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the Balance Sheet for liabilities arising from financing activities, to meet the disclosure requirement. The adoption of the amendment did not have any material impact on the financial statements.
1.16 Other income
Other income is comprised primarily of interest income, Rental Income and exchange gain / loss on foreign currencies. Interest income is accounted for on accrual basis. Rental Income comprising of rent and other related services from operating lease is recognized in the Statement of Profit and Loss on accrual basis.
1.17 Investment
Investments are classified into non-current and current investments based on the intent of management at the time of acquisition. Net Assets value as certified by expert is considered as Fair Market Value for the purpose of valuation of investment in all companies including subsidiaries. However as per Ind AS 109, Non-current investment including investment in subsidiaries and associate companies are measured at Fair Value through other comprehensive income.
Mar 31, 2016
23.0 FCS Software Solutions Limited (''FCS'' or ''the Company'' or ''the holding Company'') was incorporated on 05th May, 1993. The initial public offer was made in 2005, the company is listed on two stock exchanges in India namely National Stock exchange and Bombay stock exchange.
The Company has its wholly owned subsidiaries in USA, China, Germany, UAE and India (the Company and its subsidiaries constitute ''the group''). The group business consists of software product development and marketing and providing support services mainly for corporate business entities in the BPO, software development and e-learning service sector.
23. Significant Accounting Policies
23.1 Basis for preparation.
The consolidated financial statements are prepared under the historical cost convention on the accrual basis, in accordance with the Indian Generally Accepted Accounting Principles (âGAAPâ) and mandatory accounting standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 (â2013 Actâ),, as applicable and guidelines issued by the Securities and Exchange Board of India (âSEBIâ). Accounting policies have been consistently applied except where a newly issued accounting standard, if initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. Management evaluates all recently issued or revised accounting standards on an ongoing basis.
23.2 Principles of consolidation
These consolidated financial statements relate to the holding company and its subsidiaries (hereinafter collectively referred as âthe Groupâ), which are as follows:
The consolidated financial statements have been prepared in accordance with the principles and procedures for the preparation and presentation as laid down under Accounting Standard 21 on âConsolidated Financial Statementsâ specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 (â2013 Actâ), as applicable.
The financial statements of all the subsidiary companies used in the consolidation are drawn up to the same reporting date as that of the Company i.e., 31 March, 2016.
The financial statements of the parent company and its subsidiaries have been combined on a line by line basis by adding together the book values of all items of assets, liabilities, incomes and expenses after eliminating intercompany balances/transactions and resulting unrealized profits in full. Unrealized losses resulting from intercompany transactions have also been eliminated except to the extent that the recoverable value of related assets is lower than their cost to the Group. The amount shown in respect of reserves comprise the amount of relevant reserves as per the Consolidated Balance Sheet of the parent company and its share in the post acquisition increase in the relevant reserves of the subsidiaries.
The consolidated financial statements are prepared, to the extent possible, in the same format as that adopted by the parent company for its separate financial statements.
The consolidated financial statements are prepared using uniform accounting policies for the transaction and other events in similar circumstances, except as disclosed otherwise.
23.3 Revenue recognition.
Revenue from software development services and other projects on a time-and -material basis is recognized based on services rendered and billed to clients as per the terms of specific contracts. In the case of fixed-price contracts, revenue is recognized based on the milestones achieved, as specified in the contracts, on a percentage of completion basis.
Interest on development of surplus funds is recognized using the time-proportion method, based on interest rates implicit in the transaction. However, those expenses on which revenue had not recognized was considered as work in process as per para 239.
23.4 Cash flow statement
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Group are segregated based on the available information.
23.5 Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
23.6 Foreign exchange transactions and translation of financial statements of foreign subsidiaries
Foreign exchange transactions are recorded at the exchange rates prevailing at the date of transaction. Realized gains and losses on foreign exchange transactions during the year are recognized in the Consolidated Statement of Profit and Loss. Monetary current assets and monetary current liabilities that are determined in foreign currency are translated at the exchange rate prevalent at the date of Consolidated Balance Sheet. The resulting difference is recorded in the Consolidated Statement of Profit and Loss.
The Group follows Accounting Standard (AS) 30 - âFinancial Instruments: Recognition and Measurementâ to the extent that the adoption does not conflict with existing mandatory accounting standards and other authoritative pronouncements, Company law and other regulatory requirements.
The financial statements of the foreign subsidiaries being integral operations are translated into Indian rupees as follows:
a) Income and expense items are translated at the weighted average exchange rates.
b) Monetary assets and liabilities denominated in foreign currencies as at the Consolidated Balance Sheet date are translated at the exchange rates on that date.
c) Non-monetary items which are carried in terms of historical cost denominated in foreign currency are reported using the exchange rate at the date of transaction.
d) All resulting exchange differences are recognized in the Consolidated Statement of Profit and Loss of the reporting period.
e) Contingent liabilities are translated at the closing rate.
The financial statements of the foreign subsidiaries being non-integral operations are translated into Indian rupees as follows:
a) Income and expense items are translated at the weighted average exchange rates.
b) Assets and liabilities, both monetary and non-monetary are translated at the closing rate.
c) All resulting exchange differences are accumulated in a foreign currency translation reserve which is reflected under reserves and surplus.
d) Contingent liabilities are translated at the closing rate.
23.7 Other Income
Interest income is accounted on accrual basis. Rental income comprising of rent and other related services from operating lease is recognized in the Consolidated Statement of Profit and Loss on accrual basis.
23.8 Expenditure
Expenses are accounted for on accrual basis and provisions are made for all known losses and liabilities.
23.9 Depreciation
Depreciation on fixed assets is provided using the written down value method, as rates specified in schedule II of the Companies Act, 2013. Depreciation is charged on a pro-rata basis for assets purchased/sold during the year.
23.10 Fixed Assets
Fixed assets are stated at the cost of acquisition including incidental costs related to acquisition and installation. All direct costs are capitalized till the assets are ready to be put to use. Fixed assets under construction, advances paid towards acquisition of fixed assets and cost of assets not put to use before the period/year end, are disclosed as capital work in progress.
(a) Tangible fixed assets and capital work-in-progress
Tangible fixed assets are stated at cost of acquisition less accumulated depreciation and impairment loss, if any. Cost of acquisition includes freight inward, duties, taxes and other directly attributable expenses incurred to bring the assets to their working condition. For Fixed assets under construction and cost of assets not ready for use before the year-end, are disclosed as capital work-in-progress.
(b) Intangible fixed assets
Intangible fixed assets comprising of computer software, are stated at cost of acquisition less accumulated amortization and impairment loss, if any. Intangible fixed assets are capitalized where they are expected to provide future enduring economic benefits. Capitalization costs include license fees and cost of implementation/system integration services. The costs are capitalized in the year in which the software is fully implemented for use.
23.11 Investment
Investments are classified into long-term and current investments based on the intent of management at the time of acquisition. Long-term investments including investment in subsidiaries are stated at cost. Current investments are stated at the lower of cost and the fair value.
23.12 Retirement Benefits.
Contributions to provident fund are charged to the profit and loss account as incurred. Provisions for gratuity and leave encashment are accounted at the year-end and charged off to the profit and loss account.
Company is not providing for the gratuity on the basis of actuarial valuation as prescribed under AS-15 prescribed by ICAI and liability was provided only for those employees who are covered under Gratuity Act as determined by the management.
Company does not owe any liability for bonus as no employee is covered under Payment of Bonus Act and hence no provisions made for Bonus or Ex Gratia.
