(i) Basis of Preparation of Financial Accounts
These financial statements have been prepared under the historical cost
convention, on accrual basis and are in accordance with the generally
accepted accounting principles (GAAP) in India, the provisions of the
Companies Act, 2013 and the Accounting Standards as specified in the
Companies (Accounts) Rules, 2014.
(ii) Use of Estimates
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported balances of assets
and liabilities and disclosures relating to contingent liabilities as
at the date of the financial statement and reported amounts of income
and expenses during the period. Any revision to accounting estimates
and or difference, if any, between the actual results and estimates is
recognized in the period in which the results are known.
(iii) Tangible Fixed Assets
All fixed assets are stated at cost less accumulated depreciation.
Cost is inclusive of freight, duties, levies and any directly
attributable cost of bringing the assets to their present working
condition. Capital Work-in-Progress represents cost of fixed assets
that are not yet ready for their intended use as at the Balance sheet
(iv) Intangible Assets
Intellectual Property Rights (IPR) and software Licenses which have
been separately paid for and put to use are shown under Fixed Assets
in the Balance Sheet.
Expenses incurred for software product development are expensed as
incurred unless technical and commercial feasibility of the project is
demonstrated, future economic benefits are probable, the Company has an
intention and ability to complete and use or sell the software and the
costs can be measured reliably. Such expenses for acquiring
intellectual property rights & licenses for projects under development
on balance sheet date are shown under Capital Work-in-Process.
Depreciation on fixed assets is provided on the basis of useful lives
as per Part C of Schedule II to the Companies Act, 2013, except
depreciation on assets used in BOOT projects which are depreciated
equally over the period of respective projects, depreciation on foreign
branch assets has been provided at the rates followed under the
relevant law of the foreign country which are: Computers 5%; Furniture
& Fixture 5% and Computer Software are amortized over 5 years.
(vi) Impairment of Assets
An asset is treated as impaired when the carrying cost of assets
exceeds its recoverable value. An impairment loss, if any is charged to
the Profit and Loss Account in the year in which an asset is identified
as impaired. The impairment loss recognized in prior accounting period
is reversed if there has been a change in the estimate of recoverable
(a) Lease arrangement, where the risks and rewards incidental to
ownership of an asset substantially vests with the lesser, are
recognized as operating leases. Lease payments under operating lease
are recognized as an expense in the profit & loss account. Operating
lease rentals are expensed with reference to lease term and other
(b) The lower of the fair value of the assets and present fair value of
the minimum lease rentals is capitalized as fixed assets with
corresponding amount shown as lease liability. The principal component
in the lease rental is adjusted against the lease liability and the
interest component is charged to profit and loss account.
(viii) Foreign Currency Transactions
a) Transactions denominated in foreign currencies are recorded at the
rate of exchange prevailing on the date of transactions.
b) Monetary items denominated in foreign currencies at the year end are
restated at year end rates.
c) Non-monetary foreign currency items are carried at cost.
d) In respect of foreign operations, which are non-integral operations,
all assets and liabilities, both monetary and non-monetary, are
translated at closing rate, while all income and expenses are
translated at average exchange rate for the year. The resulting
exchange differences are accumulated in the ''Foreign Currency
e) Any income or expense on account of exchange difference either on
settlement translation or restatement, is recognized in the profit and
Current investments are carried at the lower of the cost and fair
Long-term investments are stated at cost. Cost includes costs
incidental to acquisition such as legal costs, investment banking fees
etc. Provision for diminution in the value of long-term investments is
made only if such a decline is other than temporary.
The portion of the Software development contracts which has remained
unbilled, though partly completed is inventoried as Software
Development - Work-in-Process.
The aggregate of ''Software Development'' income and the inventories viz.
Software Development - Work-in-Process is restricted to the contract
value or the net realizable value of the work completed or the cost,
whichever is less. For this purpose, manpower cost of the software
development team and other directly attributable costs are considered
(xi) Revenue Recognition
Our revenues for software development, both domestic and international,
are generated primarily on fixed time frame and time and material
basis. Revenue from software services under fixed-price contracts is
recognized to the extent of billings due on achievement of milestones
specified in the agreement. The expenditure incurred on unbilled
services are inventoried. On time-and-materials contracts, revenue is
recognized as the related services are rendered. Revenue from the sale
of user licenses for software applications is recognized on transfer of
the title in the user license. Revenue from ICT contracts which are on
BOOT/ BOO basis are recognized equally over the contract period post
implementation of contract.
Revenues in case of hardware and software trading are recognized as and
when these are delivered.
(xii) Employee Benefits
a) Short-term employee benefits are recognized as an expense at the
undiscounted amount in the profit and loss account of the year in which
the related service is rendered.
b) In respect of Indian operations of the Company, post- employment and
other long-term employee benefits are recognized as an expense in the
profit and loss account for the year in which the employee has rendered
services. The expense is recognized at the present value of the amount
payable determined using actuarial valuation techniques. Actuarial
gains and losses in respect of post employment and other long-term
benefits are charged to the profit and loss account.
c) In respect of employee stock options, the intrinsic value of the
options, i.e. the excess of market price of the underlying share on the
date of the grant over the exercise price of the option is accounted as
deferred employee compensation cost to be amortized over the vesting
(xiii) Borrowing Cost
Borrowing costs that are specifically attributable to the acquisition
or construction of qualifying asset are capitalized as part of the cost
of such asset till such time as the asset is ready for its intended
use. A qualifying asset is an asset that necessarily requires/takes a
substantial period of time to get ready for its intended use. All other
borrowing costs, i.e. not specifically attributable to the qualifying
asset are charged to revenue in the period in which those are incurred.
(xiv) Taxes on Income
Current Income Tax comprises of taxes on income from operations in
India and in foreign jurisdictions. Income tax liability in India is
determined and provided in accordance with the provisions of the Income
Tax Act, 1961.
Deferred tax resulting from timing differences between taxable income
and accounting income is accounted for using the tax rates and laws
that are enacted or substantively enacted as on the balance sheet date.
The deferred tax asset is recognized and carried forward only to the
extent that there is a virtual certainty that the asset will be
realized in future.
(xv) Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
(xvi) Derivative Contracts
In respect of derivative contracts, premium paid, gain/loss on
settlement and provision for losses on restatement are recognized along
with the underlying transactions and charged to Statement of Profit and
(xvii) Research and Development Costs
(a) Research costs are expensed as incurred.
(b) Development costs including costs paid to third parties for
technical knowhow, content etc. for software/content development are
expensed as incurred, unless the technical and commercial feasibility
of the project is demonstrated, future economic benefits are probable,
the Company has an intention and ability to complete and use or sell
the software/content and the costs can be measured reliably. Costs of
such projects upon completion are classified as Intellectual property
rights under intangible assets and amortized. Costs of such projects
under development on balance sheet date are shown under Intangible
assets under development.
(c) Research and development expenditure of a capital nature is
included in the fixed assets.
(d) The carrying value of development costs is reviewed for impairment
annually when the asset is not yet in use, and otherwise when events or
changes in circumstances indicate that the carrying value may not be