a. Basis of preparation of the Financial Statements
The accompanying Financial Statements are prepared and presented under
the Historical Cost Convention, on the accrual basis of accounting and
comply with the Accounting Standards prescribed by the Companies
(Accounting Standards) Rules, 2006 and the relevant provisions of the
Companies Act, 1956 to the extent applicable. The Financial Statements
are presented in Indian Rupees.
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 Schedule VI to the Companies Act, 1956.
b. Use of Estimates
The preparation 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, Liabilities (including Contingent Liabilities) as of the date
of the Financial Statements and the reported Revenues and Expenses
during the reporting period. Actual results could differ from the
estimates. Any revision to accounting estimates is recognized
prospectively in current and future periods.
c. Revenue Recognition
i. Revenue from Consulting business is primarily derived from
Resourcing services, Technical Support Service, Licensing of Software
and Business Support Services. Revenues from fixed price and fixed time
frame contracts / arrangements are recognized when the services have
been rendered in accordance with the contracts / arrangements and there
is no uncertainty as to the measurement or collectability of the
consideration. Where there is uncertainty as to measurement or
collectability, Revenue Recognition is postponed until such uncertainty
ii. Interest on Fixed Deposits and Interest on Advances are accounted
on accrual basis. In case of Doubtful Loans, the Interest is
recognized on actual receipt.
iii. Dividend Income is recognized when the Company''s right to receive
the dividend is recognized.
iv. Other receipts are accounted when it is received.
Expenses are accounted on accrual basis. As a matter of prudence,
provisions are made for all known losses and liabilities.
e. Fixed Assets
Fixed Assets are stated at cost less accumulated depreciation. The cost
of the Fixed Assets comprises purchase price and any attributable cost
of bringing the asset to its working condition for its intended use.
f. Intangible Assets
Intangible Assets are recorded at the Consideration paid for
acquisition of such assets and are carried at cost less accumulated
amortization and impairment, if any.
g. Depreciation and Amortization
Depreciation on fixed assets is provided on Straight-Line basis from
the date the assets have been installed and put to use. In respect of
Assets sold, depreciation is provided upto the date of disposal.
Depreciation is charged at the rates prescribed in Schedule XIV to the
Companies Act, 1956.
All Fixed Assets individually costing less than Rs. 5,000 are fully
depreciated in the year of purchase.
Intangible asset is amortized over its useful life (5 years) on
straight-line basis, commencing from the date when the asset is put to
use by the Company.
Long term investments are carried at cost less diminution, other than
any temporary diminution in value, determined separately for each
investment. Current investments are carried at lower of cost or Net
i. Foreign Currency Transactions
Foreign Currency Transactions are recorded at the rates of exchange
prevailing on the date of the transaction. Exchange differences, if
any, arising out of transactions settled during the year are recognized
in the Profit and Loss Account. Monetary Assets and Liabilities
denominated in Foreign Currencies as at the Balance Sheet date are
translated at the closing Exchange Rates on that date. The exchange
differences, if any, are recognized in the Profit and Loss Account and
related Assets and Liabilities are accordingly restated in the Balance
j. Employee Benefits
i. All Short Term Employee Benefits payable including Salaries and
other allowances are recognized on accrual basis, in the manner
provided in AS - 15.
ii. The Company contributes to a Recognized Provident Fund and
Employee State Insurance, which are defined contribution schemes. The
contributions are accounted for on an accrual basis and recognised in
the Profit and Loss Account.
iii. No provision has been made for leave encashment benefit for the
period as the terms of employment does not provide for such obligation
on the Company.
iv. Gratuity cost is accrued based on actuarial valuation, carried out
by an independent actuary as at the balance sheet date using the
projected unit credit method and provision is made in the books. The
Company has not made any insurance contribution in respect of its
The accounting treatment for Income Tax in respect of Company''s income
is based on the Accounting Standard 22 on ''Accounting for Taxes on
Income'' issued by the Institute of Chartered Accountants of India.
Income Tax : Provision for current Income Tax is made on the Taxable
Income for the year as is determined in accordance with the provisions
of the Income Tax Act, 1961.
Advance taxes and provisions for current income taxes are presented in
the balance sheet after off-setting advance tax paid and income tax
provision arising in the same tax jurisdiction and where the Company
intends to settle the asset and liability on a net basis.
Deferred Tax : Deferred Tax Assets and Liabilities are recognized at
substantively enacted Tax Rates, subject to the consideration of
prudence, on timing difference, being the difference between taxable
income and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods.
The company off-sets deferred tax assets and deferred tax liabilities
if it has a legally enforceable right and these relate to taxes on
income levied by the same governing taxation laws.
l. Earnings Per Share (EPS)
The Company reports Basic and Diluted Earnings Per Share in accordance
with Accounting Standard 20 - Earnings Per Share prescribed by the
Companies (Accounting Standards) Rules, 2006. Basic Earnings per Share
is computed by dividing the Net Profit After Tax by the weighted
average number of Equity Shares outstanding during the year. The
Company does not have any outstanding securities convertible into
Equity Shares of the Company and hence there is no dilution in the
Earnings per Share.
m. Provisions and Contingencies
The Company creates a provision when there is present or legal
constructive obligations as a result of past events, that probably
requires an outflow of resources and a reliable estimate can be made of
the amount of the obligation. A disclosure for a contingent liability
is made when there is a possible obligation or a present obligation
that may, but probably will not, require an outflow of resources.
When 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.
Provisions are reviewed at each Balance Sheet date and adjusted to
reflect the current best estimate. If it is no longer probable that the
outflow of resources would be required to settle the obligation, the
provision is reversed.
Contingent assets are not recognized in the Financial Statements since
this may result in the recognition of income that may never be
n. Cash Flows
Cash Flows are reported using the indirect method, whereby Profit
Before Tax is adjusted for the effects of transactions of a non-cash
nature and any deferrals or accruals of past or future cash receipts or
payments. The Cash Flows from regular revenue generating, financing and
investing activities of the Company are segregated.