23.13 Earnings per Share.
Basic earnings per share is computed using the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed using the weighted average number of equity and diluted equity equivalent shares outstanding during the year-end, except where the results would be anti-dilutive.
23.14 Taxation
Current tax is determined on the basis of taxable income and tax credits computed for each of the entities in the Group in accordance with the provisions of applicable tax laws of the respective jurisdictions where the entities are located. Minimum Alternate Tax (MAT) considered in accordance with the tax laws.
Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realized. However, if there are unabsorbed depreciation and carry forward of losses, deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realize the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the entity has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Consolidated Balance Sheet date for their reliability.
The Group offsets deferred tax assets and deferred tax liabilities, and advance income tax and provision for tax, if it has a legally enforceable right and these relate to taxes in income levies by the same governing taxation laws.
23.15 Impairment
Management periodically assesses using external and internal sources where there is an indication that an asset may be impaired. Impairment occurs where the carrying value exceed the present value of future cash flow expected to arise from the continuing use of the asset and its eventual disposal. The impairment loss to be expensed is determined as the excess of carrying amount over the higher of the assets net sales price or present value as determined above. The management is of the view that impairment does not apply to the Company, hence not recognized.
23.16 Service tax /VAT input credit
Service tax/VAT input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is reasonable certainty in availing / utilizing the credits.
23.17 Segment Reporting
The Segment reporting policy complies with the accounting policies adopted for preparation and presentation of financial statements of the Company and is in conformity with Accounting Standard -17 on âSegment Reportingâ, on ''Segment Reporting'' specified as per section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules 2014. The segment is based on the Geographies in which group operates and internal reporting systems.
23.18 Earnings per Share.
Basic earnings per share is computed using the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed using the weighted average number of equity and diluted equity equivalent shares outstanding during the year-end, except where the results would be anti-dilutive.
23.23 Quantitative Details.
The Company is engaged in the software consultancy, technical support services, e-learning and other related allied services. These 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, 4C and 4D of part II of Schedule VI of the Companies Act 1956.
23.27 As explained to us, during the year the Corporate Social Responsibility (CSR) committee has been formed by the Company, however the Company does not qualified the norms specified as required under section 135 of Companies Act, 2013 to contribute towards CSR.
23.28 Previous year figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/disclosures.
Mar 31, 2015
Company Overview
FCS Software Solutions Limited ('FCS or 'the Company') was incorporated
on 5 May, 1993 in India. The Company made an initial public offer in
September 2005. As at 31 March, 2015, the Company is listed on two
stock exchanges in India namely National Stock Exchange and Bombay
Stock Exchange.
The Company has its wholly owned subsidiaries in USA, China, Germany,
UAE and India (the Company and its subsidiaries constitute 'the group').
The group business consists of software product development and
marketing and providing support services mainly for corporate business
entities in the BPO, software development and e-learning service sector.
23. Significant Accounting Policies
23.1 Basis for preparation.
(i) The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards specified under
Section 133 of the Companies Act, 2013, read with Rule 7 of the
Companies (Accounts) Rules, 2014 and the relevant provisions of
the Companies Act, 2013 ("2013 Act"), as applicable and guidelines
issued by the Securities and Exchange Board of India ("SEBI").
Accounting policies have been consistently applied except where a newly
issued accounting standard, if initially adopted or a revision to an
existing accounting standard requires a change in the accounting policy
hitherto in use. Management evaluates all recently issued or revised
accounting standards on an ongoing basis. All Income and expenditure
having a material bearing on the financial statements are recognized on
the accrual Basis.
(ii) Use of estimates
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Examples of such estimates include estimates of
expected contract costs to be incurred to complete contracts, future
obligations under employee retirement benefit plans. Actual result
could differ from these estimates.
23.2 Revenue recognition.
Revenue is recognized in accordance with the completion method. Income
accrued but not due represents revenue recognized on contracts to be
billed in the subsequent period, in accordance with terms of the
contract. Further Revenue from software development services and other
projects on a time-and -material basis is recognized based on services
rendered and billed to clients as per the terms of specific contracts
as per milestones achieved, as specified in the contracts, on a
percentage of completion basis. Interest on deployment of surplus funds
is recognized using the time-proportion method, based on interest rates
implicit in the transaction.
23.3 Cash flow statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
23.4 Expenditure
Expenses are accounted for on accrual basis and provisions are made for
all known losses and liabilities. Company has booked sales incentive on
cash basis.
23.5 Fixed Assets
Fixed assets are stated at the cost of acquisition including incidental
costs related to acquisition and installation. All direct costs are
capitalized till the assets are ready to be put to use. Fixed assets
under construction, advances paid towards acquisition of fixed assets
and cost of assets not put to use before the period/year end, are
disclosed as capital work in progress.
(a) Tangible fixed assets and capital work-in-progress
Tangible fixed assets (except freehold land which is carried at cost)
are stated at cost of acquisition less accumulated depreciation and
impairment loss, if any. Cost of acquisition includes freight inward,
duties, taxes and other directly attributable expenses incurred to
bring the assets to their working condition for
Fixed assets under construction and cost of assets not ready for use
before the year- end, are disclosed as capital work-in-progress.
(b) Intangible fixed assets
Intangible fixed assets comprising of computer software, are stated at
cost of acquisition less accumulated amortization and impairment loss,
if any. Intangible fixed assets are capitalized where they are expected
to provide future enduring economic benefits. Capitalization costs
include license fees and cost of implementation/system integration
services. The costs are capitalized in the year in which the software
is fully implemented for use.
23.6 Depreciation
Depreciation on fixed assets is provided using the written down value
method, as rates specified in schedule II of the Companies Act, 2013.
Depreciation is charged on a pro-rata basis for assets purchased/sold
during the year.
23.7 Impairment of assets
Management periodically assesses using external and internal sources
where there is an indication that an asset may be impaired. Impairment
occurs where the carrying value exceed the present value of future cash
flow expected to arise from the continuing use of the asset and its
eventual disposal. The impairment loss to be expensed is determined as
the excess of carrying amount over the higher of the assets net sales
price or present value as determined above. The management is of the
view that impairment does not apply to the Company, hence not
recognized.
23.8 Foreign Currency Transactions.
Foreign exchange transactions are recorded at the exchange rates
prevailing at the date of transaction. Realized gains or losses on
foreign exchange transactions during the period are recognized in
profit and loss account. However, sundry debtors are accounted upon the
prevailing rates on the date of invoice issuance. Expenditure in
foreign currency is accounted at the conversion rate prevalent when
such expenditure is incurred. Where realizations are deposited into,
and disbursements made out of, a foreign currency bank account, all
transactions during the month are reported at a rate as per the actual
monthly rate.
In the case of current assets and current liabilities expressed in
foreign currency, the exchange rate prevalent at the end of the year is
taken for the purposes of transaction. Exchange differences are arising
on foreign currency transactions are recognized as income or expenses
in the year in which they arise. In the case of forward contracts, the
difference between the forward rate and the exchange rate on the date
of the transaction is recognized as income or expenses over the life of
the contracts.
23.9 Investment
Investments are classified into long-term and current investments based
on the intent of management at the time of acquisition. Long-term
investments including investment in subsidiaries are stated at cost.
Current investments are stated at the lower of cost and the fair value.
23.10 Retirement Benefits.
Own Contributions to provident fund and ESI are charged to the profit
and loss account as incurred. Provisions for gratuity and leave
encashment are accounted at the year-end and charged off to the profit
and loss account.
