Mar 31, 2018
1. Summary of significant accounting policies
1.0 Operating Cycle and Current versus non-current classification
The Company has ascertained its operating cycle as twelve months for the purpose of current/ non-current classification of assets and liabilities.
An asset is classified as current when it is:
- Expected to be realised or intended to sold or consumed in normal operating cycle;
- Held primarily for the purpose of trading;
- Expected to be realised within twelve months after the reporting period; or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is classified as current when:
- It is expected to be settled in normal operating cycle;
- It is held primarily for the purpose of trading;
- It is due to be settled within twelve months after the reporting period; or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current. Deferred tax liabilities are classified as non-current liabilities.
1.1 Foreign currency
Functional and presentation currency
The financial statements are presented in Indian Rupee (â^) which is also the functional and presentation currency of the Company.
Transactions and balances
Foreign currency transactions are initially recorded in the functional currency, by applying to the functional currency spot exchange rate between the functional currency and the foreign currency at the date the transaction first qualifies for recognition.
Foreign currency monetary items are converted to functional currency using the functional currency closing spot exchange rates at the reporting date.
Non-monetary items denominated in a foreign currency which are carried at historical cost are reported using the exchange rate at the date of the transaction.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or profit or loss, respectively.
Exchange differences arising on monetary items on settlement, or restatement as at reporting date, at rates different from those at which they were initially recorded, are recognized in the Statement of Profit and Loss in the year in which they arise.
1.2 Fair value measurement
The Company measures financial instruments at fair value upon initial recognition. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Leve 1 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 â Valuatian techeiiques far which the lawest level input that is significant tea the fair value measurement in unobservable
Far assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categarisatian (based on the lciwest level input thet is ligniftcant ta fhe fair value mesrurement as a whale) at ihe end ot each reparting periad.
Far the purpose of fair value disclosures, the Company has determined classes of assets and liabilities an the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
1 .3 Revenue recognition
Revenoe is recognized, when it is probable that econamic beneSits associated with a transaction flaws ta the Company in the course of its ordinary activities and the amount of revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable taking into account contractually defined terms of papwent and excluding the taxes ar dueies calle cte d on behalf a f government.
leitrtn Income
Intirest income is accrued an a time basis, by reference ta the principle outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the: financial asset ta that assetâs grass carrying amount an initial recognition. Interest income is included in other income in the Statement of Profit and La ss.
Dividend
Dividends are recognised in profit or lass only when the right ta receive payment is established, it is probable that the economic benefits associated with the dividend will flaw ta the Company, and the amount of the dividend can be measured reliably.
1.4 Taxes
income tax expense comprises ad current tex expense and deferred tax expenses. Current and deferred taxes are recognized in Statement of Profit and Lass, except when they relate ta items that are recognized in other comprehensive in came or directly in equity, in which case, the current and deferred tax are also recognized in ether camprshensive income or direcrly in equity, respectively.
Cumnt income tax
Current tax is the amount of tax payable an the taxable income far the year as determined in accordance with the provisions of the Income Tax Act of the respective jurisdiction. The current tax is calculated using tax rates that have been enacted or substantively enacted, at the repddtiog date.
Defend tax
Dtferred fax is eecognized using the Balance Sheet approach an temporary diffecences arising between the tax basrs oS aesets and liabilities and their carrying; amounts. Deeerred laxHabilities tte recognised far all taxable temporary differences. Deferred tax assets are rccogniscd for all deductibie temporary differences, the cgrry forward of unusef lox credifs ann any unused tax: lasses. Deferred tox assets acc retagnised to the extent tont it is praoablr that dcxable profit will be available against which thn deductible temporary clifferences, and the cany doioiiard aounused tax credits and unused tax lasses can be utilised, except when the deferred tax asset relating ta the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or lass.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be recovered or settled and are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities.
Minimum Alternate Tax (MAT) credit is recognised as an asset only when and to the extent it is reasonably certain that the Company will pay normal income tax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.
Dividend distribution tax (DDT)
Dividend distribution tax arising out of payment of dividends to shareholders under the Indian Income tax regulations is not considered as tax expense for the Company and all such taxes are recognised in the statement of changes in equity as part of the associated dividend payment.
1.5 Property, plant and equipment (PPE)
All items of property, plant and equipment are initially recorded at cost. Cost of property, plant and equipment comprises purchase price, non-refundable taxes, levies and any directly attributable cost of bringing the asset to its working condition for the intended use. Subsequent to initial recognition, property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.
The cost of an item of property, plant and equipment is recognized as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. Costs in nature of repairs and maintenance are recognized in the Statement of Profit and Loss as and when incurred.
Depreciation on property, plant and equipment is provided on the written down value method, computed on the basis of useful lives prescribed in Schedule II to the Companies Act, 2013. The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
The Company has elected to continue with the carrying value for all of its property, plant and equipment as recognised in its Indian GAAP financial statements as deemed cost at the transition date, viz., 1 April 2016.
1.6 Intangible assets
Intangible assets are stated at their cost of acquisition. The cost comprises purchase price, 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.
Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment loss, if any. The Company amortises intangible assets with a finite useful life using the straight-line method over 5 years.
The Company lias elected to continue with the carrying value for all of its property, plant and equipment as recognised in its Indian GAAP financial statements as deemed cost at the transition date, viz., 1 April 2016.
1.7 Impairment of non-financial assets
At each reporting date, the Company assesse s wliether thane is anyRs. indication that an asset may b e impaired, based on internal or external factors. If7 any such indicetion exiits, the Company estimates the recovcrable amount of the asset or the cash generating unit If such r ec overable amourt of the asse t o r cash geoerating unit to whith the ossat bakings is less than ids carpying amouns, the carrying amount is reduced to its recoverable amount. Ths reduction is nreated as an impairmeno loss and is recognized in the Statemenn o° Profit and Lots. If, at she reporting data there is an indication that e previously astessod impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount. Impairment losses previously recognized are acco rdingly reversed in the Statement of Profit and Loss.
1.8 Leases
Th e de termination of7 whethe r an arrangnmen is ton contain^ a leafe fs bared an the substan ce of7 the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explieitfy specified in an arrangement.
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership) to the C ompany is da^iSnd as a nnance lease.
Finance leases ere capitalise0 at the rommencement of thf lease at the mception date fair value of the loafea property or, if lower, at tiff presann value of7 the minimum lease payments. Leane payments are apportione° between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the Statement of Profit and 4oss.
A leased asset is deprecieted ovea nhe useful life on the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated ^ehd liff oe the asset and the lease nerm.
Operating lease payments are recognised as an expense in the Statement of Profit and Loss on accrual basis as ascalation in lease arrangements are for expected inflationary cost.
1.9) Provisions and contingencies
Pmvitwm
Provision! for legan claims, cha^ebacks and sales returns are recogmsed when the Company has a present legal or conttructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses.
P rovisions are mearured at the pre sent: value of7 managementâs best estimate of the eapenditure re quired So settle thf prf sene obligetion at the end of the reporting period. ''The discount rate used to deiermlne the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as finance cost.
