Accounting Policies of Fintech Communication Ltd. Company

Mar 31, 2012

A Basis of Preparation

The financial statements have been prepared and presented in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis. GAAP comprises accounting standards notified by the Central Government of India under Section 211 (3C) of the Companies Act, 1956, other pronouncements of Institute of Chartered Accountants of India, the provisions of Companies Act, 1956 and guidelines issued by Securities and Exchange Board of India.

b Use of Estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of financial statements and the reported amount of revenue and expenses during the reporting period. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods.

c Fixed assets, Intangible assets, Depreciation and Amortization

Fixed assets are stated at cost of acquisition or construction, less accumulated depreciation. Cost includes inward freight, duties, taxes and incidental expenses related to acquisition and installation of the asset. Borrowing costs related to the acquisition or construction of the qualifying fixed assets for the period up to the completion of their acquisition or constructions are capitalized. Depreciation for the year is provided on the wdv method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.

Depreciation is charged on pro-rata basis for assets purchased / sold during the year. Individual assets costing less than Rs. 5,000/- are depreciated at 100%.

Intangible assets are recorded at the consideration paid for acquisition and are amortized over their estimated useful lives on a straight-line basis, commencing from the date the asset is available to the Company for its use.

Technical Know-how fees and computer software are amortized over a period of 6 and 4 years respectively. Advances paid towards acquisition of fixed assets and the cost of assets not ready to be put to use before the yearend are disclosed under capital work in progress.

d Impairment of Assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount (higher of net realizable value and value in use) of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than the carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the profit and loss account. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost.

e Operating Lease

Operating lease payments are recognized as an expense in the profit and loss account on a straight line basis over the lease term.

f Investments

Trade investments are investments made to enhance the Company''s business interests. Investments are either classified as current or long-term based on the management''s intention. Current investments are carried at the lower of cost and fair value. Long-term investments are carried at cost and provisions recorded to recognize any decline, other than temporary, in the carrying value of each investment.

g Inventories

Inventories of raw & packing materials are valued at the lower of cost on a first in first out basis and net realizable value. Work in-process, stores and spare parts and finished goods are valued at the lower of cost and net realizable value. In the case of manufactured inventories, costs are generally calculated at standards adjusted to actual and include cost of conversion and other costs incurred in bringing the inventories to their present location and condition. The excise duty in respect of closing inventory of finished goods is included as part of inventory. The amount of CENVAT credits in respect of materials consumed for sales is deducted from the cost of materials consumed.

h Retirement benefits

Gratuity and pension costs with respect to defined benefit schemes are accrued based on actuarial valuations, carried out by an independent actuary as at the balance sheet date. These contributions are made to a registered trust. Provision is made for leave encashment based on actuarial valuation, carried out by an independent actuary as at the balance sheet date.

The Company''s contribution to Provident Fund, Employees'' State Insurance Scheme, and defined contribution plans are charged to the Profit and Loss Account when incurred.

i Revenue recognition

Revenue from the sale of goods is recognized on despatch of goods to customers which generally coincides with the transfer of all significant risks and rewards of ownership to the buyer. Revenue from service is recognized on rendering of services to customers. Sales amounts include excise duty but exclude sales tax and trade discounts. Dividend income is recognized in the year when the right to receive payment is established. Interest income is recognized on time proportion basis.

j Transactions in foreign currency

Foreign currency transactions will be accounted at the exchange rates prevailing on the date of the relevant transactions. Exchange differences arising on foreign currency transactions settled during the year will be recognized in the Profit and Loss Account of the year. Monetary assets and liabilities denominated in foreign currencies as at the Balance Sheet date would be translated at the closing exchange rates on that date. The resultant exchange differences will be recognized in the Profit and Loss Account.

k Taxation

Income tax expense comprises current tax (i.e. amount of tax for the year determined in accordance with the income tax law) and deferred tax charge or credit (reflecting the tax effects of the timing differences between accounting income and taxable income for the year). The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantially enacted by the balance sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future; however, where there is unabsorbed depreciation or carry forward of losses under taxation laws, deferred tax assets are recognized only if there is virtual certainty of realization of such assets. Deferred tax assets are reviewed at each balance sheet date and written down or written up to reflect the amount that is reasonably / virtually certain (as the case may be) to be realized.

