1.  Nature of Operations
 
 Hewlett-Packard GlobalSoft Limited (the Company) is engaged in the
 business of Software Development and Services and licensing of software
 products. The company was incorporated in the year 1988 in Bangalore,
 India.  The Company also operates branch offices in United Kingdom
 (UK), Germany, Switzerland, Japan, Hong Kong, Singapore and the United
 States of America (USA).
 
 2.  Basis of Accounting and preparation of Financial Statements
 
 The Financial Statements are prepared under the Historical Cost
 convention, in accordance with the Indian Generally Accepted Accounting
 Principles (GAAP) and the provisions of the Companies Act, 1956. All
 Income and Expenditure, having a material bearing on the Financial
 Statements, are recognized on accrual basis.
 
 3.  Change in estimate
 
 During the year, the Company revised its estimate of useful life of
 buildings to 40 years based on technical estimates made by the
 management. Hitherto, buildings were depreciated over a period of 56
 years on a straight line basis. In view of the revision in the
 estimated useful life of buildings, the unamortized depreciable amount
 is charged over the revised remaining useful life and as such the
 depreciation charge for the current year is higher by
 Rs.3,412,269/-with a corresponding impact on the profit for the year,
 the net block of fixed assets and the reserves as at the year end.
 
 4.  Fixed Assets
 
 (a) Fixed assets are stated at their original cost of acquisition and
 subsequent improvements thereto including taxes, duties, freight and
 other incidental expenses related to acquisition, construction and
 installation of the assets concerned.
 
 (b) Fixed Assets acquired on Finance Lease on or after April 01, 2001,
 are capitalized at the fair value arrived at by computing the present
 value of minimum lease payments, based on the interest rate implicit in
 the lease agreement.
 
 (c) Capital work-in-progress comprises of the Costs of fixed assets
 that are not put to use as at the Balance sheet date and advances paid
 towards acquisition of fixed assets.
 
 (d) Depreciation is provided from the month of capitalization on a
 straight-line method (SLM), based on the managements estimate of
 useful lives for the various fixed assets, as given below:
 
 i.  Buildings : 40years (refer note 3 above)
 
 ii.  Lease hold improvements Lower of Lease period or : 5 yrs
 
 iii.  Furniture & Fixtures : 5 years
 
 iv.  Computer equipment
 
 * Desktop/Server/Workstation
   and other Computer Equipment : 3 years
 
 * Laptops : 2 years
 
 v.  Plant & Machinery : 5 years
 
 vi.  Office Equipment : 5 years
 
 vii.  Electrical Fittings : 5 years
 
 viii. Vehicles : 5 years
 
 ix.  Leased Vehicles : Lease period
 
 x.  Intangible assets (Computer software): 3 years
 
 (e) Individual assets costing less than Rs.5,000/- are depreciated in
 full, in the year of purchase.
 
 5.  Capitalization and Amortization of Software product acquisition and
 product development costs.
 
 Costs incurred towards acquisition and development of Computer Software
 products meant for sale, lease or otherwise marketed, are capitalized
 until the product is available for release to the customers.
 Capitalized Software Costs are amortized on a product-by-product basis
 based on straight-line method over the estimated economic life of the
 product.  The carrying value of Capitalized Software Costs is reviewed
 at each Balance Sheet date and adjusted for any changes to the
 estimated economic life of the product.
 
 6.  Revenue
 
 (a) Revenue from Software Development on a time-and-material basis is
 recognized based on software developed and billed to clients as per the
 terms of specific contracts. In the case of fixed price contracts,
 revenue is recognized based on the milestones achieved as specified in
 the contracts.
 
 (b) Revenue from Sale of Licenses for software products is recognized
 on shipment of licenses and fulfillment of acceptance terms. Revenue
 from software product related maintenance services is recognized over
 the period of such services.
 
 (c) Interest on deployment of surplus funds is recognized based on
 interest rates, using the time-proportion method.
 
 (d) Rental Income from Lease of property is recognized on accrual
 basis, based on the terms and conditions agreed with the lessee.
 
 7.  Expenditure
 
 Expenses are accounted on accrual basis and provisions are made for all
 known losses and liabilities. Cost of software purchased for use in
 software development and services and having a useful life of less than
 one year is charged to revenue at the time of acquisition.
 
 8.  Foreign Currency Transactions
 
 (a) Initial Recognition - Foreign currency transactions are recorded in
 the reporting currency, by applying to the foreign currency amount the
 exchange rate between the reporting currency and the foreign currency
 approximately at the date of the transaction.
 
 (b) Conversion - Foreign currency monetary items are reported using the
 closing rate. Non-monetary items which are carried in terms of
 historical cost denominated in a foreign currency are reported using
 the exchange rate at the date of the transaction.
 
 (c) Exchange Differences-Exchange differences arising on the settlement
 or conversion of monetary items are recognized as income or as expenses
 in the year in which they arise except those arising on liabilities
 pertaining to fixed assets, which has been adjusted to the cost of
 fixed assets.
 