Company has provided the provision for gratuity and leave encashment on
the basis of actuarial valuation as prescribed under AS-15 prescribed
by ICAI and liability was provided only for those employees who are
covered under Gratuity Act as certified by valuer.
Company does not owe any liability for bonus as no employee is covered
under Payment of Bonus Act and no provision for Bonus or Ex Gratia was
made.
23.11 Earning per Share
Basic earning per share is computed using the weighted average number
of equity shares outstanding during the year in pursuance with AS-20
prescribed by ICAI. Diluted earnings per share is computed using the
weighted average number of equity and diluted equity equivalent shares
outstanding during the year-end, except where the results would be
anti- dilutive.
23.12 Income Tax
a. Provision is made for income tax on a yearly basis in pursuance
with the provision prescribed under Income Tax Act, 1961 under the
tax-payable method, based on the tax liability as computed after taking
credit for allowances and exemptions as the case may be.
b. In compliance of Accounting Standard-22 on "Accounting for taxes on
Income" issued by ICAI, the company has recorded the deferred tax Asset
of Rs. 2,810,423/- for the year ended March 31, 2015, has been provided
and the post tax profit has accordingly increased
23.13 Employees Stock Option Plan (ESOP).
During the fiscal the company had not issued shares under employees'
stock option scheme.
23.14 Research & Development
Revenue Expenditure incurred on research and development is charged to
revenue in the year it is incurred. Assets used for research and
development activities are included in fixed assets.
23.15 Foreign Branch
All revenue and expenses transactions are during the year reported at
average rate. The assets and liabilities both monetary and non-monetary
are translated at the rate prevailing on the balance sheet date. All
resulting exchange differences are accumulated in a foreign currency
translation reserve until the disposal of the net investment. However
the Balance sheet of branch as on 31st March 2015 has been considered
and accounted as certified by the certified public accountant and as
certified by the management for the purpose of this Balance Sheet.
23.16 Segment Reporting
The Segment reporting policy complies with the accounting policies
adopted for preparation and presentation of financial statements of the
Company and is in conformity with Accounting Standard -17 on "Segment
Reporting", issued by ICAI. The primary segmentation is based on the
Geographies in which Company operates and internal reporting system.
The Company operates in two main Geographical Segments India and USA.
23.17 Provision and contingencies
The Company recognizes a provision when there is a present obligation
as a result of a past event and it is probable that it would involve an
outflow of resources and a reliable estimate can be made of the amount
of such obligation. Such provisions are not discounted to their present
value and are determined based on the management's estimation of the
obligation required to settle the obligation at the balance sheet date.
These are reviewed at each balance sheet date and adjusted to reflect
management's current estimates. Contingent assets are not recognized in
the financial statements.
23.18 Service tax input credit
Service tax input credit is accounted for in the books in the period in
which the underlying service received is accounted and when there is
reasonable certainty in availing / utilising the credits.
Material events occurring after the Balance Sheet date taken into
consideration while preparing the financial statement for the year.
23.19 As explained to us, during the year the Corporate Social
Responsibility (CSR) committee has been formed by the Company, however
the Company does not qualified the norms specified as required under
section 135 of Companies Act, 2013 to contribute towards CSR.
23.20 The Previous year figures have been regrouped/ reclassified
wherever necessary to make them comparable with the current year
figures.
Mar 31, 2014
1.1 Basis for preparation.
The revised schedule VI has become effective from 1st April 2011 for
the preparation of financial statements. This has significantly
impacted the disclosure and presentation made in the financial
statement. Previous year''s figures have been regrouped /reclassified
wherever necessary to correspond with the current year''s
classification/ disclosure.
The Financial statements have been prepared under the historical-cost
convention, in accordance with the Generally Accepted Accounting
Principles (GAAP) and accounting standards issued by the Institute of
Chartered Accountants of India (ICAI), the provisions of the Companies
Act, 1956 and guidelines issued by the Securities and Exchange Board of
India (SEBI) as adopted consistently by the Company. All Income and
expenditure having a material bearing on the financial statements are
recognized on the accrual Basis.
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Examples of such estimates include estimates of
expected contract costs to be incurred to complete contracts, future
obligations under employee retirement benefit plans. Actual result
could differ from these estimates.
1.2 Revenue recognition
Revenue from software development services and other projects on a
time-and -material basis is recognized based on services rendered and
billed to clients as per the terms of specific contracts. In the case
of fixed-price contracts, revenue is recognized based on the milestones
achieved, as specified in the contracts, on a percentage of completion
basis. Interest on deployment of surplus funds is recognized using the
time-proportion method, based on interest rates implicit in the
transaction. However, those expenses on which revenue had not
recognized was considered as work in process as per para 23.9.
1.3 Current-non-current classification
All assets and liabilities are classified into current and non-current.
(a) Assets
An asset is classified as current when it satisfies any of the
following criteria:
i) it is expected to be realized in the company''s normal operating
cycle;
ii) it is expected to be realized within 12 months after the reporting
date; or
iii) it is cash or cash equivalent unless it is restricted from being
exchanged or used to settle a liability for at least 12 months after
the reporting date.
Current assets include the current portion of non-current financial
assets.
All other assets are classified as non-current.
(b) Liabilities
A liability is classified as current when it satisfies any of the
following criteria:
i) it is expected to be settled in the company''s normal operating
cycle;
ii) it is held primarily for the purpose of being operational;
iii) it is due to be settled within 12 months after the reporting date;
or
iv) the company does not have an unconditional right to defer
settlement of the liability for at least 12 months after the reporting
date. Terms of a liability that could, at the option of the
counterparty, result in its settlement by the issue of equity
instruments do not affect its classification.
Current liabilities include current portion of non-current financial
liabilities. All other liabilities are classified as non-current.
1.4 Use of estimates
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities, if any at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
period. Examples of such estimates include provisions of future
obligation under employee retirement benefit plans and loans and
advances and provision for income-tax. Actual results could differ from
these estimates. Any revisions to estimates are recognized
prospectively in current and future periods.
1.5 Expenditure
Expenses are accounted for on accrual basis and provisions are made for
all known losses and liabilities. Company has booked sales incentive on
cash basis.
1.6 Fixed Assets
Fixed assets are stated at the cost of acquisition including incidental
costs related to acquisition and installation. All direct costs are
capitalized till the assets are ready to be put to use. Fixed assets
under construction, advances paid towards acquisition of fixed assets
and cost of assets not put to use before the period/year end, are
disclosed as capital work in progress.
(a) Tangible fixed assets and capital work-in-progress
Tangible fixed assets (except freehold land which is carried at cost)
are stated at cost of acquisition less accumulated depreciation and
impairment loss, if any. Cost of acquisition includes freight inward,
duties, taxes and other directly attributable expenses incurred to
bring the assets to their working condition for Fixed assets under
construction and cost of assets not ready for use before the year-end,
are disclosed as capital work-in-progress.
(b) Intangible fixed assets
Intangible fixed assets comprising of computer software, are stated at
cost of acquisition less accumulated amortization and impairment loss,
if any. Intangible fixed assets are capitalized where they are expected
to provide future enduring economic benefits. Capitalization costs
include license fees and cost of implementation/system integration
services. The costs are capitalized in the year in which the software
is fully implemented for use.
1.7 Depreciation
Depreciation on fixed assets is provided using the written down value
method, as rates specified in schedule XIV of the Companies Act, 1956.
Depreciation is charged on a pro-rata basis for assets purchased/sold
during the year. Individual assets costing less than Rs. 5,000/- are
depreciated in full in the year of purchase.
