Accounting Policies of Glodyne Technoserve Ltd. Company

Mar 31, 2013

I. Basis of Accounting

The financial statements have been prepared in accordance with Indian Generally Accepted Accounting Principles (IGAAP) under the historical cost convention on accrual basis. The IGAAP comprises Accounting Standards ("AS") notified under Companies Accounting Standards Rules, 2006 by the Central Government of India under Section 211(3C) of the Companies Act, 1956, various pronouncements of the Institute of Chartered Accountants of India ("ICAI"), and the relevant provisions of the Companies Act, 1956 ("the Act") 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 is initially adopted or a revision to an existing Accounting Standard requires a change in the accounting policy hitherto in use. The Management evaluates all recently issued or revised Accounting Standards on an ongoing basis.

ii. Use of estimates

The preparation of financial statements in conformity with IGAAP requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and disclosure of contingent liabilities on the date of financial statements. Examples of such estimates and assumptions include useful lives of fixed assets, intangible assets, taxes, provision for doubtful debts, anticipated obligations under employee retirement plans, etc. The recognition, measurement, classification or disclosures of an item or information in the financial statements have been made relying on these estimates to a greater extent. Actual results could differ from those estimates.

iii. Revenue Recognition

Revenues are recorded net off all the applicable taxes.

Direct revenue of the Company comprises the income from following principal activities:

a) Technology Infrastructure Management Services - This represents Technology Integration and Management Services. Technology Integration activities include Technology Management services, turnkey Solutions for Technology Deployment, resales, leasing and Integration of Hardware / System Software/ Database Software / Networking Products with or without one another. Revenue from Technology Integration is recognised on delivery to the customer and acknowledgement thereof, in accordance with the terms of the individual contracts. Management Services represents amount charged for Facility Management Services, Maintenance upkeep of Hardware / System Software/ Database Software / Networking Products and consultancy thereon. Revenue from Management Services is recognised over the life of the contracts. Maintenance revenue on expired contracts on which services have continued to be rendered is recognised on renewal of contract or on receipt of payment.

The Company provides financial inclusion and e-governance managed services to various Indian banks which include, data capture, digitization, de-duplication, software applications and its maintenance, data center and its maintenance, networking, handheld devices connectivity, business correspondent operations, smart card/ identity card supply, etc. The Company provide public cloud based education managed services across schools, colleges and universities which include web based solutions, automation and maintenance of it assets, software services and maintenance etc. Revenue recognition in these businesses are according to the service delivery milestones specified in the contracts.

b) Software Services- This represents charges for development of software for customer and sale of licenses of software and other products. Revenue from Software services is recognised when the software is developed and installed / delivered to the customers as per the terms of the contract. Revenue on sale of licenses of software and other products is recognised on delivery / installation, as the case may be.

Indirect Revenue of the Company generally comprises the following items:

a) Interest Income- Interest Income is recognised based on time proportion and on gross basis.

b) Dividend Income- Dividend Income is recognised when the Company's right to receive dividend is established.

c) Rental Income- Rent on Immovable properties is recognised on accrual basis as per respective agreement with the parties.

iv. Expenditure

Expenses are accounted on the accrual basis and provisions are made for all known losses and liabilities.

v. Fixed assets, Intangible Assets, Capital Work-in Progress and Depreciation/Amortisation

a) All fixed assets are stated at cost less accumulated depreciation. For this purpose cost includes purchase price and all other attributable costs of bringing the assets to working condition for its intended use.

b) Intangible assets are stated at the consideration paid for purchase / acquisition less accumulated amortization.

c) Capital Work in Progress / Intangible Assets under development include expenditure incurred for acquiring Fixed / Intangible assets not ready for intended use before the balance sheet date.

d) Depreciation on all assets is provided pro-rata to the period of use, under straight-line method, at rates prescribed in Schedule XIV of the Companies Act, 1956. Intangible assets including Technical Know how are amortised over their respective individual estimated useful lives (not exceeding five years) on a straight line basis, commencing from the date the asset is available for its intended use. Leasehold land is amortised over the life of the lease.

vi. Classification of Current/Non-current Assets and Liabilities :

An asset is classified as current when it satisfies following criteria:

a) It is expected to be realized in or is intended for sale or consumption in, the company's operating cycle;

b) It is expected to be realised within 12 months after the reporting date;

c) It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date.

