Accounting Policies of Powersoft Global Solutions Ltd. Company

Mar 31, 2010

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

b. Use of Estimates The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities on the date of the financial statements and reported amounts of revenues and expenses during the period reported. Actual results could differ from those estimates.

c. Fixed Assets Fixed Assets are stated at the cost of acquisition less accumulated depreciation. All costs incurred in bringing the assets to its working condition for intended use have been capitalized.

d. Intangible Assets Intangible assets are recognized only if it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortization.

e. Depreciation and amortization i) Depreciation on fixed assets excepting software has been provided on straight line method as per the rates specified in schedule XIV to the Companies Act, 1956

ii) Pro-rata depreciation is provided from the date of purchase of assets purchased during the period.

iii)Softwares are being amortized on straight line basis over a period of 7 years, considering its useful life.

f. Employee Benefits

i. Provident Fund

Eligible employees receive benefits from provident fund, which is a defined contribution plan. Both the employees and the Company make monthly contributions to the provident fund plan equal to a specified percentage of the covered employees salary. The contributions are made to government administered provident fund.

ii. Employee State Insurance

Eligible employees receive benefits from the Employees State Insurance, which is a defined contribution scheme. Both the employees and the Company make monthly contributions to this scheme. The employees contribute 1.75% of the covered employees salary and the Company has to contribute 4.75% of the covered employees salary. The contributions are made to government administered Employees State Insurance Fund.

iii.Gratuity

The Company recognizes and pays gratuity liability to the employees as and when it occurs.

g. Revenue Recognition

Revenues from software related services are accounted for on the basis of services rendered on cost plus method, as per the terms of the contract.

Revenues from engagement services are based on the number of engagements performed. Revenues from time period services are recognized based on the time incurred in providing services at contracted rates.

h. Impairment of Assets

The Company periodically assesses whether there is any indication that an asset or a group of assets comprising a cash generating unit may be impaired. If any such indication exists, the Company estimates the recoverable amount of asset. For an asset or group of assets that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Profit and Loss account. If at the Balance Sheet date, there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost. An impairment loss is reversed only to the extent that the carrying amount of asset does not exceed the net book value that would have been determined; if no impairment loss has been recognized.

i. Leases

For operating leases, lease payments (including cost for services, such as maintenance) are recognized as an expense in the statement of profit and loss on a straight line basis over the lease term. The lease term is the non-cancelable period for which the lessee has agreed to take on lease the asset together with any further periods for which the lessee has the option to continue the lease of the asset, with or without further payment, which option at the inception of the lease it is reasonably certain that the lessee will exercise.

j. Income-tax

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

k. Fringe Benefit Tax

Consequent to the introduction of Fringe Benefit Tax ("FBT") effective 1 April 2005, the Company provides for and discloses FBT in accordance with the provisions of Section 115WC of Income-tax Act, 1961 and the guidance note on FBT issued by the Institute of Chartered Accountants of India respectively.

l. Foreign Currency Transactions

Transactions in foreign currency are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currency are translated at the rates of exchange at the Balance Sheet date and resultant gain or loss is recognized in the Profit & Loss Account.

m. Investments

Long term investments are stated at cost less provision for diminution in the value of such investments. Diminution in value is provided for where management is of the opinion that the diminution is of other than temporary nature. Short term investments are valued at lower of cost and net realizable value.

n. Earning Per Share

Basic earnings per share are calculated by dividing the net profit / loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.For the purpose of calculating diluted earnings per share, the net profit / loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares, if any.

o. Provisions and Contingent Liabilities

The Company creates a provision when there is a present obligation as a result of an obligating event that probably require an outflow of resources and a reliable estimate can be made of the amounts of the outflow.

A disclosure for a contingent liability is made when there is a possible obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

p. Miscellaneous Expenditure

The Company has a policy of amortizing public issue expenses over a period of 5 years, i.e. one-fifth of the expenditure per year.

q. Cash Flow Statement

The cash flow statement has been prepared under the indirect method as set out in the Accounting Standard (AS) – 3 “Cash Flow Statement” issued by the Institute of Chartered Accountants of India

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Jun 30, 2001

A. System of Accounting : The financial statements are prepared under the historical cost convention in accordance with applicable accounting standards. The Company adopts the accrual basis in the preparation of its financial statements.

b. Fixed Assets : Expenditure which are of capital nature are capitalised at cost which comprises of net purchase price, import duties, levies and directly attributable cost of bringing the asset to its working condition for its intended use, Revenue Expenses incurred for the period prior to commencement of commercial production/installation are capitalised as part of cost,

c. Depreciation : Depreciation on fixed assets are provided as per the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 under straight line method.

d. Investments are stated at cost (refer note 5 below),

e. Inventories are valued at lower of cost of net realisable value.

f. Foreign currency conversion : Foreign Currency Assets and liabilities covered by forward contracts are stated at forward contract rates. Foreign currency assets and liabilities not covered by forward contracts are stated at rates prevailing at the year end.

Exchange differences relating to fixed assets are adjusted in the cost of the asset. Any other exchange differences are dealt with in the Profit & Loss Account.

g. Research & Development: Expenditure on research and development is accounted according with the accounting standard for accounting research and development issued by the institute of Chartered Accountants of India.

h. Retirement Benefits: No provision for Gratuity has been made as none of the employee have completed five years of continuous service as contemplated in the payment of gratuity act.

i. All know liabilities are provided in the accounts except liabilities of contingent in nature which have been adequately disclosed in the accounts.

j. Sales & Services : Sales includes sale of goods and is net of returns.

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Mar 31, 2000

A. Sysem of Accounting : The financial statements ore prepared under the historical cost convention in accordance with applicable accounting standards. The company adopts the accrual basis in the preparation of its finan- cial statements.

b. Fixed Assets : Expenditure which are of capital nature are capitalised at cost which comprises of net purchase price, import duties, levies and di- rectly attributable cost of bringing the asset to its working condition for its intended use. Revenue Expenses incurred for the perriod prior to com- mencement of commercial production/instalation are capitalised as part of cost.

c. Depreciation : Depreciation on fixed assets are provded as pei ihe rates and in the manner prescribed in Schedule XIV to the companies Act. 1956 under straight line method.

d. Investments are stated at cost.

e. Inventories are valued at lower of cost or net realisable value.

f. Foreign currency conversion : Foreign Currency Assets and liabilities cov- ered by forward contracts are stated at forward contract rates.

Foreign currency assets and liabilites not covered by forward contracts are stated at rates prevailing at the year end.

Exchange differences relating to fixed assets are adjusted in the cost of the asset. Any other exchange differences are dealt with in the Profit & Loss Account.

g. Kesearch & Development: Expenditure on research and development is accounted according with the accounting standard for accounting for re- search and development issued by the institute of chartered accountants of India.

h. Retirement Benefits : No provision for Gratuity has been made as none of the employee have completed five years of continuous service as con- templated in the payment of gratuity act.

i. All know liabilities are provided for in the accounts except liabilites of con- tingent in nature which have been adequately disclosed in the accounts. j. Sales & Services : Sales includes sale of goods and is net of returns.

k. Premilinary and Public issue expenses are amortised over a period of 10 years,