1.8 Impairment of assets
Management periodically assesses using external and internal sources
where there is an indication that an asset may be impaired. Impairment
occurs where the carrying value exceed the present value of future cash
flow expected to arise from the continuing use of the asset and its
eventual disposal. The impairment loss to be expensed is determined as
the excess of carrying amount over the higher of the assets net sales
price or present value as determined above. The management is of the
view that impairment does not apply to the Company, hence not
recognized.
1.9 Work-in-Process
The value of work in process as on the date of Balance Sheet has been
derived at cost. Which comprising all direct cost(s) incurred upon
ongoing projects client wise up till the end of financial year. The
value of such unbilled amount has been valued, taken and considered as
per certificate given by the management.
1.10 Foreign Currency Transactions
Foreign exchange transactions are recorded at the exchange rates
prevailing at the date of transaction. Realized gains or losses on
foreign exchange transactions during the period are recognized in
profit and loss account. However, sundry debtors are accounted upon the
prevailing rates on the date of invoice issuance. Expenditure in
foreign currency is accounted at the conversion rate prevalent when
such expenditure is incurred. Where realizations are deposited into,
and disbursements made out of, a foreign currency bank account, all
transactions during the month are reported at a rate which approximates
the actual monthly rate.
In the case of current assets and current liabilities expressed in
foreign currency, the exchange rate prevalent at the end of the year is
taken for the purposes of transaction. Exchange differences are arising
on foreign currency transactions are recognized as income or expenses
in the year in which they arise. In the case of forward contracts, the
difference between the forward rate and the exchange rate on the date
of the transaction is recognized as income or expenses over the life of
the contracts.
1.11 Investment
Investments are accounted based on the intent of management at the time
of acquisition as details below:
2013-2014 2012-2013
PARTICULARS (Rs. ) (Rs. )
NON-CURRENT INVESTMENTS
(AT COST UNLESS STATED OTHERWISE)
Investments in Equity instruments-Non
Traded Unquoted
In Associates
M/s.Enstaserv eServices Ltd
9930 Equity shares of '' 10/- each
fully paidup. 99,800 99,800
M/s Myzeal IT Solutions Pvt. Ltd.
5000 Equity Shares of Rs. 10/-
fully paid d 50,000 50,000
Others
M/s. Pumarth Properties & Holdings
Private 400000 equity shares @ Rs. 10
each at premium of Rs. 215 90,000,000 90,000,000
M/s Readystate Infraservices Private
Limited 300000 Equity Shares of
Rs. 700 each fully paid up 2,100,000,000 Nil
M/s Indian Durobuild Private Limited
250,000 Equity Shares of Rs. 10
each fully paid 2,500,000 2,500,000
M/s Master Talent Eduservices Pvt.
Ltd. 360000 Equity Shares of
Rs. 1700/- at premium i.e.
Rs. 10 each per Share and premium
@ Rs. 1690 612,000,000 612,000,000
In Subsidiaries
2706 Equity shares of AED 100000/-
each fully paidup in M/s.FCS
SOFTWARE MIDDLE EAST FZE 3,378,045,643 3,378,045,643
M/s Insync Business Solutions
Limited 50000 Equity Shares of
Rs. 10/- fully paid 626,100 626,100
USD 1.00 PAR VALUE OF 701,000
COMMON STOCK in FCS Software
Solutions America Ltd. 44,858,742 5,439
25000 Equity shares of EURO 1/-
each fully paidup in M/s.FCS
Software Solutions GmbH 2,126,285 Nil
4,340,306,569 4,083,326,982
1.12 Retirement Benefits
Own Contributions to provident fund and ESI are charged to the profit
and loss account as incurred. Provisions for gratuity and leave
encashment are accounted at the year-end and charged off to the profit
and loss account.
Company has provided the provision for gratuity and leave encashment on
the basis of actuarial valuation as prescribed under AS-15 prescribed
by ICAI and liability was provided only for those employees who are
covered under Gratuity Act as certified by valuer.
Company does not owe any liability for bonus as no employee is covered
under Payment of Bonus Act and no provision for Bonus or Ex Gratia was
made.
1.13 Earning per Share
Basic earning per share is computed using the weighted average number
of equity shares outstanding during the year in pursuance with AS-20
prescribed by ICAI. Diluted earnings per share is computed using the
weighted average number of equity and diluted equity equivalent shares
outstanding during the year-end, except where the results would be
anti- dilutive.
Year Ended Year Ended
31.03.2014 31.03.2013
AMOUNT (Rs.) AMOUNT (Rs.)
Profit After taxation available
to equity shareholders (Rs.) (38240714) 6,937,788
Weighted average number of
equity shares used in 1,296,813,374 1,059,169,538
Calculating basic earning per share
Add: Effect of diluted issue of
shares 400,000,000
Weighted average number of equity
shares used in 1,659,553,100 1,495,169,539
Calculating diluted earning per
share
Face Value of Shares (Rupees) Rs. 1/- Rs. 1/-
Basic earnings per share (Rupees) (0.03) 0.00065
Diluted earnings per share (Rupees) (0.023) 0.0005
1.14 Income Tax
a. Provision is made for income tax on a yearly basis in pursuance with
the provision prescribed under Income Tax Act, 1961 under the
tax-payable method, based on the tax liability as computed after taking
credit for allowances and exemptions as the case may be.
b. In compliance of Accounting Standard-22 on "Accounting for taxes on
Income" issued by ICAI, the company has recorded the deferred tax Asset
of Rs. 1,297,079/- for the year ended March 31, 2014, has been provided
and the post tax profit has accordingly increased
The item-wise details of deferred tax liability are as under: -
Year Ended Year Ended
31.03.2014 31.03.2013
AMOUNT (Rs.) AMOUNT (Rs.)
Deferred Tax( Liability)/Assets
(1) Depreciation 6,462,984 4,461,967
Add: Deferred Tax Assets
(2) Provision for Retirement Benefits
-For Gratuity 412,327 491,495
-Leave Encashment 1,105,318 1,730,089
Deferred Tax (Liability)/Assets (Net) 7,980,629 66,83,550
1.15 Employees Stock Option Plan (ESOP)
During the fiscal year the company had not issued shares under
employees'' stock option scheme.
1.16 Managerial Remuneration*
Year Ended Year Ended
31.03.2014 31.03.2013
AMOUNT (Rs.) AMOUNT (Rs.)
A.Managing Director
Salary and perquisites Nil Nil
Contribution to Provident Fund
and other funds Nil Nil
Commission Nil Nil
B.Executive Directors
Salary and perquisites 24,57,000 2,457,000
Contribution to Provident Fund
and other funds Nil Nil
Commission Nil Nil
C.Non Executive Directors
Salary and perquisites Nil Nil
Contribution to Provident Fund
and other funds Nil Nil
Commission Nil Nil
Sitting Fee 1,00,000 120,000
25,57,000 2,577,000
1.17 Research & Development
Revenue Expenditure incurred on research and development is charged to
revenue in the year it is incurred. Assets used for research and
development activities are included in fixed assets.
1.18 Foreign Branch
All revenue and expenses transactions are during the year reported at
average rate. The assets and liabilities both monetary and non-monetary
are translated at the rate prevailing on the balance sheet date. All
resulting exchange differences are accumulated in a foreign currency
translation reserve until the disposal of the net investment. However
the Balance sheet of branch as on 31st March 2014 has been considered
and accounted as certified by the certified public accountant and as
certified by the management for the purpose of this Balance Sheet.