Contingencies
Contingent liability is disclosed for:
- Possible obligatio ns which will be confirmed only by future events not wholly within the control of the Company or
- Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the; obligation or a reliable estimate of the amnunt of the obligation cannot bt made.
Contingent assets are neither recognized nor disclosed, unless inflow of economic benefits is probable. However, when realization of income is virtually certain, related asset is recognized.
1.10 Employee benefit s
Defined contribution pirn
The Companyâs contribution to provident fund and employee stafe insurance schemes is charged to the S tatement of Protit and Loar. The Companyâs contributions towards Provident Fund are deposited with the Regional Provident Fund Commissioner under a defined contribution plan. There are no other obligations other than the contribution payable to the respective fund.
Defined benefitpfcn
The Company has unfunded gratuity as defined benefit plan where the amount that an employee will receive on retirement is defined by reference to the employeeâs length of service and final salary. The liability recognised in the balance sheet for defined benefit plans as the present value of the defined benefit obligation (DBO) at the reporting dfte. Management eitimates the DBO annually with the assistance of independsnt actuaries Actuarial eains/losses resulting from re-measurements of the liability aee included in other comprehensive income. Remeasurements are not reclassified to profit or loss in subsequent periods.
Short-term employee benefits
Short-term employee benefits comprise of employee costs such as salaries, bonus etc. is recognized on an undiscounted and aetrual basic during; the period when the employee tendert serike o f the b enefit.
1.11 Investments in subsidiaries
The Company has elected to recognise its investments in equity instruments in subsidiaries at cost in accordance with the option available in Ind AS 27, âSeparate Financial Statementsâ.
1.12 Finem^d instrumetits Financial instruments
A pinancial ins trument it any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financed assets
Initial recognition and geatusement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regulat way tcades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
- Debt instruments at amortised cost
- Debt instruments at fair value thtough other comprehensive inc ome (FVTOCI)
- Itebt instruments hnd equity instruments at fair value through profit or loss (FVTPL) and
- Equity instruments measured at FVTOCI
Debit instruments at amortised cost
A âdebt instrumentâ is measured at the amortised cosi if both the following condkions are met:
- The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
- Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, financial asrets are subsequently measured at amortised cost using the effective interest tate (EIR) method. Amortised cost ie calculated by taking into account any disceunt or piemium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising;; trom impairment are recognised in the Statement of Profit and Loss.
De-recohnitton
The Company de-recognices a financial asset only when the contractual rights to the cash flows from the asset expires or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferreg nor retained substantially ali of the ris ks and rewards of the asset, nor trancferred control hf -lie asset, the Company continues to recognise the transferred asset to the extent of the Companyâs continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of this original carrying imount of the asset and the maximum amount o f c onsideration that the Company couid bi required to repfy.
Impairment of fid atiaial awsets
In accordance with Ind-AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of7 tmpatrment loss:
a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, deposits, and bank balance and
b) Financial assets that are debt instruments and are measured as at FVTOCI
The Company follows âsimplified approachâ for rtcognition of impairment loss aUowance on other receivables. The application of simplifieg approach does noC require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive. When estimating the cash flows, the Company is required to consider â
- All contractual terms of7 the financial assets (including prepayment and extension) over the expected life of the assets.
- Cash flows from the sale of7 collateral held or other credit enhancements that are integral to the contractual terms.
Financial liabilities
Initial recognition and measurement
Financial liabilities are measured at fair value on initial recognition. The Companyâs financial liabilities include trade and other payablee and othes financial instruments.
Subsequent measu rement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabiltries et fair value through profit or ioss include financi! liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term.
Gains or losses on liabilities held for trading are recognised in the profit or loss.
Frade nnd other pay ables
These amounts represent liabilities for goods and services provided So the Ctmpane pfior to the end of financial year which nre unpaid. ''The amounts are unsecured and are usually pa!d as per agreed tsrms. Trsde and nther payablos are paeasnted as currant liabilities unless payment is not due within 12 montht aftea the reportings period. They are recognised initiaUy at their fair value and subsequently measured at amortised cost using the effective interest method.
DeinmgnitSm
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an existing; fioancial liability is replaced by another from the same lender on substantially different terms, or the terms of7 an existing liability are substsntialiy modified, euch an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
1.13 Contributed equity
Equity shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
1.14 Earnings per equity share (EPES)
Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue.
For the purpose of7 calculating diluted earnings per share, (he net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects af (ll dilutive potential equity shares.
1.15 Cash and cash equivalent
Caih and carh equivrlent represenn cash and bank balances and fixed deposits with banks with original maturity of7 lesc thtn fhaee months. Cash and cash equivalent are readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value.
1.16 Cash flow statement
The cash flow statameni is prepared as pier the indirect Method. Cash Flow Statements present the cash flows by operating, financing and investing activities of the Company. Operating cash flows are arrived by adjusting profit or loss before tax for the effects of transactions of a non- cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expense associated with investing or financing cash flow/s.
1.17 Cash divide nd
The Company recognises a liability to make cash dividend to equity holders when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the Act, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
Mar 31, 2016
1. Company Overview
Paired Technologies Limited (the âCompanyâ) is a public limited company domiciled in India and incorporated under the provisions of7 the Companies Act 1956. The Companyâs equity shares are listed on Bombay)? Stock Exchange (âBSEâ) and National Stock Exchange aâNSEâ). Paler Technologies Limited together with its subsidiaries collectively referred to as âGroupâ) is engaged indo providing IT solutions and ITT services for media and entertainment: and online e-commerce portal and trading online in computers, mobiles, electronic products, and computer peripherals.
2. Summary of significant accounting policies
(a) Basis of consolidation
The consolidated Financial statements of the Group are prepared and presented under the historical cost convention on the accrual basis of accounting in accordance withâ accounting; principles generally accepted in Index (âIndian GAAPO and comply in all material re tests with the Acc owning Standards (âASâ) specified under Section 133 of the Companies Act, 2013 (âthe Act5), read with Rule l of the Companies (Accounts) Rules, 2014 (as amended), and with the relevant provision of the Aft pronouncements of7 The Institute of Chartered Accountants of India (1CAP). The consolidated financial statements hive been projected using; uniform accounting policies tor like transactionsâ and other events in similar circumstances âand are presented to the extent possible in the same manner as the Companiesâ separate financial statements. The accounting policies applied by the Group are consistent with those used in the previous year.
All asset as anise liabilities have been classified ns current or none-current as per the Groupâs normal operating; cycle and other criteria set out in the Schedule III to the -Act. Based on the nature of business, the Group has ascertained its operating cycle as up to twelve months for the purpose of current and non-current classification of assets and liabilities.
investments in consolidated entities, except where such investments are acquired exclusively with: a view tit its sub sequent disposal in the near future, are accounted in accordance with accounting principles as defined under AS 21 âConsolidated Financial Statementsâ, on a line by line basis. Inter-company balances and inter-company Transactions and resulting unrealized profits ot losses are eliminated on consolidation The following entities have been considered for the purpose of preparation of consolidated financial statements:
(c) Tangible assets
''Tangible assets are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Cost comprises the purchase price and any directly attributable cost of bringing the asset to its working condition for its intended use. Finance costs relating to acquisition of tangible assets which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready for its intended use.
