1. Accounting Convention
(a) The financial statements have been prepared under Historical Cost
Convention and in accordance with the accounting standards referred to
in Section 211 (3C) of the Companies Act, 1956.
(b) The company follows mercantile system of accounting and recognizes
income and expenditure on accrual basis except those with significant
(c) The presentation of the financial statements in conformity with the
generally accepted accounting principles requires the management to
make estimates and assumptions that affect the reported amount of
assets and liabilities, revenues and expenses and disclosure of
contingent liabilities. Such estimates and assumptions are based on
management''s evaluation of relevant facts and circumstances as on the
date of financial statements. The actual outcome may diverge from these
2. Revenue Recognition
(a) Revenue from software development/ software products is recognized
on the basis of delivery of the license of the required software
products specified in the purchase order. The company also performs
item bound fixed price engagements, revenue are recognized using the
stages of completion method of accounting. The invoice value is
received in phased manner over the period of installation and adjusted
against receivables on receipt.
(b) All other income is recognized on an accrual basis.
3. Fixed Assets
(a) Fixed assets are stated at cost less accumulated depreciation. Cost
includes capital cost, freight, installation cost, duties and taxes and
other incidental expenses incurred during the construction/
installation stage attributable to bringing the asset to working
condition for its intended use.
(a) Depreciation is provided under the WDV Method at the rates and in
accordance with the manner specified in Schedule XIV of the Companies
(b) Depreciation is charged on a pro-rata basis for assets
purchased/sold during the year. Individual assets costing less than Rs.
5,000 are depreciated in full, in the year of purchase.
5. Impairment of Asset
If the carrying amount of assets exceeds the recoverable amount on the
reporting date, the carrying amount is reduced to the recoverable
amount. The recoverable amount is measured at the higher of the net
selling price and value in use determined by the present value of
estimated future cash flows. The company has a policy of comparing the
Recoverable value of assets with the carrying cost and recognizing
impairment when required. Technical know-how,capital reorganization
account and good will have not been tested for impairment.
(a) Provision for current tax is made based on the liability computed
in accordance with Income Tax Act, 1961 and rules framed there under.
(b) Deferred tax is recognized, subject to consideration of prudence,
on timing differences, being difference between taxable and accounting
income/expenditure that originate in one period and are capable of
reversal in one or more subsequent period(s). As a matter of prudence
deferred tax asset is not recognized unless there is virtual
certainty that sufficient future taxable income will be available
against which such deferred tax assets will be realized.
(a) A provision is recognized when an enterprise has a present
obligation as a result of past event and it is probable that an outflow
from the enterprise, of resources embodying economic benefits, will be
required to settle the obligation, in respect of which a reliable
estimate can be made.
(b) Provisions made in terms of Accounting Standard 29 are not
discounted to its present value and are determined based on the
management estimates required to settle the obligation at the balance
Liabilities which are material and whose future outcome cannot be
ascertained with reasonable certainty are treated as contingent and
disclosed by way of Notes to the financial statements.
9. Earnings per Share
Basic Earnings per Share is calculated by dividing the net profit after
tax for the year attributable to equity shareholders of the Company by
the weighted average number of equity shares in issue during the year.