1.19 Segment Reporting
The Segment reporting policy complies with the accounting policies
adopted for preparation and presentation of financial statements of the
Company and is in conformity with Accounting Standard -17 on "Segment
Reporting", issued by ICAI. The primary segmentation is based on the
Geographies in which Company operates and internal reporting system.
The Company operates in two main Geographical Segments India and USA.
The Profit and Loss for reportable primary Segment is setout below:
For the Year Ended 31st March 2014 (Amount in Lacs)
Description India USA Total
Revenue from external customers 1,340.21 7,055.53 8,395.74
Expenses 535.15 5,534.63 6,069.79
Segment Result 805.05 1,520.90 2,325.95
Unallocated Expenses 3,121.70
Operating Profit Before Taxation (795.75)
Other Income 495.17
Finance Charges 88.38
Profit Before Tax & Prior (388.96)
Period Adj.
Prior Period Adjustment 0.23
(Income)/ Expenses
Provision for Taxation 6.19
Provision for Deferred Tax (12.97)
Net Profit After Tax (382.41)
For the Year Ended 31st March 2013 (Amount in Lacs)
Description India USA Total
Revenue from external customers 999.34 4,562.91 5,562.26
Expenses 388.15 4,003.48 4,391.63
Segment Result 611.20 559.43 1,170.63
Unallocated Expenses 1,501.40
Operating Profit Before Taxation (330.77)
Other Income 458.14
Finance Charges 106.10
Profit Before Tax & Prior 21.27
Period Adj.
Prior Period Adjustment (0.79)
Income/ Expenses
Provision for Taxation 10.25
Provision for Deferred Tax (62.28)
(Assets)/Liability
Net Profit After Tax 69.38
1.20 Related Party Transactions:
31.03.2014 31.03.2013
A. List of Related parties-Where
control exists Wholly owned
subsidiary companies
Insync Business Solutions Limited:
- Provision for Services 38,821,009/- 37,909,000/-
Investments in Subsidiaries:
- FCS Software Solutions GmbH 2,126,285/- Nil
- FCS Software Solution America Ltd. 44,746,824/- Nil
B. Others
Lord Budha Educational Society:
- Loans & Advances Nil 294,450,436/-
- REPAYMENT OF LOAN 78,000,000/- Nil
- DONATION Paid 47,650,000/- Nil
- INTEREST Received 17,394,396/- 9,789,373/-
1.21 Material Events
Material events occurring after the Balance Sheet date taken into
consideration while preparing the financial statement for the year.
Mar 31, 2013
1.1 Basis for preparation.
The revised schedule VI has become effective from 1st April 2011 for
the preparation of financial statements. This has significantly
impacted the disclosure and presentation made in the financial
statement. Previous year''s figures have been regrouped
/reclassified wherever necessary to correspond with the current
year''s classification/ disclosure. The Financial statements
have been prepared under the historical-cost convention, in accordance
with the Generally Accepted Accounting Principles (GAAP) and accounting
standards issued by the Institute of Chartered Accountants of India
(ICAI), the provisions of the Companies Act, 1956 and guidelines issued
by the Securities and Exchange Board of India (SEBI) as adopted
consistently by the Company. All Income and expenditure having a
material bearing on the financial statements are recognized on the
accrual Basis. The preparation of financial statements in conformity
with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, and disclosure
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Examples of such estimates include estimates of
expected contract costs to be incurred to complete contracts, future
obligations under employee retirement benefit plans. Actual result
could differ from these estimates.
1.2. Revenue recognition.
Revenue from software development services and other projects on a
time-and "material basis is recognized based on services
rendered and billed to clients as per the terms of specific contracts.
In the case of fixed-price contracts, revenue is recognized based on
the milestones achieved, as specified in the contracts, on a percentage
of completion basis. Interest on deployment of surplus funds is
recognized using the time-proportion method, based on interest rates
implicit in the transaction. However, those expenses on which revenue
had not recognized was considered as work in process as per para 23.6.
1.3. Expenditure
Expenses are accounted for on accrual basis and provisions are made for
all known losses and liabilities. Company has booked sales incentive on
cash basis.
1.4. Fixed Assets
Fixed assets are stated at the cost of acquisition including incidental
costs related to acquisition and installation. All direct costs are
capitalized till the assets are ready to be put to use. Fixed assets
under construction, advances paid towards acquisition of fixed assets
and cost of assets not put to use before the period/year end, are
disclosed as capital work in progress.
1.5. Depreciation
Depreciation on fixed assets is provided using the written down value
method, as rates specified in schedule XIV of the Companies Act, 1956.
Depreciation is charged on a pro-rata basis for assets purchased/sold
during the year. Individual assets costing less than Rs. 5,000/- are
depreciated in full in the year of purchase.
1.6. Work-in-Process
The value of work in process as on the date of Balance Sheet has been
derived at cost. Which comprising all direct cost(s) incurred upon
ongoing projects client wise up till the end of financial year. The
value of such unbilled amount has been valued, taken and considered as
per certificate given by the management.
1.7. Foreign Currency Transactions.
Foreign exchange transactions are recorded at the exchange rates
prevailing at the date of transaction. Realized gains or losses on
foreign exchange transactions during the period are recognized in
profit and loss account. However, sundry debtors are accounted upon the
prevailing rates on the date of invoice issuance. Expenditure in
foreign currency is accounted at the conversion rate prevalent when
such expenditure is incurred. Where realizations are deposited into,
and disbursements made out of, a foreign currency bank account, all
transactions during the month are reported at a rate which approximates
the actual monthly rate.
In the case of current assets and current liabilities expressed in
foreign currency, the exchange rate prevalent at the end of the year is
taken for the purposes of transaction. Exchange differences are arising
on foreign currency transactions are recognized as income or expenses
in the year in which they arise. In the case of forward contracts, the
difference between the forward rate and the exchange rate on the date
of the transaction is recognized as income or expenses over the life of
the contracts.
1.8. Investment
Investments are accounted based on the intent of management at the time
of acquisition as detail below:
1.9. Investment in subsidiary
The company has its 100% wholly owned subsidiary FCS Software Solutions
America Ltd. U.S.A. & FCS Software Middle East FZE, UAE. The company
extended its captive investments of 100% in Insync Business Solutions
Limited in October 2012.
1.10. Retirement Benefits.
Own Contributions to provident fund and ESI are charged to the profit
and loss account as incurred. Provisions for gratuity and leave
encashment are accounted at the year-end and charged off to the profit
and loss account.
Company has provided the provision for gratuity and leave encashment on
the basis of actuarial valuation as prescribed under AS-15 prescribed
by ICAI and liability was provided only for those employees who are
covered under Gratuity Act as certified by valuer.
Company does not owe any liability for bonus as no employee is covered
under Payment of Bonus Act and no provision for Bonus or Ex Gratia was
made.
1.11. Earning per Share.
Basic earning per share is computed using the weighted average number
of equity shares outstanding during the year in pursuance with AS-20
prescribed by ICAI. Diluted earnings per share is computed using the
weighted average number of equity and diluted equity equivalent shares
outstanding during the year-end, except where the results would be
anti- dilutive.
1.12. Income Tax
a. Provision is made for income tax on a yearly basis in pursuance
with the provision prescribed under Income Tax Act, 1961 under the
tax-payable method, based on the tax liability as computed after taking
credit for allowances and exemptions as the case may be.
b. In compliance of Accounting Standard-22 on âÂÂAccounting for
taxes on Incomeâ issued by ICAI, the company has recorded the
deferred tax Asset of Rs. 62,28,249/- for the year ended March 31,
2013, has been provided and the post tax profit has accordingly
increased
1.13. Employees Stock Option Plan (ESOP).
During the fiscal the company had not issued shares under
employees'' stock option scheme.