Gains or losses arising from de-recognition of a tangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when the asset is de-recognized.
(d) Depreciation on tangible assets
Depreciation on tangible fixed assets is provided using the written down value method, based on the useful life of the assets, as prescribed under Schedule II to the Act.
(e) Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any.
vernally gen rated intangible sets, excluding capitalized development cost , are not capitalized and expenditure s reflect d in the Statement of Pr fit and Loss in th ye r in which is expenditure is incurred.
Intangible assets are amortized on a straight-line method based on useful life of assets i.e. 5 years.
(f) Goodwill
Goodwill represents the excess of purchase consideration over the Companyâs share of net assets at the time of acquisitions of share in subsidiaries. Goodwill is evaluated periodically for impairment and impairment looses are recognized -where applic able.
(g) impairment
The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/ external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount it the greater of the assents nisi: yelling price and value in use. In posse smog value in us e, the as tempted future c ash flows are discounted to their present value at the weighted average cost of capital.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
(h) Leases
Leases where the less or effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.
(i) investments
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. Current investments are carried at lower of cods eye fair value determined on an individual investment bas is. Long-term instilments are carried it cost. However, provision for diminution in value, if any is made to recognize a decline other than temporary in the value of the investments..
(j) Inventories
Inventories comprise of trading goods and are valued at the lower of cost and net realizable value. Cost of inventories comprises all costs of purchase and other costs incurred in bringing the inventories to their present condition and location. Cost is determined by the weighted average cost method.
Net realizable value is the estimated selling price in the ordinary course of business reduced by the estimated costs to affect the sale.
(k) Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured.
Sale of goods
Revenue from sale of goods is recognized when the risks and rewards of ownership are transferred to customers, which generally coincides with delivery to the customers and is net of trade discount, sales taxes and value added taxes (VAT), rebates and returns.
Dividends
Income from dividend is recognized when the Groupâs right to receive payment is established by the reporting date. (l) Foreign currency transactions
Initial recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transactions.
Conversion
Foreign currency monetary items are reported using the closing rate. N on-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.
Exchange differences
Exchange differences arising on the settlement of monetary items or on reporting Groupâs monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.
(m) Retirement and other employee benefits
Defined contribution plans
A retirement benefit in the form of provident fund scheme is a defined contribution and the contribution is charged to the Statement of Profit and Loss of the year when the contribution to the respective fund is due. There are no other obligations other than the contribution payable to the respective fund.
Defined benefit plans
Gratuity is a post-employment benefit and is a defined benefit obligation. The liability recognized in the Balance Sheet represents the present value of1 the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments or unrecognized actuaries gains one losses and past service costs. Independent actuary using the projected unit credit method calculated the defined benefit obligations annually
Actuarial gains or losses arising from experience adjustments and changes in actuarial assumptions airs credited or t charged to the Statement of Profit and Loss in the year in which such gains or losses arises.
(n) employee stock option scheme and Sweat fruity shares
M measurement and disclosure of the employee share-based payment plans is done in accordance with Securities Exchange Born of Indie (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on âAccounting for Employee Share-based Paymentsâ, issued by the ICAI. The excess of market value of this stock o n the date eve grant over the exercise price e of7 the opine is recognized as deferred employee stock compensation and as charged to statement of profit and loss on straight-line method over the vesting period of the options. The market value of the sweat equity shares issued for consideration other than cash is recognized as deferred employee shares compensation and is charged to statement of profit and loss.
(o) Income taxes
Tax expense comprises of current: tax and deferred tax.
Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income tee Act, 19f 1. Deferred income teas reflects the impact of7 current year sliming differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset, in a legally enforceable right eases to s et off current tax assets against current tax liabilities and the deferred tax assets ann. inferred test liabilities relate to the tastes on encore levied by same governing taxation laws. Deferred tax assets are recognized only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. If the Group has carry forward of unabsorbed depreciation and tax losses, deferred tax assets are recognized only if there is virtual certainty, supported by convincing evidence, that all such deferred tax assets can be realized against future taxable profits. Unrecognized deferred tax asset. to earlier periods are re-assessed and recognized to the extent that it has become reasonably certain or virtually certain, as the ease may be, that future ratable income would e available against which touch deferred Ace a assets can b e realized.
The arraying amount of deferred tax assets are reviewed at each balance sheet date. The Group writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will lie available against which deferred the asset: can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.
(p) Earnings per equity share
Basic sensingâs per equity share are calculated by dividing she net profit for the sear attributable to equity shareholders by the weighted average number of7 equally eves outstanding during the year.
For the purpose of calculating diluted earnings per equity share, the net profit for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year airs adjusted for the effects of ill dilutive potential equity shares. In computing the dilutive earnings per share, only potential equity sherbet that as dilutive end that either reduces the earnings per share or increases loss per share are included.
(q) Provisions and contingent liabilities
A provision is recognized when the Group has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted no its present value and are determined based on management estimate required to steal the obligation at the balance sheet date. A disclosure for a contingent liability is made when there is o possible obligation or a present obligation that may, but probably will one, require an outflow of resource s. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision Go disclosure is made.
(r) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.
Mar 31, 2015
(a) Basis of preparation of financial statements
The financial statements are prepared under historical cost convention
on an accrual basis in accordance with the generally accepted
accounting principles in India ("Indian GAAP") and comply in all
material respects with the Accounting Standards specified under Section
133 of the Companies Act, 2013 ('the Act'), read with Rule 7 of the
Companies (Accounts) Rules, 2014 (as amended), and with the relevant
provisions of the Act, pronouncements of The Institute of Chartered
Accountants of India ('ICAI'). The accounting policies applied by the
Company are consistent with those used in the previous year.
Pursuant to the enactment of the Act, effective 1 April 2014 the
Company has adopted Schedule III to the Act, for preparation and
presentation of the financial statements. In relation to the Company,
the adoption of Schedule III nekher impact recognition and measurement
principles followed in preparation for presentation and disclosures
made in the financial statements.
All assets and liabilities have been classified as current or
non-current as per the Company's normal operating cycle and other
criteria set out in the Schedule III to the Act. Based on the nature of
business, the Company has ascertained its operating cycle as up to
twelve months for the purpose of current and non-current classification
of assets and liabilities.
(b) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements and the results of
operations during the reporting period. Examples of such estimates
include diminution in the value of long-term investmentsRs, income
taxes, future obligation under employee benefit plans and estimated
useful lives of tangible and intangible assets. Although these
estimates are based upon management's best knowledge of current events
and actions, actual results could differ from these estimates. Any
revLn to accounting estimates is recognized prospectively in the
current and future periods.
(c) Tangible assets
Tangible assets are stated at cost less accumulated depreciation and
impairment losses if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use Finance costs relating to acquisition of fixed assets
which takes substantial period of time to get ready for its intended
use are also included to the extent they relate to the period till such
assets are ready for its intended use.