 (d) Forward Exchange Contracts-The Company uses forward exchange
 contracts to hedge its exposure to movements in foreign exchange rates.
 The Company does not use forward exchange contracts for trading or
 speculation purposes.  In respect of foreign currency monetary assets
 or liabilities in respect of which forward exchange contract is taken,
 the premium or discount arising at the inception of forward exchange
 contracts is amortized as expense or income over the life of the
 contract, except where it relates to fixed assets in which case it is
 adjusted to the cost of the corresponding asset. Exchange differences
 on such contracts are recognized in the statement of profit and loss of
 the relevant year. Any profit or loss arising on cancellation or
 renewal of forward exchange contract is recognized as income or as
 expense for the year.
 
 (e) Foreign branches-The financial statements of an integral foreign
 operations are translated as if the transactions of the foreign
 operation have been those of the Company itself.
 
 9.  Retirement Benefits to employees
 
 (a) Gratuity: In accordance with the Indian Law, the Company provides
 for gratuity, a defined benefit plan covering all employees. The
 Company covers employees for this benefit under the Group Gratuity
 Scheme, which is currently with Life Insurance Corporation (LIC) of
 India, and the provision required and the payment is determined as per
 actuarial valuation carried at the end of the year.
 
 (b) Leave Encashment: The Company makes a provision in its books for
 encashment of unavailed accumulated privilege leave lying to the credit
 of employees, subject to a maximum period of leave, based on actuarial
 valuation conducted by an independent actuary as at the end of the
 year.
 
 (c) Provident Fund: The Company has established a Provident Fund Trust
 to which contributions towards provident fund are made each month. The
 contributions towards the family pension fund are remitted to the
 Regional Provident Fund.  Contributions towards Provident Fund and
 Pension Fund are charged to the Profit and Loss Account on an accrual
 basis. The trust guarantees a specified rate of return on such
 contributions of employee and employer on a yearly basis. The Company
 will meet the shortfall in the return, if any, and the same is charged
 to Profit and Loss Account on an accrual basis.
 
 (d) Superannuation Fund: The Company established a Superannuation
 Scheme administered by Life Insurance Corporation (LIC) of India. As
 per the Scheme, for employees claiming the benefit, the Company makes
 monthly contributions, which are charged to the Profit and Loss Account
 on an accrual basis.
 
 10.  Income Tax
 
 (a) The Current charge for income tax is based on the tax liability
 computed after considering tax allowances and exemptions.
 
 (b) Deferred tax asset or liability is recognized for timing
 differences between the profit as per financial statements and the
 profit offered for income taxes, based on tax rates that have been
 enacted or substantively enacted at the Balance Sheet date. Deferred
 tax asset or liability is recognized only for those timing differences
 that originate during the tax holiday period but reversed after the tax
 holiday period. Deferred tax assets are recognized only if there is
 reasonable certainty that sufficient future taxable income will be
 available, against which they can be realized. The carrying amount of
 deferred tax assets is reviewed at each Balance Sheet date and reduced
 to the extent that it is no longer probable that sufficient taxable
 profit will be available to allow all or part of the deferred tax asset
 to be utilized.
 
 11.  Impairment of Assets
 
 The Company assesses at each balance sheet date whether there is any
 indication that an asset may be impaired. If any such indication
 exists, the Company estimates the recoverable amount of the asset. If
 such recoverable amount of the asset or the recoverable amount of the
 cash-generating unit to which the asset belongs is less than its
 carrying amount, the carrying amount is reduced to its recoverable
 amount. The reduction is treated as impairment loss and is recognized
 in the Profit and Loss Account. If at the balance sheet date there is
 an indication that if a previously assessed impaired loss no longer
 exists, the recoverable amount is reassessed and the asset is reflected
 at the recoverable amount.
 
 12.  Provisions
 
 A provision is recognized when an enterprise has a present obligation
 as a result of past event; it is probable that an outflow of resources
 will be required to settle the obligation, in respect of which a
 reliable estimate can be made. Provisions are not discounted to its
 present value and are determined based on best estimate required to
 settle the obligation at the balance sheet date. These are reviewed at
 each balance sheet date and adjusted to reflect the current best
 estimates.
 
 13 Leases
 
 (a) Finance Lease payments are apportioned between finance charges and
 reduction of the lease liability, so as to achieve a constant rate of
 interest on the remaining balance of the liability. Finance charges are
 recognized as an expense in the Profit and Loss account.
 
 (b) Operating Lease payments/income is recognized in the Profit and
 Loss account on a straight-line basis over the lease term.
 
 14.  Earnings Per Share
 
 Earnings per share is calculated on Profit after tax as disclosed in
 the Profit and Loss account. Basic Earnings per share is computed using
 the weighted average number of shares outstanding during the period.
 Diluted earnings per share is computed using the weighted average
 number of shares considered for deriving basic earnings per share and
 also the weighted average number of equity shares that could have been
 issued on the conversion of all dilutive potential equity shares.