a. Basis of Preparation:
The financial statements of the company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The company has prepared these financial statements to
comply in all material respects with the accounting standards notified
under the Companies ( Accounting Standards) Rules, 2006, (as amended)
and the relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on an accrual basis and under the
historical cost convention.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year, except for the
change in accounting policy explained below.
b. Presentation and disclosure of financial statements:
During the year ended 31 March 2102, the revised Schedule VI notified
under the Companies Act, 1956 has become applicable to the company, for
preparation and presentation of its statements. The adoption of revised
Schedule VI does not impact recognition and measurement principles
followed for preparation of financial statements. However, it has
significant impact on presentation and disclosures made in the
financial statements. The company has also reclassified the previous
year figures in accordance with the requirements applicable in the
c. Use of Estimates:
The preparation of financial statements in conformity with the Indian
GAAP requires the management to make judgments, estimates and
assumptions that affect the reported amounts of revenues, expenses,
assets and liabilities and the disclosure of contingent liabilities, at
the end of the reporting period. Although these estimates are based on
management''s best knowledge of current events and actions,
uncertainty about these assumptions and estimates could result in the
outcomes requiring adjustment to the carrying amounts of assets or
liabilities in future periods.
d. Tangible Fixed Assets:
Fixed Assets are stated at cost, net of accumulated depreciation and
accumulated impair- ment losses, if any. The cost comprises of purchase
price, borrowing costs if capitalization criteria are met and directly
attributable cost of bringing the asset to its working condition for
the intended use. Any trade discounts and rebates are deducted in
arriving at the purchase price.
Subsequent expenditures related to an item of fixed asset is added to
its book value only if it increase the future benefits from the
existing asset beyond its previously assessed standard of performance:
All other expenses on existing fixed assets, including day-to-day
repair and maintenance expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the period during which
such expenses are incurred.
e. Depreciation on tangible fixed assets:
Depreciation on fixed assets is calculated on a Straight Line basis
using the rates prescribed under the Schedule XIV of the Companies Act
1956. The company has used the following rates to provide depreciation
on its fixed assets.
Where the company is Lessee
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 inception of the lease term at the lower of the
fair value of the leased property and present value of minimum lease
payments. Lease payments are apportioned between the finance charges
and reduction of lease liability, so as to achieve constant rate of
interest of the remaining balance of the liability. Finance charges
recognized as finance cost in the statement of profit and Loss. Lease
management fees , Legal charges, and other initial direct costs of
lease are capitalized.
A leased asset is depreciated on a straight line basis at the rates
prescribed in Schedule XIV of The Companies Act, 1956.
Leases, where the less or effectively retains substantially all the
risks and benefits f owner- ship 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. .
g. Borrowing costs:
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowing and exchange
differences arising from foreign currency bor- rowing to the extent
they are regards as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
h. 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. The following specific recognition criteria must
also be met before revenue is recognized.
Sale of Goods:
Revenue from sale of goods is recognized when the significant risk and
rewards of ownership of goods have passed to the buyer, usually on
delivery of the goods. The company collects sales taxes and value added
taxes (VAT) on behalf of the Government and therefore, theses are not
economic benefits flowing to the company. Hence, they are excluded from
Income from Service:
Revenues from Product Support Services are recognized once the service
is provided and the invoice is raised. The company collects service tax
on behalf of the government and, therefore, it is not an economic
benefit flowing to the company. Hence, it is excluded from revenue.
Interest income is recognized on a time proportion basis taking into
the amount outstanding and the applicable interest rate. Interest
income is included under the head other income in the statement of
profit and loss.
i. Foreign Currency Transaction:
Foreign currency transactions and balances.
Foreign currency transactions are recorded at the exchange rate
prevailing on the date of transactions. In certain cases foreign
currency transactions are recorded at a fixed exchange rate. All
exchange rate differences in respect of foreign currency transactions
are dealt with in statement of Profit & Loss. All foreign currency
assets and liabilities, if any as at the balance sheet date are
restated at the closing rate or the forward contract rate wherever
Investments which are intended to be held for not more than one year
from the reporting date are classified as Current Investments.
Current Investments are carried in the Financials statements at lower
of cost or fair value determined on an individual investments basis.
Long Term Investments are stated at cost. Provision for diminution in
value of Long term Investments is made if only such a decline is other
The Company had invested in 8000 Equity shares of Audit E-Commerce
Pvt.Ltd.in the Financial year 2009-10 at a price of Rs.26.32 Lacs. As
a result of this acquisition, Audit E-Commerce Pvt. Ltd. became a
subsidiary of the company and accordingly, this amount was stated under
the head Non-Current Investments in subsidiary companies in the balance
sheet as at 31.3.2011. Audit E-Commerce Pvt Ltd. has incurred
substantial losses and its net worth as per the books has been eroded.