Gain or losses arising from derecognition of an fixed asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
(d) Depreciation on tangible assets
Depreciation is provided using the written down value method over the
useful lives of the fixed assets, as prescribed under Schedule II to
the Act.
(e) Intangible assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any. Internally generated intangible assets,
excluding capitalized development cost, are not capitalized and
expenditure is reflected in the statement of profit and loss in the
year in which expenditure is incurred
Research and development cost
Research costs are expensed as incurred. Development expenditure
incurred on an individual project is recognized as an intangible asset
when the Company can demonstrate aU of the Mowing
- the technical feasibility of completing the intangible asset so that
it will be available for use or sale -its intention to complete the
asset
-its ability to use or sell the asset
- how the asset will generate future economic benefits
- the availability of adequate resources to complete the development
and to use or sell the asset
- the ability to measure reliably the expenditure attributable to the
intangible asset during development
Following the initial recognition of the development expenditure as an
asset, the asset is carried at cost less accumulated amortization and
accumulated impairment losses if any. Amortization of the asset begins
when development is complete and the asset is available for use. It is
amortized on straight line basis over the period of expected future
benefit from the related project i.e. the estimated useful life of 10
years. Amortization is recognized in the statement of profit and loss
Intangible assets are amortized on a straight-line method based on
useful life of assets i.e. 5 years.
(f) Impairment
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on, internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assets net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present vLe at the weighted average cost of capital.
(g) Leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
(h) Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. AU other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognize a
decline other than temporary in the value of the investments.
(i) Inventories
Inventories are valued at the lower of cost and net realizable value.
Cost of inventories comprises all costs of purchase and other costs
incurred in bringing the inventories to their present condition and
location. Cost is determined by the weighted average cost method.
(j) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Sale of goods and services
Revenue from the sale of user licenses for software applications is
recognized on delivery or subsequent milestone schedule as per the
terms and contract with the customers. Revenue from time and maternal
contracts is recognized as the related services are rendered. Revenue
from annual maintenance services is recognized proportionately over the
period in which services are rendered.
Revenue from services on fixed-priced and fixed time frame contracts is
recognized on completion and delivery of services to the customers when
the outcome of the contract cannot be assessed with reasonable
certainty or on proportionate completion method when there is no
significant uncertainty exists regarding the amount of consideration
that will be derived from rendering the services.
Costs and earnings in excess of billings are classified as unbilled
revenue while billings in excess of costs and earnings are classified
as unearned revenue. Provision for estimated losses on
contracts/engagements is made in the year m which such loss becomes
probable and can be reasonably estimated.
Sales of stock-in-trade represents revenue from the sale of products,
net of cash discounts, rebates and returns. The sales are recorded
when the products are shipped and all the significant risks and rewards
of ownership of the goods have passed to the customers.
Interest
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the rates applicable.
Dividends
Income from dividend is recognized when the Company's right to receive
payment is established by the reporting date.
Kenta income
Rental income from operating lease is recognized on a straight-line
basis over the term of the lease.
(k) Foreign currency transactions
Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transactions.
Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction.
Exchange differences
Exchange differences arising on the settlement of monetary items or on
reporting Company's monetary items at rates different from those at
which they were initially recorded during the year, or reported in
previous financial statements, are recognized as income or as expenses
in the year m which they arise.
(l) Retirement and other employee benefits
Proudent fund
A retirement benefit in the form of provident fund scheme is a defined
contribution and the contribution is charged to the statement of profit
and loss of the year when the contribution to the respective fund is
due. There are no other obligations other than the contribution payable
to the respective fund.
GratuHj
Gratuity liability is a defined benefit obligation and provided for on
the basis of an actuarial valuation made on projected unit credit
method at the end of each financial year. Actuarial gams and losses are
recognized in full in the statement of profit and loss for the period
in which they occur.
(m) Employee stock option scheme
Measurement and disclosure of the employee share-based payment plans is
done in accordance with Securities Exchange Board of India (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999 and the Guidance Note on Accounting for Employee Share-based
Payments', issued by the ICAI. The excess of market value of the stock
on the date of grant over the exercise price of the option is
recognized as deferred employee stock compensation and is charged to
statement of profit and loss on straight-line method over the vesting
period of the options.
(n) Income taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income tax Act, 1961. Deferred income taxes
reflects the impact of current year timing differences between taxable
income and accounting income for the year and reversal of timing
differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets and deferred tax liabilities are offset, if a legally
enforceable right exists to set off current tax assets against current
tax liabilities and the deferred tax assets and deferred tax
liabilities relate to the taxes on income levied by same governing
taxation laws. Deferred tax assets are recognized only to the extent
there is reasonable certainty that sufficient future taxable income
will be available against which such deferred tax assets can be
realized.
At each balance sheet date the Company re-assesses unrecognized
deferred tax assets and recognizes it to the extent it has become
reasonably certam that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The company wfltes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
(o) Earnings per equity share
Basic earnings per equity share are calculated by dividing the net
profit for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per equity share, the
net profit for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares
computing the dilutive earnings per share, only potential equity shares
that are dilutive and that either reduces the earnings per share or
increases loss per share are included.
(p) Provisions and contingent liabilities
A provision is recogmzed when the Company has a present obligation as a
result of past event and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on management estimate required
to settle the obligation at the balance sheet date. 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. These are reviewed at each balance sheet date and
adjusted to reflect the current best estimates. 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.
(q) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
Mar 31, 2014
(a) Basis of preparation of financial statements
The financial statements are prepared under historical cost convention
in accordance with the generally accepted accounting principles in
India (''Indian GAAP'') and comply in all material respects with the
mandatory Accounting Standards (''AS1) prescribed in the Companies
(Accounting Standard) Rules, 2006 (''the Rules''), with the relevant
provisions of the Act, the Companies Act, 2013 (to the extent
applicable) and pronouncements of the Institute of Chartered
Accountants of India (''ICAI'') and other relevant provisions of the Act.
The financial statements have been prepared on an accrual basis and the
accounting policies applied by the Company are consistent with those
used in the previous year.
(b) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements and the results of
operations during the reporting period. Examples of such estimates
include completeness of contracts, cost estimate to complete contracts,
provision for doubtful receivables, loans and advances, diminution in
the value of long-term investments, income taxes, future obligation
under employee benefit plans, unbilled revenue and estimated useful
lives of tangible and intangible assets. Although these estimates are
based upon management''s best knowledge of current events and actions,
actual results could differ from these estimates. Any revision to
accounting estimates is recognized prospectively in the current and
future periods.
All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle and other
criteria set out in the Schedule VI to the Act. Based on the nature of
work and the time between the acquisition of assets for processing and
their realization in cash and cash equivalents, the Company has
ascertained its operating cycle as up to twelve months for the purpose
of current and non-current classification of assets and liabilities.