All other assets are classified as Non-current.

A liability is classified as current when it satisfies any of following criteria:

a) It is expected to be settled in the company's normal operating cycle;

b) It is due to be settled within 12 months after the reporting date;

c) The company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

All other liabilities are classified as Non-current

vii. Borrowing Costs

Borrowing Costs directly attributable to the acquisition or construction of fixed assets are capitalized for the period until the asset is ready for its intended use. Other borrowing costs are recognised as an expense in the period in which they are incurred.

viii. Investments

Trade Investments are investments made to enhance the Company's business interest. Investments are either classified as Long term or Current based on the Management's intention at the time of purchase. Investments that are readily realizable and intended to be held for not more than a year are classified as Current Investments. All other Investments are classified as Long Term Investments. Long Term Investments are stated at Cost. A provision for diminution in value is made to recognise a decline, other than temporary, in the value of long term investments. Current Investments, if any, are valued at lower of cost and net realizable value.

ix. Inventories

Inventories include stocks of Computer equipments, peripherals and traded software in respect of Infrastructure Management Services of the Company and the same is valued at lower of cost (net of provision for obsolescence) or net realizable value. Cost is determined on First In First Out (FIFO) basis.

x. Foreign exchange transactions

Transactions in foreign currencies are generally recorded at the exchange rate prevailing on the date of the transaction. Monetary items denominated in foreign currency and outstanding at the Balance Sheet date are translated at the exchange rate ruling on that date. Exchange differences on foreign exchange transactions are recognised in the profit and loss account.

Investments in overseas subsidiaries are recognised at the relevant exchange rates prevailing on the dates of allotment / investments.

xi. Accounting for Employee Benefits

Staff Costs and Directors' Remuneration include Short term employee benefits such as Salaries, allowances, incentives, and short term compensated absences etc. It also includes company contributions towards Defined Contribution plans and provisions for Defined Benefit plans.

(a) Short Term Employee Benefits

Short term employee benefits are recognised in the period during which the services are rendered. Provision for unused entitlements in respect of compensated absences is made for on the basis of actuarial valuation made at the end of each financial year.

(b) Post Employment Benefits

A. Provident Fund (PF) & Employees' State Insurance Scheme (ESIC)- Defined Contribution Plans

Under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 all eligible employees of the Company are entitled to receive benefits which is a Defined Contribution Plan. In addition, some employees of the Company are covered under ESIC Act, 1948, which is also a Defined Contribution Plan. Both these Plans are recognised and administered by the Statutory Authorities. Both the employees and the Company make monthly contributions to these plans. The Company's contributions to these schemes are recognised as expense in the Statement of Profit and Loss during the period in which the employee renders the related service. The Company has no further obligation under these plans beyond its monthly contributions.

B. Gratuity- a Defined Benefit Plan

The Company provides for Gratuity in accordance with the Payment of Gratuity Act, 1972, a Defined Benefit Plan. The plan, subject to the provisions of the above Act, provides for lump sum payment to eligible employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary and tenure of employment. Gratuity liability is accrued and provided for on the basis of an actuarial valuation on Projected Unit Credit Method made at the end of each financial year. Actuarial gains / losses are recognised immediately to the Statement of Profit and Loss.

xii. Accounting for Taxes

Tax expense comprises of Current and Deferred tax. Provision for Current tax is made in accordance with the relevant provisions of the Income - tax Act, 1961.