1.15. Research & Development
Revenue Expenditure incurred on research and development is charged to
revenue in the year it is incurred. Assets used for research and
development activities are included in fixed assets.
1.16. Impairment
Management periodically assesses using external and internal sources
where there is an indication that an asset may be impaired. Impairment
occurs where the carrying value exceed the present value of future cash
flow expected to arise from the continuing use of the asset and its
eventual disposal. The impairment loss to be expensed is determined as
the excess of carrying amount over the higher of the assets net sales
price or present value as determined above. The management is of the
view that impairment does not apply to the Company, hence not
recognized.
1.17. Foreign Branch
All revenue and expenses transactions are during the year reported at
average rate. The assets and liabilities both monetary and non-monetary
are translated at the rate prevailing on the balance sheet date. All
resulting exchange differences are accumulated in a foreign currency
translation reserve until the disposal of the net investment. However
the Balance sheet of branch as on 31st March 2013 has been considered
and accounted as certified by the certified public accountant and as
certified by the management for the purpose of this Balance Sheet.
1.18. Segment Reporting
The Segment reporting policy complies with the accounting policies
adopted for preparation and presentation of financial statements of the
Company and is in conformity with Accounting Standard "17 on
âÂÂSegment Reportingâ , issued by ICAI. The primary
segmentation is based on the Geographies in which Company operates and
internal reporting system. The Company operates in two main
Geographical Segments India and USA.
The Profit and Loss for reportable primary Segment is setout below:
1.19. Material Events.
Material events occurring after the Balance Sheet date taken into
consideration while preparing the financial statement for the year.
Mar 31, 2012
1.1 Basis for preparation.
The revised schedule VI has become effective from 1st April 2011 for
the preparation of financial statements. This has significantly
impacted the disclosure and presentation made in the financial
statement. Previous year's figures have been regrouped /reclassified
wherever necessary to correspond with the current year's
classification/ disclosure.
The Financial statements have been prepared under the historical-cost
convention, in accordance with the Generally Accepted Accounting
Principles (GAAP) and accounting standards issued by the Institute of
Chartered Accountants of India (ICAI), the provisions of the Companies
Act, 1956 and guidelines issued by the Securities and Exchange Board of
India (SEBI) as adopted consistently by the Company. All Income and
expenditure having a material bearing on the financial statements are
recognized on the accrual Basis.
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Examples of such estimates include estimates of
expected contract costs to be incurred to complete contracts, future
obligations under employee retirement benefit plans. Actual result
could differ from these estimates.
1.2. Revenue recognition
Revenue from software development services and other projects on a
time-and -material basis is recognized based on services rendered and
billed to clients as per the terms of specific contracts. In the case
of fixed-price contracts, revenue is recognized based on the milestones
achieved, as specified in the contracts, on a percentage of completion
basis. Interest on deployment of surplus funds is recognized using the
time-proportion method, based on interest rates implicit in the
transaction.
1.3. Expenditure
Expenses are accounted for on accrual basis and provisions are made for
all known losses and liabilities. Company has booked sales incentive on
cash basis.
1.4. Fixed Assets
Fixed assets are stated at the cost of acquisition including incidental
costs related to acquisition and installation. All direct costs are
capitalized till the assets are ready to be put to use. Fixed assets
under construction, advances paid towards acquisition of fixed assets
and cost of assets not put to use before the period/year end, are
disclosed as capital work in progress.
1.5. Depreciation
Depreciation on fixed assets is provided using the written down value
method, as rates specified in schedule XIV of the Companies Act, 1956.
Depreciation is charged on a pro-rata basis for assets purchased/sold
during the year. Individual assets costing less than Rs. 5,000/- are
depreciated in full in the year of purchase.
1.6. Work-in-Process
The value of work in process as on the date of Balance Sheet has been
derived at cost. Which comprising all direct cost(s) incurred upon
ongoing projects client wise up till the end of financial year. The
value of such unbilled amount has been valued, taken and considered as
per certificate given by the management.
1.7. Foreign Currency Transactions.
Foreign exchange transactions are recorded at the exchange rates
prevailing at the date of transaction. Realized gains or losses on
foreign exchange transactions during the period are recognized in
profit and loss account. However, sundry debtors are accounted upon the
prevailing rates on the date of invoice issuance. Expenditure in
foreign currency is accounted at the conversion rate prevalent when
such expenditure is incurred. Where realizations are deposited into,
and disbursements made out of, a foreign currency bank account, all
transactions during the month are reported at a rate which approximates
the actual monthly rate.
In the case of current assets and current liabilities expressed in
foreign currency, the exchange rate prevalent at the end of the year is
taken for the purposes of transaction. Exchange differences are
arising on foreign currency transactions are recognized as income or
expenses in the year in which they arise. In the case of forward
contracts, the difference between the forward rate and the exchange
rate on the date of the transaction is recognized as income or expenses
over the life of the contracts.
1.8. Investment
Investments are accounted based on the intent of management at the time
of acquisition as detail below:
1.9. Investment in subsidiary
The company has its 100% wholly owned subsidiary FCS Software Solutions
America Ltd. U.S.A. & F.C.S. Software Middle East FZE, UAE.
1.10. Retirement Benefits.
Own Contributions to provident fund and ESI are charged to the profit
and loss account as incurred. Provisions for gratuity and leave
encashment are accounted at the year-end and charged off to the profit
and loss account.
Company has provided the provision for gratuity and leave encashment on
the basis of actuarial valuation as prescribed under AS-15 prescribed
by ICAI and liability was provided only for those employees who are
covered under Gratuity Act as certified by value.
Company does not owe any liability for bonus as no employee is covered
under Payment of Bonus Act and no provision for Bonus or Ex Gratia was
made.
1.11. Earnings per Share.
Basic earnings per share is computed using the weighted average number
of equity shares outstanding during the year. Diluted earnings per
share is computed using the weighted average number of equity and
diluted equity equivalent shares outstanding during the year- end,
except where the results would be anti-dilutive.
1.12. Income Tax
a. Provision is made for income tax on a yearly basis in pursuance
with the provision prescribed under Income Tax Act, 1961 under the
tax-payable method, based on the tax liability as computed after taking
credit for allowances and exemptions as the case may be.
b. In compliance of Accounting Standard-22 on "Accounting for taxes
on Income" issued by ICAI, the company has recorded the deferred tax
Asset of Rs. 7,069,344/- for the year ended March 31, 2012, has been
provided and the post tax profit has accordingly been increased
1.13. Employees Stock Option Plan (ESOP).
During the fiscal the company had not issued shares under employees'
stock option scheme.
1.15. Research & Development
Revenue Expenditure incurred on research and development is charged to
revenue in the year it is incurred. Assets used for research and
development activities are included in fixed assets.
1.16. Impairment
Management periodically assesses using external and internal sources
where there is an indication that an asset may be impaired. Impairment
occurs where the carrying value exceed the present value of future cash
flow expected to arise from the continuing use of the asset and its
eventual disposal. The impairment loss to be expensed is determined as
the excess of carrying amount over the higher of the assets net sales
price or present value as determined above. The management is of the
view that impairment does not apply to the Company, hence not
recognized.