(c) Tangible assets
Tangible assets are stated at cost less accumulated depreciation and
impairment losses if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use. Finance costs relating to acquisition of fixed assets
which takes substantial period of time to get ready for its intended
use are also included to the extent they relate to the period till such
assets are ready for its intended use.
Gain or losses arising from derecognition of an fixed asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
Assets under installation or under construction as at the balance sheet
date are shown as ''capital work-in- progress''.
(d) Depreciation on tangible assets
Depreciation is provided using the written down value method as per the
useful lives of the fixed assets estimated by management, or at the
rates prescribed under Schedule XIV to the Act whichever is higher. The
rates used by the Company are:
Assets Rate
(%)
Buildings 5.60
Computers 40,00
Office equipment 13.91
Furniture and fittings 18.10
Leasehold improvements are depreciated on written down value over the
lease period of three to five years or useful lives as estimated by
management, whichever is lower.
(e) Intangible assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any. Internally generated intangible assets,
excluding capitalized development cost, are not capitalized and
expenditure is reflected in the statement of profit and loss in the
year in which is expenditure is incurred.
Research and development cost
Research costs are expensed as incurred. Development expenditure
incurred on an individual project is recognized as an intangible asset
when the Company can demonstrate all the following:
* the technical feasibility of completing the intangible asset so that
it will be available for use or sale
* its intention to complete the asset
* its ability to use or sell the asset
* how the asset will generate future economic benefits
* the availability of adequate resources to complete the development
and to use or sell the asset
* the ability to measure reliably the expenditure attributable to the
intangible asset during development
Following the initial recognition of the development expenditure as an
asset, the asset is carried at cost less accumulated amortization and
accumulated impairment losses if any. Amortization of the asset begins
when development is complete and the asset is available for use. It is
amortized on straight line basis over the period of expected future
benefit from the related project i.e. the estimated useful life of 10
years. Amortization is recognized in the statement of profit and loss.
(f) Impairment
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assets net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
(g) Leases
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease term, capitalized leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
(h) Investments
Investments that are readily realisable 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. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognize a
decline other than temporary in the value of the investments.
(i) Inventories
Inventories are valued at the lower of cost and net realisable value.
Cost of inventories comprises all costs of purchase and other costs
incurred in bringing the inventories to their present condition and
location. Cost is determined by the weighted average cost method.
(j) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Sale of goods and services
Revenue from the sale of user licenses for software applications is
recognized on deliver)'' or subsequent milestone schedule as per the
terms and contract with the customers. Revenue from time and material
contracts is recognized as the related services are rendered. Revenue
from annual maintenance services is recognized proportionately over the
period in which services are rendered.
Revenue from services on fixed-priced and fixed time frame contracts is
recognized on completion and deliver)'' of services to the customers
when the outcome of the contract cannot be assessed with reasonable
certainty or on proportionate completion method when there is no
significant uncertainty exists regarding the amount of consideration
that will be derived from rendering the services.
Costs and earnings in excess of billings are classified as unbilled
revenue while billings in excess of costs and earnings are classified
as unearned revenue. Provision for estimated losses on
contracts/engagements is made in the year in which such loss becomes
probable and can be reasonably estimated.
Sales of stock-in-trade represents revenue from the sale of products,
net of cash discounts, rebates and returns. The sales are recorded
when the products are shipped and all the significant risks and rewards
of ownership of the goods have passed to the customers.
Interest
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the rates applicable.
Dividends
Income from dividend is recognized when the Company''s right to receive
payment is established by the reporting date.
Rental income
Rental income from operating lease is recognized on a straight-line
basis over the term of the lease.
(k) Foreign currency transactions
Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transactions.
Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
Exchange differences
Exchange differences arising on the settlement of monetary items or on
reporting Company''s monetary items at rates different from those at
which they were initially recorded during the year, or reported in
previous financial statements, are recognized as income or as expenses
in the year in which they arise.
(l) Retirement and other employee benefits
Provident fund
A retirement benefit in the form of provident fund scheme is a defined
contribution and the contribution is charged to the statement of profit
and loss of the year when the contribution to the respective fund is
due. There are no other obligations other than the contribution payable
to the respective fund.
Gratuity
Gratuity liability is a defined benefit obligation and provided for on
the basis of an actuarial valuation made on projected unit credit
method at the end of each financial year. Actuarial gains and losses
are recognized in full in the statement of profit and loss for the
period in which they occur.
Compensated absences
Compensated absences are in the nature of short-term benefit and
provided for based on estimates.
(m) Employee stock option scheme
Measurement and disclosure of the employee share-based payment plans is
done in accordance with Securities Exchange Board of India (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999 and the Guidance Note on ''Accounting for Employee Share-based
Payments'', issued by the ICAI. The excess of market value of the stock
on the date of grant over the exercise price of the option is
recognized as deferred employee stock compensation and is charged to
statement of profit and loss on straight-line method over the vesting
period of the options. The unamortized portion of cost is shown under
stock options outstanding.
(n) Income taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income tax Act, 1961. Deferred income taxes
reflects the impact of current year timing differences between taxable
income and accounting income for the year and reversal of timing
differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets and deferred tax liabilities are offset, if a legally
enforceable right exists to set off current tax assets against current
tax liabilities and the deferred tax assets and deferred tax
liabilities relate to the taxes on income levied by same governing
taxation laws. Deferred tax assets are recognized only to the extent
there is reasonable certainty that sufficient future taxable income
will be available against which such deferred tax assets can be
realized.
At each balance sheet date the Company re-assesses unrecognized
deferred tax assets and recognizes it to the extent it has become
reasonably certain that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
Minimum Alternative Tax (MAT) credit is recognized as an asset only
when and to the extent there is convincing evidence that the company
will pay normal income tax during the specified period. In the year in
which the MAT credit becomes eligible to be recognized as an asset in
accordance with the recommendations contained in guidance note issued
by the ICAI, the said asset is created by way of a credit to the
statement profit and loss and shown as MAT credit entitlement. The
Company reviews the same at each balance sheet date and writes down the
carrying amount of MAT credit entitlement to the extent there is no
longer convincing evidence to the effect that Company will pay normal
income tax during the specified period.
(o) Earnings per equity share
Basic earnings per equity share are calculated by dividing the net
profit for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per equity share, the
net profit for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares. In
computing the dilutive earnings per share, only potential equity shares
that are dilutive and that either reduces the earnings per share or
increases loss per share are included.
(p) Provisions and contingent liabilities
A provision is recognized when the Company has a present obligation as
a result of past event and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on management estimate required
to settle the obligation at the balance sheet date. 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. These are reviewed at each balance sheet date and
adjusted to reflect the current best estimates. 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.
(q) Cash flow statement
Cash flows are reported using the indirect method, whereby net 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.
Cash and cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
Mar 31, 2013
(a) Basis of preparation of financial statements
The financial statements are prepared under historical cost convention
in accordance with the generally accepted accounting principles in
India (''Indian GAAP'') and comply in all material respects with the
mandatory Accounting Standards (''AS'') prescribed in the Companies
(Accounting Standard) Rules, 2006 (''the Rules''), with the relevant
provisions of the Companies Act, 1956 (''the Act''), pronouncements of
the Institute of Chartered Accountants of India (''ICAI'') and other
relevant provisions of the Act. The financial statements have been
prepared on an accrual basis and the accounting policies applied by the
Company are consistent with those used in the previous year.