Deferred tax resulting from "timing differences" between book and tax profits is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. Deferred tax assets are recognised and carried forward only if there is a virtual/ reasonable certainty that the assets will be realised in future.

xiii. Impairment

The carrying amounts of assets are reviewed at each balance sheet date to check any indication of impairment based on internal/external factors. Impairment Loss is recognised whenever the carrying amount of an asset is in excess of its recoverable amount. The Impairment Loss is recognised as an expense in the Statement of Profit and Loss and carrying amount of the asset is reduced to its recoverable value.

xiv. Provisions, Contingent Liabilities and Contingent Assets:

The Company recognises a provision when there is a present obligation as a result of a past event that probably requires outflow of resources which can be reliably estimated.Disclosures for contingent liability is made, without a provision in books,when there is an obligation that may, but probably will not (in the opinion of the management), require outflow of resources. Contingent Assets are neither recognised nor disclosed in the financial statements.

xv. Earning per Share (EPS)

The earning considered in ascertaining the Company's EPS comprises the net profit after tax. The number of shares used in computing Basic EPS is the weighted average number of shares outstanding during the year duly adjusted for additional shares issued during the year, if any.

The number of shares used in computing diluted EPS comprises the weighted average number of equity shares considered for deriving basic EPS, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares.

Dilutive potential equity shares are deemed to be converted as of the beginning of the period, unless issued at a later date. The number of shares and potentially dilutive equity shares are adjusted for stock splits and bonus shares issued, if any.

xvi. Receivables

A receivable is classified as "Trade Receivable" if it is in respect of amount due on account of services rendered in the normal course of the business. Trade Receivables are stated at the amounts they are estimated to realize, net of provisions for bad and doubtful debts. A provision for doubtful debt is made when collection of the full amount is no longer probable. Bad debts are written off when identified.

xvii. Cash and Cash equivalents

Cash and Cash equivalents comprises cash at bank and in hand and short term investments with an original maturity of three months or less.

xviii. Cash Flow Statement

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

xix. Liabilities

All known liabilities are recorded in the balance sheet at the amounts the Company is bound to settle.

xx. Trade Payable

A payable is classified as "Trade Payables" if it is in respect of amount due on account of goods/services received in the normal course of business.

xxi. Unbilled Revenue

The same represents revenue accrued as on date of financial statements but not billed to the customer as per contractual terms for billing.

xxii. Events occurring after the Balance Sheet date

All material events occurring after the Balance Sheet date are considered and where appropriate, adjustments to or disclosures are made in the respective notes of the financial statements.

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Mar 31, 2011

1. Basis of Accounting

The financial statements have been prepared in accordance with Indian Generally Accepted Accounting Principles (IGAAP) under the historical cost convention on accrual basis. The IGAAP comprises Accounting Standards ("AS") notifed under Companies Accounting Standards Rules, 2006 by the Central Government of India under Section 211(3C) of the Companies Act, 1956, various pronouncements of the Institute of Chartered Accountants of India ("ICAI"), and the relevant provisions of the Companies Act, 1956 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 is initially adopted or a revision to an existing Accounting Standard requires a change in the accounting policy hitherto in use. The Management evaluates all recently issued or revised Accounting Standards on an ongoing basis.

2. Use of estimates

The preparation of financial statements in conformity with IGAAP requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and disclosure of contingent liabilities on the date of financial statements. Examples of such estimates and assumptions include useful lives of fixed assets, Intangible assets, taxes, provision for doubtful debts, anticipated obligations under employee retirement plans, etc. The recognition, measurement, classification or disclosures of an item or information in the financial statements have been made relying on these estimates to a greater extent. Actual results could differ from those estimates.

3. Revenue Recognition

Revenues are recorded net off all the applicable taxes.