However, the company has not made a provision for diminution in value
of this investment as it is expecting to recover its investment by safe
of Intangible Assets in the form of Intellectual Property Rights, which
are owned by Audit E- Commerce Pvt. Ltd. Accordingly, the investment
has been reclassified under the head Current Investments in Subsidiary
companies in the current balance sheet.
(i) Stock of goods traded is valued at lower of cost and net realizable
value. The costs are determined on a weighted average basis.
(ii) Saleable scrap is accounted for as and when sold.
I. Retirement and other employee benefits:
Retirement benefit in the form of provident fund is a defined
contribution scheme. The contributions to the provident fund are
charged to the statement of profit and loss for the years when the
contributions are due.
The company has no obligation, other than the contribution payable to
the provident fund.
The Gratuity is accounted for on the basis of Actuarial valuation,
based on premium calculated by LIC under its Group Gratuity (Cash
m. Income Taxes:
Tax expenses 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. The tax rates and tax laws
used to compute the amounts are those that are enacted or substantively
enacted, at the reporting date. Current income tax relating to items
recognized directly in equity is recognized in equity and not in the
statement of profit and loss.
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences for the earlier years. Deferred
tax is measured using the tax rates and the tax laws enacted or
substantively enacted, at the reporting date. Deferred income tax
relating to items recognized directly in equity is recognized in equity
and not in the statement of profit and loss.
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. In situations where The company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognized only if there is virtual certainty supported
by convincing evidence that they can be realized against future taxable
At each reporting date, the company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax asset to the
extent that it has become reasonably certain or virtual certain, as the
case may be, that sufficient future taxable income will be available
against which such deferred tax assets can be realized.
Carrying amount of deferred tax assets are reviewed at each reporting
date. The Company writes down the carrying amount of deferred tax
assets to the extent that it is no longer reasonably certain or virtual
certain, as the case may be, that sufficient future taxable income will
be available against which such deferred tax assets can be realized.
Any such write down is reversed to the extent that it becomes
reasonably certain or virtual certain, as the case may be, that
sufficient future taxable income will be available.
Deferred tax assets and deferred tax liabilities are offset, if a
legally enforceable right exists to set-off current tax assets against
current liabilities and deferred tax assets and deferred taxes relate
to the same taxable entity.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the company will pay normal income tax during the speci-
field period i.e. the period for the MAT credit is allowed to be carried
forward. In the year in which the company recognizes MAT credit as an
asset in accordance with the Guidance Note on Accounting for Credit
Available in respect of Minimum Alternative Tax under the Income- tax
Act, 1961, the said asset is created by way of credit to the statement
of profit and loss and shown as MAT credit entitlement. The company
reviews the MAT credit entitlement asset at each reporting date and
writes down the asset to the extent the company does not have
convincing evidence that it will pay normal tax during the specified
n. Cash and cash equivalents:
Cash and cash equivalents for the purpose of cash flow statement
comprise cash at bank and in hand and short term investments and
deposits with an original maturity of three months or less.
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 will be recognized wherever the carrying
amount of an asset exceeds its estimated recoverable amount. The
recoverable amount is greater of the asset''s net selling price and
value in use. In assessing the value in use, the estimated future
cash flows are discounted to the present value at the weighted average
cost of capital. Previously recognized impairment loss if any is
further provided or reversed depending on changes in circumstances.
Confirmation from Debtors and Creditors are in the process of being
obtained as yet.
There are no Micro, Small and Medium Enterprises, as defined in the
Micro, Small and Medium Enterprises Development Act, 2006 to whom the
company owes dues on account of principal amount together with interest
and accordingly no additional disclosures have been made.
The above information regarding Micro, Small and Medium Enterprises has
been determined to the extent such parties have been identified on the
basis of information available with the Company. This has been relied
upon by the auditors.
Valuation of Imports calculated on C.I.F. basis for One Year period
ended 31st March 2012 is RS.31244.10 Lacs (Previous year Rs. 50637.85
The Company is in the business of Distribution of Computer parts and
peripherals in India having similar risks and rewards and therefore
there is only one geographical and business segment.
Earnings Per Share.
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity share outstanding during the period.
For the purpose of calculating Diluted Earnings per share, the net
profit or loss for the period attributable to equity share holders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
Measurement of EBITDA:
As permitted by the Guidance Note on the revised Schedule VI to the
companies Act, 1956, the company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of profit and loss. The company
measures EBITDA on the basis of profits/ loss from the continuing
operations. In its measurement, the company does not include
depreciation and amortization expenses, finance cost and tax