1.17. Foreign Branch
All revenue and expenses transactions are during the year reported at
average rate. The assets and liabilities both monetary and non-monetary
are translated at the rate prevailing on the balance sheet date. All
resulting exchange differences are accumulated in a foreign currency
translation reserve until the disposal of the net investment. However
the Balance sheet of branch as on 31st March 2012 has been considered
and accounted as certified by the certified public accountant and as
certified by the management for the purpose of this Balance Sheet.
1.18. Segment Reporting
The Segment reporting policy complies with the accounting policies
adopted for preparation and presentation of financial statements of the
Company and is in conformity with Accounting Standard -17 on "Segment
Reporting", issued by ICAI. The primary segmentation is based on the
Geographies in which Company operates and internal reporting system.
The Company operates in two main Geographical Segments India and USA.
The Profit and Loss for reportable primary Segment is setout below:
1.19. Employee Benefits
Contributions to defined schemes such as provident Fund, Employees'
State Insurance Schemed are charged as incurred on actual basis. The
Company also provides for other retirement benefits in the form of
gratuity and leave encashment based on valuation made by independent
actuaries as at the balance sheet date.
1.20. Related Party Transactions:
The Company had no Related Party Transactions during the financial
year.
1.21. Unsecured Loans taken / accepted
The company has given an unsecured loans to M/s Lord Budha Educational
Society on which no interest has been charged.
1.22. Material Events.
Material events occurring after the Balance Sheet date have been taken
into consideration while preparing the financial statement for the
year.
Mar 31, 2010
P.1.1. Basis for preparation.
The Financial statements have been prepared under the historical-cost
convention, in accordance with the Generally Accepted Accounting
Principles (GAAP) and accounting standards issued by the Institute of
Chartered Accountants of India (ICAI), the provisions of the Companies
Act, 1956 and guidelines issued by the Securities and Exchange Board of
India (SEBI) as adopted consistently by the Company. All Income and
expenditure having a material bearing on the financial statements are
recognized on the accrual Basis.
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Examples of such estimates include estimates of
expected contract costs to be incurred to complete contracts, future
obligations under employee retirement benefit plans. Actual result
could differ from these estimates.
P.1.2. Revenue recognition.
Revenue from software development services and other projects on a
time-and -material basis is recognized based on services rendered and
billed to clients as per the terms of specific contracts. In the case
of fixed-price contracts, revenue is recognized based on the milestones
achieved, as specified in the contracts, on a percentage of completion
basis. Interest on development of surplus funds is recognized using the
time-proportion method, based on interest rates implicit in the
transaction.
P.1.3. Expenditure
Expenses are accounted for on accrual basis and provisions are made for
all known losses and liabilities. Company has booked sales incentive on
cash basis.
P.1.4. Fixed Assets
Fixed assets are stated at the cost of acquisition including incidental
costs related to acquisition and installation. All direct costs are
capitalized till the assets are ready to be put to use. Fixed assets
under construction, advances paid towards acquisition of fixed assets
and cost of assets not put to use before the period/year end, are
disclosed as capital work in progress.
P.1.5. Depreciation
Depreciation on fixed assets is provided using the written down value
method, as rates specified in schedule XIV of the Companies Act, 1956.
Depreciation is charged on a pro- rata basis for assets purchased/sold
during the year. Individual assets costing less than ` 5,000/- are
depreciated in full in the year of purchase.
P.1.6. Work-in-Process
The value of work in process as on the date of Balance Sheet has been
derived at cost. Which comprising all direct cost(s) incurred upon
ongoing projects client wise up till the end of financial year. The
value of such unbilled amount has been valued, taken and considered as
per certificate given by the management.
P.1.7. Foreign Currency Transactions.
Foreign exchange transactions are recorded at the exchange rates
prevailing at the date of transaction. Realized gains or losses on
foreign exchange transactions during the period are recognized in
profit and loss account. However, sundry debtors are accounted upon the
prevailing rates on the date of invoice issuance. Expenditure in
foreign currency is accounted at the conversion rate prevalent when
such expenditure is incurred. Where realizations are deposited into,
and disbursements made out of, a foreign currency bank account, all
transactions during the month are reported at a rate which approximates
the actual monthly rate.
In the case of current assets and current liabilities expressed in
foreign currency, the exchange rate prevalent at the end of the year is
taken for the purposes of transaction. Exchange differences are
arising on foreign currency transactions are recognized as income or
expenses in the year in which they arise. In the case of forward
contracts, the difference between the forward rate and the exchange
rate on the date of the transaction is recognized as income or expenses
over the life of the contracts.
P.1.8. Investment
Investments are accounted based on the intent of management at the time
of acquisition.
P.1.9. Retirement Benefits.
Contributions to provident fund are charged to the profit and loss
account as incurred. Provisions for gratuity and leave encashment are
accounted at the year-end and charged off to the profit and loss
account.
Company is not providing for the gratuity on the basis of actuarial
valuation as prescribed under AS-15 prescribed by ICAI and liability
was provided only for those employees who are covered under Gratuity
Act as determined by the management.
Company does not owe any liability for bonus as no employee is covered
under Payment of Bonus Act and no provision for Ex Gratia was made.
P.1.11. Employee Stock option based compensation.
The company had not issued any shares under employee stock option plan
and accordingly not claimed any expenses towards employees stock
compensation account. However, a scheme has been approved by the
shareholders for issue of 1,00,00,000 equity shares.
P.1.12. Earning per Share.
Basic earning per share is computed using the weighted average number
of equity shares outstanding during the year. Diluted earnings per
share is computed using the weighted average number of equity and
diluted equity equivalent shares outstanding during the year-end,
except where the results would be anti-dilutive.
P.1.13. Income Tax
a. Provision is made for income tax on a yearly basis, under the
tax-payable method, based on the tax liability as computed after taking
credit for allowances and exemptions as the case may be.
b. In compliance of Accounting Standard-22 on "Accounting for taxes on
Income" issued by ICAI, the company has recorded the deferred tax Asset
of Rs 53,76,320/- for the year ended 31st March 31,2010, has been
provided and the post tax profit has accordingly increased.
P.1.14. Employees Stock Option Plan (ESOP).
During the fiscal the company had not issued shares under employees
stock option scheme.
The Securities and Exchange board of India (SEBI) has issued the
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
guidelines, 1999 which is effective for all stock options schemes
established after 19th June 1999. In accordance with these guidelines,
the access of the market price of the underlying equity shares as of
the date of the grant of the options over the exercise price of the
option, including upfront payments, if any is to be recognized and
amortized on a straight-line basis over the vesting period.
In the fiscal 2005, the company instituted an ESPS Scheme comprising
the issue of 110,000 equity shares and ESOS scheme comprising the issue
of 7,53,000 equity shares having the vesting period of three years. The
Board of Directors and shareholders in the meeting duly approved the
scheme and issued shares as under:
P.1.17. Research & Development
Revenue Expenditure incurred on research and development is charged to
revenue in the year it is incurred. Assets used for research and
development activities are included in fixed assets.
P.1.18. Foreign Branch
All revenue and expenses transactions are during the year reported at
average rate. The assets and liabilities both monetary and non-monetary
are translated at the rate prevailing on the balance sheet date. All
resulting exchange differences are accumulated in a foreign currency
translation reserve until the disposal of the net investment. However
the Balance sheet of branch as on 31st March 2010 has been considered
and accounted as certified by the certified public accountant and
further certified by the management.
P.1.19. Segment Reporting
The Segment reporting policy complies with the accounting policies
adopted for preparation and presentation of financial statements of the
Company and is in conformity with Accounting Standard-17 on "Segment
Reporting", issued by ICAI. The primary segmentation is based on the
Geographies in which Company operates and internal reporting system.