Direct revenue of the Company comprises the income from following principle activities:

i. Technology Infrastructure Management Services - This represents Technology Integration and Management Services. Technology Integration activities include Technology Management services, turnkey Solutions for Technology Deployment, resales, leasing and Integration of Hardware / System Software/ Database Software/ Networking Products with or without one another. Revenue from Technology Integration is recognised on delivery to the customer and acknowledgement thereof, in accordance with the terms of the individual contracts. Management Services represents amount charged for Facility Management Services, Maintenance upkeep of Hardware / System Software/ Database Software / Networking Products and consultancy thereon. Revenue from Management Services is recognised over the life of the contracts. Maintenance revenue on expired contracts on which services have continued to be rendered is recognised on renewal of contract or on receipt of payment.

ii. Software Services - This represents charges for development of software for customer and sale of licenses of software and other products. Revenue from Software services is recognised when the software is developed and installed / delivered to the customers as per the terms of the contract. Revenue on sale of licenses of software and other products is recognised on delivery / installation, as the case may be.

Indirect Revenue of the Company generally comprises the following items:

i. Interest Income - Interest Income is recognised based on time proportion and on gross basis.

ii. Dividend Income - Dividend Income is recognised when the Company's right to receive dividend is established.

iii. Rent Income - Rent on immovable properties is recognised on accrual basis as per the respective agreements with the parties.

4. Expenditure

Expenses are accounted on the accrual basis and provisions are made for all known losses and liabilities.

5. Fixed assets, Intangible Assets, Capital Work-in Progress and Depreciation/Amortisation

i. All fixed assets are stated at cost less accumulated depreciation. For this purpose cost includes purchase price and all other attributable costs of bringing the assets to working condition for its intended use.

ii. Intangible assets are stated at the consideration paid for purchase / acquisition less accumulated amortization.

iii. Capital Work in Progress/ Intangible Assets undercapitalization include expenditure incurred /advances paid for acquiring fixed / Intangible assets and cost of assets not ready for intended use before the balance sheet date.

iv. Depreciation on all assets is provided pro-rata to the period of use, under straight-line method, at rates prescribed in Schedule XIV of the Companies Act, 1956. Intangible assets including Technical Know how are amortised over their respective individual estimated useful lives (not exceeding five years) on a straight line basis, commencing from the date the asset is available for its intended use. Leasehold land is amortised over the life of the lease.

6. Borrowing Costs

Borrowing Costs directly attributable to the acquisition or construction of fixed assets are capitalized for the period until the asset is ready for its intended use. Other borrowing costs are recognised as an expense in the period in which they are incurred.

7. Investments

Trade Investments are investments made to enhance the Company's business interest. Investments are either classifed as Long term or Current based on the Management's intention at the time of purchase. Investments that are readily realizable and intended to be held for not more than a year are classifed as Current Investments. All other Investments are classifed as Long Term Investments. Long Term Investments are stated at Cost. A provision for diminution in value is made to recognise a decline, other than temporary, in the value of long term investments. Current Investments, if any, are valued at lower of cost and net realizable value.

8. Inventories

Inventories include stocks of Computer equipments, peripherals and traded software in respect of Infrastructure Management Services of the Company and the same is valued at lower of cost (net of provision for obsolescence) or net realizable value. Cost is determined on First In First Out (FIFO) basis.

9. Foreign exchange transactions

Transactions in foreign currencies are generally recorded at the exchange rate prevailing on the date of the transaction. Monetary items denominated in foreign currency and outstanding at the Balance Sheet date are translated at the exchange rate ruling on that date. Exchange differences on foreign exchange transactions are recognised in the Profit and loss account.

Investments in overseas subsidiaries are recognised at the relevant exchange rates prevailing on the dates of allotment / investments.

10. Preliminary / Share Issue Expenses / Expenses on amalgamation

Preliminary expenses are charged to the Profit and Loss Account in the year in which incurred. Share issue expenses are adjusted against Securities Premium Account as per Section 78(2) of the Companies Act, 1956. Expenditure on amalgamation is adjusted against the capital reserve arising on amalgamation.

11. Accounting for Employee Benefits

Staff Costs and Directors' Remuneration include Short term employee benefits such as Salaries, allowances, incentives, and short term compensated absences etc. It also includes company contributions towards Defned Contribution plans and provisions for Defined Benefit plans.