Current tax and deferred tax assets and liabilities are offset to the extent to which the Company has a legally enforceable right to set off. Deferred tax assets are written back this years an it is not likely to be of any advantage.

l Earnings per share

Basic earnings per share is computed by dividing net profit or loss for the period attributable to equity shareholders by the weighted average number of shares outstanding during the year. Diluted earnings per share amounts are computed after adjusting the effects of all dilutive potential equity shares. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share, and also the weighted average number of equity shares, which could have been issued on the conversion of all dilutive potential shares. In computing dilutive earnings per share, only potential equity shares that are dilutive and that decrease profit per share are included.

m Provisions, contingent liabilities and contingent assets

The Company creates a provision when there is present obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent assets are neither recognised nor disclosed in the financial statements.

n Cash flows

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

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Mar 31, 2010

A. BASIS OF ACCOUNTING: The Financial Statements are prepared under the historical cost convention, in accordance with applicable Accounting Standards.

B. FIXED ASSETS: Fixed Assets are valued at cost. The cost comprises of purchase price and all other attributable costs of bringing the assets to working condition for intended use and includes preoperative expenses up to commencement of business.

C. DEPRECIATION: Depreciation is provided on written down method at the rates and the manner specified in the Schedule-XIV of the Companies Act,1956. Computer and software are treated as plant and machinery to the Company being a software Company. Depreciation is worked out on pro rata basis from/up to the date of acquisition / put to use/ disposed of the respective assets.

D. INVESTMENTS: Long-term investments are stated at realisable value and depletion in the value is accounted for.

E. RETIREMENT BENEFITS: Provision of provident fund to employees is not made, as the provisions relating to the same are not yet applicable to the Company.

F. PRELIMINARY EXPENSES: Preliminary and Public issue expenses are already amortised in ten equal installments starting from the year of commencement of business.

G. RECOGNITION OF INCOME & EXPENDITURES: (i) Income from services rendered for software development are recognised on complete service contract method. (ii) Interest on outstanding allotment money due is accounted as and when received. (iii) All other income and expenditures are accounted on accrual basis. (iv) Claims not ascertainable with reasonable certainty are accounted on payment basis.

H. CONTINGENT LIABILITIES: Contingent liabilities are not provided for in the Books of Accounts.

I. Taxation :

(i) Provision for current income tax is determined in accordance with the provisions of the income tax act, 1961.

(ii) Deferred tax is recognized, on timing differences, being the difference between the taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

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Mar 31, 2009

A. BASIS OF ACCOUNTING: The Financial Statements are prepared under the historical cost convention, in accordance with applicable Accounting Standards.

B. FIXED ASSETS: Fixed Assets are valued at cost. The cost comprises of purchase price and all other attributable costs of bringing the assets to working condition for intended use and includes preoperative expenses up to commencement of business.

C. DEPRECIATION: Depreciation is provided on written down method at the rates and the manner specified in the Schedule-XIV of the Companies Act,1956. Computer and software are treated as plant and machinery to the Company being a software Company. Depreciation is worked out on pro rata basis from/up to the date of acquisition / put to use/ disposed of the respective assets.

D. INVESTMENTS: Long-term investments are stated at realisable value and depletion in the value is accounted for.

E. RETIREMENT BENEFITS: Provision of provident fund to employees is not made, as the provisions relating to the same are not yet applicable to the Company.

F. PRELIMINARY EXPENSES: Preliminary and Public issue expenses are already amortised in ten equal installments starting from the year of commencement of business.

G. RECOGNITION OF INCOME & EXPENDITURES: (i) Income from services rendered for software development are recognised on complete service contract method. (ii) Interest on outstanding allotment money due is accounted as and when received. (iii) All other income and expenditures are accounted on accrual basis. (iv) Claims not ascertainable with reasonable certainty are accounted on payment basis.

H. CONTINGENT LIABILITIES: Contingent liabilities are not provided for in the Books of Accounts.

I. Taxation :

(i) Provision for current income tax and fringe benefit tax is determined in accordance with the provisions of the respective acts.

(ii) Deferred tax is recognized, on timing differences, being the difference between the taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.