The Company operates in three main Geographical Segments India, USA,
and Middle East.
P.1.20. Employee Benefits
Contributions to defined schemes such as provident Fund, Employees
State Insurance Schemed are charged as incurred on actual basis. The
Company also provides for other retirement benefits in the form of
gratuity and leave encashment based on valuation made by independent
actuaries as at the balance sheet date.
P.1.21. Material Events.
Material events occurring after the Balance Sheet date have been taken
into consideration.
Mar 31, 2009
P.1.1. Basis for preparation.
The Financial statements have been prepared under the historical-cost
convention, in accordance with the Generally Accepted Accounting
Principles (GAAP) and accounting standards issued by the Institute of
Chartered Accountants of India (ICAI), the provisions of the Companies
Act, 1956 and guidelines issued by the Securities and Exchange Board of
India (SEBI) as adopted consistently by the Company. All Income and
expenditure having a material bearing on the financial statements are
recognized on the accrual Basis.
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Examples of such estimates include estimates of
expected contract costs to be incurred to complete contracts, future
obligations under employee retirement benefit plans. Actual result
could differ from these estimates.
P.1.2. Revenue recognition.
Revenue from software development services and other projects on a
time-and -material basis is recognized based on services rendered and
billed to clients as per the terms of specific contracts. In the case
of fixed-price contracts, revenue is recognized based on the milestones
achieved, as specified in the contracts, on a percentage of completion
basis. Interest on development of surplus funds is recognized using the
time-proportion method, based on interest rates implicit in the
transaction.
P.1.3. Expenditure
Expenses are accounted for on accrual basis and provisions are made for
all known losses and liabilities. Company has booked sales incentive on
cash basis.
P.1.4. Fixed Assets
Fixed assets are stated at the cost of acquisition including incidental
costs related to acquisition and installation. All direct costs are
capitalized till the assets are ready to be put to use. Fixed assets
under construction, advances paid towards acquisition of fixed assets
and cost of assets not put to use before the period/year end, are
disclosed as capital work in progress.
P.1.5. Depreciation
Depreciation on fixed assets is provided using the written down value
method, as rates specified in schedule XIV of the Companies Act, 1956.
Depreciation is charged on a pro- rata basis for assets purchased/sold
during the year. Individual assets costing less than Rs. 5,000/- are
depreciated in full in the year of purchase.
The company has booked depreciation on building situated at NSEZ.
Whereas title of land yet to be transfer in the name of the company.
Till 31st March 2009 the company had paid Rs 2,92,53,975/-, which was
capitalized, against land as shown in fixed assets.
P.1.6. Work-in-Process
The value of work in process as on the date of Balance Sheet has been
derived at cost. Which comprising all direct cost(s) incurred upon
ongoing projects client wise up till the end of financial year. The
value of such unbilled amount has been valued, taken and considered as
per certificate given by the management.
P.1.7. Foreign Currency Transactions.
Foreign exchange transactions are recorded at the exchange rates
prevailing at the date of transaction. Realized gains or losses on
foreign exchange transactions during the period are recognized in
profit and loss account. However, sundry debtors are accounted upon the
prevailing rates on the date of invoice issuance. Expenditure in
foreign currency is accounted at the conversion rate prevalent when
such expenditure is incurred. Where realizations are deposited into,
and disbursements made out of, a foreign currency bank account, all
transactions during the month are reported at a rate which approximates
the actual monthly rate.
In the case of current assets and current liabilities expressed in
foreign currency, the exchange rate prevalent at the end of the year is
taken for the purposes of transaction. Exchange differences are
arising on foreign currency transactions are recognized as income or
expenses in the year in which they arise. In the case of forward
contracts, the difference between the forward rate and the exchange
rate on the date of the transaction is recognized as income or expenses
over the life of the contracts.
P.1.8. Investment
Investments are accounted based on the intent of management at the time
of acquisition.
P.1.9. Investment in subsidiary
The company has its 100% wholly owned subsidiary FCS Software Solutions
America Ltd. U.S.A.
P.1.10. Retirement Benefits.
Contributions to provident fund are charged to the profit and loss
account as incurred. Provisions for gratuity and leave encashment are
accounted at the year-end and charged off to the profit and loss
account.
Company is not providing for the gratuity on the basis of actuarial
valuation as prescribed under AS-15 prescribed by ICAI and liability
was provided only for those employees who are covered under Gratuity
Act as determined by the management.
Company does not owe any liability for bonus as no employee is covered
under Payment of Bonus Act and no provision for Ex Gratia was made.
P.1.11. Employee Stock option based compensation.
The excess of market price of underlying equity shares as of the date
of the grant of options over the exercise price of the options given to
employees under the employee stock option plan is recognize as deferred
stock compensation cost and amortized over the vesting period, on a
straight line basis.
P.1.12. Earning per Share.
Basic earning per share is computed using the weighted average number
of equity shares outstanding during the year. Diluted earnings per
share is computed using the weighted average number of equity and
diluted equity equivalent shares outstanding during the year-end,
except where the results would be anti-dilutive.
P.1.13. Income Tax
a. Provision is made for income tax on a yearly basis, under the
tax-payable method, based on the tax liability as computed after taking
credit for allowances and exemptions as the case may be.
b. In compliance of Accounting Standard-22 on "Accounting for taxes on
Income" issued by ICAI, the company has recorded the deferred tax Asset
of Rs. 1421930/- for the year ended 31st March 31,2009, has been
provided and the post tax profit has accordingly increased.
P.1.14 Employees Stock Option Plan (ESOP).
The Securities and Exchange board of India (SEBI) has issued the
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
guidelines, 1999 which is effective for all stock options schemes
established after 19th June 1999. In accordance with these guidelines,
the access of the market price of the underlying equity shares as of
the date of the grant of the options over the exercise price of the
option, including upfront payments, if any is to be recognized and
amortized on a straight-line basis over the vesting period.
In the fiscal 2005, the company instituted an ESPS Scheme comprising
the issue of 110,000 equity shares and ESOS scheme comprising the issue
of 7,53,000 equity shares having the vesting period of three years. The
Board of Directors and shareholders in the meeting duly approved the
scheme.
P.1.15. Research & Development
Revenue Expenditure incurred on research and development is charged to
revenue in the year it is incurred. Assets used for research and
development activities are included in fixed assets.
P.1.16. Foreign Branch
All revenue and expenses transactions are during the year reported at
average rate. The assets and liabilities both monetary and non-monetary
are translated at the rate prevailing on the balance sheet date. All
resulting exchange differences are accumulated in a foreign currency
translation reserve until the disposal of the net investment. However
the Balance sheet of branch as on 31st March 2009 has been considered
and accounted as certified by the certified public accountant and
further certified by the management.
P.1.17. Segment Reporting
The Segment reporting policy complies with the accounting policies
adopted for preparation and presentation of financial statements of the
Company and is in conformity with Accounting Standard -17 on "Segment
Reporting", issued by ICAI. The primary segmentation is based on the
Geographies in which Company operates and internal reporting system.
The Company operates in two main Geographical Segments India and USA.
P.1.18 Employee Benefits
Contributions to defined schemes such as provident Fund, Employees
State Insurance Schemed are charged as incurred on actual basis. The
Company also provides for other retirement benefits in the form of
gratuity and leave encashment based on valuation made by independent
actuaries as at the balance sheet date.
P.1.19 Material Events.
Material events occurring after the Balance Sheet date taken into
consideration.
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