(a) Short Term Employee benefits

Short term employee benefits are recognised in the period during which the services are rendered. Provision for unused entitlements in respect of compensated absences is made for on the basis of actuarial valuation made at the end of each financial year.

(b) Post Employment benefits

(i) Provident Fund (PF) & Employees' State Insurance Scheme (ESIC)- Defned Contribution Plans

Underthe Employees' Provident Funds and Miscellaneous Provisions Act, 1952 all eligible employees of the Company are entitled to receive benefits which is a Defned Contribution Plan. In addition, some employees of the Company are covered under ESIC Act, 1948, which is also a Defned Contribution Plan. Both these Plans are recognised and administered by the Statutory Authorities. Both the employees and the Company make monthly contributions to these plans. The Company's contributions to these schemes are recognised as expense in the Profit and Loss Account during the period in which the employee renders the related service. The Company has no further obligation under these plans beyond its monthly contributions.

(ii) Gratuity- a Defned benefit Plan

The Company provides for Gratuity in accordance with the Payment of Gratuity Act, 1972, a Defned benefit Plan. The plan, subject to the provisions of the above Act, provides for lump sum payment to eligible

employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary and tenure of employment. Gratuity liability is accrued and provided for on the basis of an actuarial valuation on Projected Unit Credit Method made at the end of each financial year. Actuarial gains / losses are recognised immediately to the Profit and Loss Account. In respect of Compulink Systems Limited which merged with the Company during the Financial year 2009-10, Gratuity benefits are administered by a Trust formed for this purpose through the Group Gratuity Scheme of the Life Insurance Corporation (LIC) of India. In respect of this fund, the adequacy of the accumulated funds available with the LIC has been confirmed on the basis of an actuarial valuation made at the year end and the provision has been made for the shortfall, if any.

12. Accounting for Taxes

Tax expense comprises of Current and Deferred tax. Provision for Current tax is made in accordance with the relevant provisions of the Income -tax Act, 1961.

Deferred tax resulting from "timing differences" between book and tax Profits is accounted for using the tax rates and laws that have been enacted or substantially enacted as on the balance sheet date. Deferred tax assets are recognised and carried forward only if there is a virtual/ reasonable certainty that the assets will be realised in future.

13. Impairment

The carrying amounts of assets are reviewed at each balance sheet date to check any indication of impairment based on internal/external factors. Impairment Loss is recognised whenever the carrying amount of an asset is in excess of its recoverable amount. The Impairment Loss is recognised as an expense in the Statement of Profit and Loss and carrying amount of the asset is reduced to its recoverable value.

14. Provisions, Contingent Liabilities and Contingent Assets:

The Company recognises a provision when there is a present obligation as a result of a past event that probably requires outfow of resources, which can be reliably estimated. Disclosures for contingent liability is made, without a provision in books, when there is an obligation that may, but probably will not (in the opinion of the management), require outfow of resources. Contingent Assets are neither recognised nor disclosed in the financial statements.

15. Earning per Share (EPS)

The earning considered in ascertaining the Company's EPS comprises the net profit after tax. The number of shares used in computing Basic EPS is the weighted average number of shares outstanding during the year duly adjusted for additional shares issued during the year, if any.

The number of shares used in computing diluted EPS comprises the weighted average number of equity shares considered for deriving basic EPS, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares.

Dilutive potential equity shares are deemed to be converted as of the beginning of the period, unless issued at a later date. The number of shares and potentially dilutive equity shares are adjusted for stock splits and bonus shares issued, if any.

16. Cash and Cash equivalents

Cash and Cash equivalents in the balance sheet comprises cash at bank and in hand and short term investments with an original maturity of three months or less.

17. Cash Flow Statement

Cash Flows are reported using the indirect method, whereby net Profits before tax is adjusted for the effect of transaction of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash fows from regular revenue generating, investing and fnancing activities are segregated.