(b) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements and the results of
operations during the reporting period. Examples of such estimates
include completeness of contracts, cost estimate to complete contracts,
provision for doubtful receivables and loans and advances, diminution
in the value of long-term investments, income taxes, future obligation
under employee benefit plans, unbilled revenueand estimated useful
lives of tangible and intangible assets. Although these estimates are
based upon management''s best knowledge of current events and actions,
actual results could differ from these estimates. Any revision to
accounting estimates is recognized prospectively in the current and
future periods.
(c) Tangible assets
Tangible assets are stated at cost less accumulated depreciation and
impairment losses if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use. Finance costs relating to acquisition of fixed assets
which takes substantial period of time to get ready for its intended
use are also included to the extent they relate to the period till such
assets are ready for its intended use.
Gain or losses arising from derecognition of an fixed asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
Assets under installation or under construction as at the balance sheet
date are shown as ''capital work-in-progress''.
(d) Depreciation on tangible assets
Depreciation is provided using the written down value method as per the
useful lives of the fixed assets estimated by management, or at the
rates prescribed under Schedule XIV to the Act whichever is higher. The
rates used by the Company are:
Leasehold improvements are depreciated on written down value over the
lease period of three to five years or useful lives as estimated by
management, whichever is lower.
(e) Intangible assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any. Internally generated intangible assets,
excluding capitalized development cost, are not capitalized and
expenditure is reflected in the statement of profit and loss in the
year in which is expenditure is incurred.
Research and development cost
Research costs are expensed as incurred. Development expenditure
incurred on an individual project is recognized as an intangible asset
when the Company can demonstrate all the following:
- the technical feasibility of completing the intangible asset so that
it will be available for use or sale -its intention to complete the
asset
-its ability to use or sell the asset
-how the asset will generate future economic benefits
-the availability of adequate resources to complete the development and
to use or sell the asset
- the ability to measure reliably the expenditure attributable to the
intangible asset during development
Following the initial recognition of the development expenditure as an
asset, the asset is carried at cost less accumulated amortization and
accumulated impairment losses if any. Amortization of the asset begins
when development is complete and the asset is available for use. It is
amortized on straight line basis over the period of expected future
benefit from the related project i.e. the estimated useful life of 10
years. Amortization is recognized in the statement of profit and loss.
(f) Impairment
The carrying amounts ofassets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assets net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
(g) Leases
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease term, capitalized leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
(h) Investments
Investments that are readily realisable 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. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognize a
decline other than temporary in the value of the investments.
(i) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Sale of goods and services
Revenue from the sale of user licenses for software applications is
recognized on delivery or subsequent milestone schedule as per the
terms and contract with the customers. Revenue from time and material
contracts is recognized as the related services are rendered. Revenue
from annual maintenance services is recognized proportionately over the
period in which services are rendered.
Revenue from services on fixed-priced and fixed time frame contracts is
recognized on completion and delivery of services to the customers when
the outcome of the contract cannot be assessed with reasonable
certainty or on proportionate completion method when there is no
significant uncertainty exists regarding the amount of consideration
that will be derived from rendering the services.
Costs and earnings in excess of billings are classified as unbilled
revenue while billings in excess of costs and earnings are classified
as unearned revenue. Provision for estimated losses on
contracts/engagements is made in the year in which such loss becomes
probable and can be reasonably estimated.
Interest
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the rates applicable.
Dividends
Income from dividend is recognized when the Company''s right to receive
payment is established by the reporting date. Rental income
Rental income from operating lease is recognized on a straight-line
basis over the term of the lease. (j) Foreign currency transactions
Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transactions.
Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
Exchange differences
Exchange differences arising on the settlement of monetary items or on
reporting Company''s monetary items at rates different from those at
which they were initially recorded during the year, or reported in
previous financial statements, are recognized as income or as expenses
in the year in which they arise.
(k) Retirement and other employee benefits
Provident fund
A retirement benefit in the form of provident fund scheme is a defined
contribution and the contribution is charged to the statement of profit
and loss of the year when the contribution to the respective fund is
due. There are no other obligations other than the contribution payable
to the respective fund.
Gratuity
Gratuity liability is a defined benefit obligation and provided for on
the basis of an actuarial valuation made on projected unit credit
method at the end of each financial year. Actuarial gains and losses
are recognized in full in
Compensated absences
Compensated absences are in the nature of short-term benefit and
provided for based on estimates.
(l) Employee stock option scheme
Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999 and the guidance note on ''Accounting
for Employee Share-based Payments'', issued by the ICAI. The excess of
market value of the stock on the date of grant over the exercise price
of the option is recognized as deferred employee stock compensation and
is charged to statement of profit and loss on straight-line method over
the vesting period of the options. The unamortized portion of cost is
shown under stock options outstanding.
(m) Income taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income tax Act, 1961. Deferred income taxes
reflects the impact of current year timing differences between taxable
income and accounting income for the year and reversal of timing
differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets and deferred tax liabilities are offset, if a legally
enforceable right exists to set off current tax assets against current
tax liabilities and the deferred tax assets and deferred tax
liabilities relate to the taxes on income levied by same governing
taxation laws. Deferred tax assets are recognized only to the extent
there is reasonable certainty that sufficient future taxable income
will be available against which such deferred tax assets can be
realized.
At each balance sheet date the Company re-assesses unrecognized
deferred tax assets and recognizes it to the extent it has become
reasonably certain that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
Minimum Alternative Tax (MAT) credit is recognized as an asset only
when and to the extent there is convincing evidence that the company
will pay normal income tax during the specified period. In the year in
which the MAT credit becomes eligible to be recognized as an asset in
accordance with the recommendations contained in guidance note issued
by the ICAI, the said asset is created by way of a credit to the
statement profit and loss and shown as MAT credit entitlement. The
Company reviews the same at each balance sheet date and writes down the
carrying amount of MAT credit entitlement to the extent there is no
longer convincing evidence to the effect that Company will pay normal
income tax during the specified period.
(n) Earnings per equity share
Basic earnings per equity share are calculated by dividing the net
profit for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per equity share, the
net profit for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.In
computing the dilutive earnings per share, only potential equity shares
that are dilutive and that either reduces the earnings per share or
increases loss per share are included.
(o) Provisions and contingent liabilities
A provision is recognized when the Company has a present obligation as
a result of past event and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on management estimate required
to settle the obligation at the balance sheet date. 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. These are reviewed at each balance sheet date and
adjusted to reflect the current best estimates. 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.
(p) Cash flow statement
Cash flows are reported using the indirect method, whereby net 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.
