a. Basis of Preparation of Financial Statements.
 
 i. The Financial Statements have been prepared using historical cost
 convention and on basis of going concern with Revenues recognized and
 expenses accounted on accrual basis.
 
 II. Accounting policies followed by the Company and not specifically
 referred to otherwise, are consistent and in consonance with generally
 accepted accounting principles.
 
 b. Fixed Assets :
 
 i. Fixed assets are stated at cost.
 
 ii. Depreciation on additions/sales is restricted to the period of use.
 Depreciation on all addition to and sale of assets has been provided on
 pro rata, basis and at the rates in accordance with Schedule XIV to the
 Companies Act, 1956.
 
 iii. Depreciation is charged on straight line method at the following
 rates :
 
 Plant & Machinery                                 4.75%
 
 Furniture & Fixtures                              6.23%
 
 Leasehold Premises                               10.00%
 
 c. Revenue Recognition :
 
 Franchisee Centres :
 
 i) Technical know how fees are accounted for as income in the year in
 which Memorandum of Understanding (MOU) is signed with the franchisee.
 
 ii) Charges for installation of software at Xee Exchange are accounted
 as income in the year in which Memorandum of Understanding is signed
 with the franchisee.
 
 iii) The licence fees receivable from franchisee centres is accounted
 as income in the year in which the fees become due as laid down in the
 Memorandum of Understanding signed with the franchisee.
 
 Xee Centres :
 
 The following charges on Xee centres is booked as Income at the time of
 receiving an Application to enter into Xee centre agreement.
 
 i) Registration fees
 
 ii) Licence fees
 
 iii) Annual subscription
 
 iv) Promotional Kit Charges
 
 v) Additional Mail Box Charges
 
 E-Mail Subscribers :
 
 The Company follows the policy of booking subscription received as
 Income in the year in which invoice is raised.
 
 Annual Maintenance Charges :
 
 The Annual maintenance charges, which relate to the period for which
 maintenance contracts are entered, are pro-rated over the entire tenure
 of the contract.
 
 d. All known liabilities are provided for in the accounts except
 liabilities of contingent nature which have been adequately disclosed
 in the accounts.
 
 e. Issue expenses are amortised over a period of ten years starting
 from the year in which the project is commissioned and operates for a
 full year.
 
 f. Project and other Expenses :
 
 Project and other expenses including, revenue expenses like man power
 cost, travelling expenses and other pre-operative expenses and
 advances/deposits of capital nature are shown under capital
 work-in-progress and the same will be apportioned to the respective
 fixed assets on the commissioning of the respective projects.
 
 g. The liability of gratuity in respect of employees is accounted for
 in the books on cash basis.
 
 h. Sales are accounted for at Net of Sales Tax.
 
 i. Inventories.
 
 Closing stock of goods, stores and spare parts is valued at cost.
 
 j. Deferred Revenue Expenditure
 
 The expenditure incurred by the Company on launching a Xee Mail nod and
 introduction of new value added service is treated as Deferred Revenue
 Expenditure and will be
 
 k.  written off over a period of three years.
 
 Foreign Currency Transactions :
 
 Outstanding foreign currency liabilities are transacted at the exchange
 rate prevailing as on Balance Sheet date, gains and losses on these
 liabilities are recognised in the Profit and Loss Account under exchange
 fluctuation account.