Cash and cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
Mar 31, 2012
(a) Basis of preparation of financial statements
The financial statements are prepared under historical cost convention
in accordance with the generally accepted accounting principles in
India ('Indian GAAP') and comply in all material respects with the
mandatory Accounting Standards ('AS') prescribed in the Companies
(Accounting Standard) Rules, 2006 ('the Rules'), with the relevant
provisions of the Companies Act, 1956 ('the Act'), pronouncements of
The Institute of Chartered Accountants of India ('ICAI') and other
relevant provisions of the Act. The financial statements have been
prepared under the historical cost convention on an accrual basis and
the accounting policies applied by the Company are consistent with
those used in the previous year.
Pursuant to the amendment to the Schedule VI to the Act, effective 1
April 2011 the Company has adopted revised Schedule VI for preparation
and presentation of the financial statements and have reclassified
previous year figures to conform to this year's presentation and
classification. Except accounting for dividend on investment in
subsidiaries, the adoption of revised Schedule VI does not impact
recognition and measurement principles followed for preparation of
financial statements. However, it significantly impacts presentation
and disclosures made in the financial statements, particularly
presentation of balance sheet.
(b) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements and the results of
operations during the reporting period. Examples of such estimates
include completeness of contracts, cost estimate to complete contracts,
provision for doubtful debts and loans and advances, diminution in the
value of long-term investments, income taxes, future obligation under
employee benefit plans, unbilled revenue and estimated useful lives of
tangible and intangible assets. Although these estimates are based upon
management's best knowledge of current events and actions, actual
results could differ from these estimates. Any revision to accounting
estimates is recognized prospectively in the current and future
periods.
(c) Tangible assets
Tangible assets are stated at cost less accumulated depreciation and
impairment losses if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use. Finance costs relating to acquisition of fixed assets
which takes substantial period of time to get ready for its intended
use are also included to the extent they relate to the period till such
assets are ready for its intended use.
Gain or losses arising from derecognition of an fixed asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
Assets under installation or under construction as at the balance sheet
date are shown as 'capital work-in-progress'.
(d) Depreciation on tangible assets
Depreciation is provided using the written down value method as per the
useful lives of the fixed assets estimated by management, or at the
rates prescribed under Schedule XIV to the Act whichever is higher. The
rates used by the Company are:
Leasehold improvements are depreciated on written down value over the
lease period of three to five years or useful lives as estimated by
management, whichever is lower.
(e) Intangible assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any. Internally generated intangible assets,
excluding capitalized development cost, are not capitalized and
expenditure is reflected in the statement of profit and loss in the
year in which is expenditure is incurred.
Research and development cost
Research costs are expensed as incurred. Development expenditure
incurred on an individual project is recognized as an intangible asset
when the Company can demonstrate all the following:
- the technical feasibility of completing the intangible asset so that
it will be available for use or sale
- its intention to complete the asset
- its ability to use or sell the asset
- how the asset will generate future economic benefits
- the availability of adequate resources to complete the development
and to use or sell the asset
- the ability to measure reliably the expenditure attributable to the
intangible asset during development
Following initial recognition of the development expenditure as an
asset, the cost model is applied requiring the asset to be carried at
cost less any accumulated amortization and the accumulated impairment
losses. Amortization of the asset begins when development is complete
and the asset is available for use. It is amortized on straight line
basis over the period of expected future benefit from the related
project i.e. the estimated useful life of 10 years. Amortization is
recognized in the statement of profit and loss.
(f) Impairment
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assets net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
(g) Leases
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease term, capitalized leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
(h) Investments
Investments that are readily realisable 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. Current
investments are carried at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary
in the value of the investments.
(i) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Sale of goods and services
Revenue from the sale of user licenses for software applications is
recognized on delivery or subsequent milestone schedule as per the
terms and contract with the customers. Revenue from time and material
contracts is recognized as the related services are rendered. Revenue
from annual maintenance services is recognized proportionately over the
period in which services are rendered.
Revenue from services on fixed-priced and fixed time frame contracts is
recognized on completion and delivery of services to the customers when
the outcome of the contract cannot be assessed with reasonable
certainty or on proportionate completion method when there is no
significant uncertainty exists regarding the amount of consideration
that will be derived from rendering the services.
Costs and earnings in excess of billings are classified as unbilled
revenue while billings in excess of costs and earnings are classified
as unearned revenue. Provision for estimated losses on
contracts/engagements is made in the year in which such loss becomes
probable and can be reasonably estimated.
Interest
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the rates applicable.
Dividends
Income from mutual fund dividend is recognized when the Company's right
to receive payment is established by the reporting date.
Rental income
Rental income from operating lease is recognized on a straight-line
basis over the term of the lease.
(j) Foreign currency transactions
Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transactions.
Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
Exchange differences
Exchange differences arising on the settlement of monetary items or on
reporting Company's monetary items at rates different from those at
which they were initially recorded during the year, or reported in
previous financial statements, are recognized as income or as expenses
in the year in which they arise.
(k) Retirement and other employee benefits
Provident fund
A retirement benefit in the form of provident fund scheme is a defined
contribution and the contribution is charged to the statement of profit
and loss of the year when the contribution to the respective fund is
due. There are no other obligations other than the contribution payable
to the respective fund.
Gratuity
Gratuity liability is a defined benefit obligation and provided for on
the basis of an actuarial valuation made on projected unit credit
method at the end of each financial year. Actuarial gains and losses
are recognized in full in the statement of profit and loss in the
period in which they occur.
Compensated absences
Compensated absences are in the nature of short-term benefit and
provided for based on estimates.
(l) Employee stock option scheme
Measurement and disclosure of the employee share-based payment plans is
done in accordance with Securities Exchange Board of India (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999 and the guidance note on 'Accounting for Employee Share-based
Payments', issued by the Institute of Chartered Accountants of India
(ICAI). The excess of market value of the stock on the date of grant
over the exercise price of the option is recognized as deferred
employee stock compensation and is charged to statement of profit and
loss on straight-line method over the vesting period of the options.
The unamortized portion of cost is shown under stock options
outstanding.
(m) Income taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income tax Act, 1961. Deferred income taxes
reflects the impact of current year timing differences between taxable
income and accounting income for the year and reversal of timing
differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets and deferred tax liabilities are offset, if a legally
enforceable right exists to set off current tax assets against current
tax liabilities and the deferred tax assets and deferred tax
liabilities relate to the taxes on income levied by same governing
taxation laws. Deferred tax assets are recognized only to the extent
there is reasonable certainty that sufficient future taxable income
will be available against which such deferred tax assets can be
realized.
At each balance sheet date the Company re-assesses unrecognized
deferred tax assets and recognizes it to the extent it has become
reasonably certain that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
Minimum Alternative Tax (MAT) credit is recognized as an asset only
when and to the extent there is convincing evidence that the company
will pay normal income tax during the specified period. In the year in
which the MAT credit becomes eligible to be recognized as an asset in
accordance with the recommendations contained in guidance note issued
by the ICAI, the said asset is created by way of a credit to the
statement profit and loss and shown as MAT credit entitlement. The
Company reviews the same at each balance sheet date and writes down the
carrying amount of MAT credit entitlement to the extent there is no
longer convincing evidence to the effect that Company will pay normal
income tax during the specified period.
(n) Earnings per equity share
Basic earnings per share are calculated by dividing the net profit for
the year attributable to equity shareholders by the weighted average
number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net
profit for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares. In
computing the dilutive earnings per share, only potential equity shares
that are dilutive and that either reduces the earnings per share or
increases loss per share are included.
(o) Provisions and contingent liabilities
A provision is recognized when the Company has a present obligation as
a result of past event and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on management estimate required
to settle the obligation at the balance sheet date. 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. These are reviewed at each balance sheet date and
adjusted to reflect the current best estimates. 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.
(p) Cash flow statement
Cash flows are reported using the indirect method, whereby net 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.
Cash and cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
Mar 31, 2010
(a) Basis of preparation
The financial statements have been prepared and presented under the
historical cost convention on the accrual basis of accounting in
accordance with Accounting Principles Generally Accepted in India
(Indian GAAP) and comply with mandatory Accounting Standards (AS)
prescribed by the Companies (Accounting Standards) Rules, 2006 (the
Rules) and the relevant provisions of the Companies Act, 1956 (the
Act). The accounting policies applied by the Company are consistent
with those used in the previous year.
(b) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements and the results of
operations during the reporting period. Examples of such estimates
include provision for doubtful debts and loans and advances, diminution
in the value of long-term investments, income taxes, future obligation
under employee benefit plans and estimated useful lives of fixed
assets. Although these estimates are based upon managements best
knowledge of current events and actions, actual results could differ
from these estimates. Any revision to accounting estimates is
recognized prospectively in the current and future periods.
(c) Fixed assets
Fixed assets are stated at cost less accumulated depreciation and
impairment losses if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use. Borrowing costs relating to acquisition of fixed
assets which takes substantial period of time to get ready for its
intended use are also included to the extent they relate to the period
till such assets are ready to be put to use.
Assets under installation or under construction as at the balance sheet
date are shown as capital work-in-progress. Advances paid towards
purchase of capital assets are also included under capital work in
progress.
(e) Impairment
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assets net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
(f) Intangibles
Software licenses
Intangible assets in the nature of software licenses are stated at cost
including expenditure incurred towards implementation of such software
and are amortized over the estimated useful life of six years, using
written down value method.
Research and development costs
Research costs are expensed as incurred. Development expenditure
incurred on an individual project is carried forward when technical and
commercial feasibility has been established.
(g) Leases
Finance leases, which effectively transfer to the Company substantially
all the risks and benefits incidental to ownership of the leased item,
are capitalized at the lower of the fair value and present value of the
minimum lease payments at the inception of the lease term and disclosed
as leased assets. Lease payments are apportioned between the finance
charges and reduction of the lease liability based on the implicit rate
of return. Finance charges are charged directly against income. Lease
management fees, legal charges and other initial direct costs are
capitalized.
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease term, capitalized leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term. Leases where the lessor effectively retains
substantially all the risks and benefits of ownership of the leased
item, are classified as operating leases. Operating lease payments are
recognized as an expense in the profit and loss account on a
straight-line basis over the lease term.
(h) Investments
Investments that are readily realisable 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. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognize a
decline other than temporary in the value of the investments.
(i) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. Sale of goods and services Revenue from the sale of
user licenses for software applications is recognized on delivery or
subsequent milestone schedule as per the terms and contract with the
customers. Revenue from time and material contracts is recognized as
the related services are rendered. Revenue from annual maintenance
services is recognized proportionately over the period in which
services are rendered.
Revenue from services on fixed-priced and fixed time frame contracts is
recognized on completion and delivery of services to the customers when
the outcome of the contract cannot be assessed with reasonable
certainty or on proportionate completion method when there is no
significant uncertainty exists regarding the amount of consideration
that will be derived from rendering the services.
Interest
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the rates applicable.
Dividends
Income from dividend is recognized when the Groups right to receive
payment is established by the balance sheet date.
Dividend from subsidiaries is recognized even if same are declared
after the balance sheet date but pertains to period on or before the
date of balance sheet as per the requirement of Schedule VI to the Act.
(j) Foreign currency translation
Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
Exchange differences
Exchange differences arising on the settlement of monetary items or on
reporting Companys monetary items at rates different from those at
which they were initially recorded during the year, or reported in
previous financial statements, are recognized as income or as expenses
in the year in which they arise.
(k) Retirement and other employee benefits
Provident fund
A retirement benefit in the form of provident fund scheme is a defined
contribution and the contribution is charged to the profit and loss
account of the year when the contribution to the respective fund is
due. There are no other obligations other than the contribution payable
to the respective fund.
Gratuity
Gratuity liability is a defined benefit obligation and provided for on
the basis of an actuarial valuation made on projected unit credit
method at the end of each financial year. Actuarial gains and losses
are recognized in full in the profit and loss account for the period in
which they occur.
Compensated absences
Compensated absences are in the nature of short-term benefit and
provided for based on estimates.
(l) Employee stock option scheme
Measurement and disclosure of the employee share-based payment plans is
done in accordance with Securities Exchange Board of India (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999 and the guidance note on Accounting for Employee Share-based
Payments, issued by the Institute of Chartered Accountants of India
(ICAI). The excess of market value of the stock on the date of grant
over the exercise price of the option is recognized as deferred
employee stock compensation and is charged to profit and loss account
on straight-line method over the vesting period of the options. The
unamortized portion of cost is shown under stock options outstanding.
(m) Income taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income tax Act, 1961. Deferred income taxes
reflects the impact of current year timing differences between taxable
income and accounting income for the year and reversal of timing
differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets and deferred tax liabilities are offset, if a legally
enforceable right exists to set off current tax assets against current
tax liabilities and the deferred tax assets and deferred tax
liabilities relate to the taxes on income levied by same governing
taxation laws. Deferred tax assets are recognized only to the extent
there is reasonable certainty that sufficient future taxable income
will be available against which such deferred tax assets can be
realized.
At each balance sheet date the Company re-assesses unrecognized
deferred tax assets and recognizes it to the extent it has become
reasonably certain that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
Minimum Alternative Tax (MAT) credit is recognized as an asset only
when and to the extent there is convincing evidence that the company
will pay normal income tax during the specified period. In the year in
which the MAT credit becomes eligible to be recognized as an asset in
accordance with the recommendations contained in guidance note issued
by the ICAI, the said asset is created by way of a credit to the profit
and loss account and shown as MAT credit entitlement. The Company
reviews the same at each balance sheet date and writes down the
carrying amount of MAT credit entitlement to the extent there is no
longer convincing evidence to the effect that Company will pay normal
income tax during the specified period.
(n) Earnings per share
Basic earnings per share are calculated by dividing the net profit for
the year attributable to equity shareholders by the weighted average
number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net
profit for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
(o) Provisions
A provision is recognized when the Company has a present obligation as
a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates.
(p) Cash flow statement
Cash flows are reported using the indirect method, whereby net 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.
(q) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
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