A.  Basis of preparation of Financial Statements
 
 The financial statements have been prepared under the historical cost
 convention in accordance with generally accepted accounting principles
 in India and the provisions of the Companies Act, 1956.
 
 B.  Use of Estimates
 
 The preparation of financial statements in conformity with generally
 accepted accounting principles requires estimates and assumptions to be
 made that affect the reported amounts of assets and liabilities on the
 date of the financial statements and the reported amounts of revenues
 and expenses during the reporting period. Differences between actual
 results and estimates are recognized in the period in which the results
 are known/materialize.
 
 C.  Fixed Assets (Tangible Assets)
 
 Fixed assets are stated at cost of acquisition or construction and
 carried at cost less accumulated depreciation and impairment loss, if
 any.
 
 D. Intangible Assets
 
 Intangible assets are recognized only if it is probable that the future
 economic benefits that are attributable to the assets will flow to the
 enterprise and the cost of the assets can be measured reliably.
 Expenditure on an intangible item is expensed when incurred unless it
 forms part of the cost of intangible asset that meets the recognition
 criteria.  Intangible assets are stated at cost of acquisition and are
 carried at cost less accumulated amortization and impairment loss, if
 any.
 
 E.  Operating Leases
 
 Assets taken/given on lease under which all the risks and rewards of
 ownership are effectively retained by the lessor are classified as
 operating lease. Lease payments/income under operating leases are
 recognized as expenses/income on a straight line basis over the lease
 term in accordance with the respective lease agreements.
 
 F.  Depreciation and Amortization
 
 Depreciation and amortization is provided for on straight line basis
 and using the rates prescribed in Schedule XIV of the Companies Act,
 1956 except for following assets which are depreciated over the useful
 lives stated as follows:
 
 G.  Investments
 
 Current investments are carried at the lower of cost and fair value.
 Long-term investments are stated at cost. Provision for diminution in
 the value of long-term investments is made only if such a decline is
 other than temporary in the opinion of the management. The difference
 between carrying amount of the investment determined on average cost
 basis and sale proceeds, net of expenses, is recognized as profit or
 loss on sale of investments.
 
 H.  Revenue Recognition
 
 Revenue is recognized when no significant uncertainty as to
 determination and realization exists. Sales include sale of products
 (licenses), services (contracts) and traded goods.
 
 Revenue from sale of licenses for the use of software applications is
 recognized on delivery/granting of right to use.
 
 Revenue from fixed price service contracts is recognized based on
 milestones/acts performed as specified in the contracts or on a
 straight line basis over the contract period where performance of
 several acts is required over that period.
 
 In the case of time and material contracts, revenue is recognized on
 the basis of hours completed and material used.
 
 Revenue from annual maintenance contracts, lease of licenses, IT
 infrastructure sharing income and Shared Business Support Services is
 recognized proportionately over the period in which the services are
 rendered/licenses are leased.
 
 Revenue from sale of traded goods is recognized when the significant
 risks and rewards in respect of ownership of products are transferred
 by the Company.
 
 Sales are stated net of returns, VAT and service tax wherever
 applicable.
 
 Dividend income is recognised when the Company''s right to receive
 dividend is established. Interest income is recognised on time
 proportion basis. Insurance claim is recognised when such claim is
 admitted by the Insurance Company.
 
 I.  Foreign Currency Transactions and Translation
 
 Foreign currency transactions are recorded at the exchange rates
 prevailing on the date of the transaction.
 
 Monetary items denominated in foreign currency are restated using the
 exchange rate prevailing at the balance sheet date.  Exchange
 differences relating to long term monetary items are dealt with in the
 following manner:
 
 i. Exchange differences arising during the year, in so far as they
 relate to the acquisition of a depreciable capital asset are added
 to/deducted from the cost of the asset and depreciated over the balance
 life of the asset.
 
 ii. In other cases, such differences are accumulated in a Foreign
 Currency Monetary Item Translation Difference Account and amortized to
 the profit and loss account over the balance life of the long-term
 monetary item, however, period of amortization does not extend beyond
 March 31, 2011 (Refer Note 14 below).
 
 All other exchange differences are dealt with in the profit and loss
 account.
 
 Non-monetary items denominated in foreign currency are carried at
 historical cost.
 
 Foreign Branches
 
 The translation of the financial statements of foreign branches (non
 integral) is accounted for as under:
 
 a) All revenues and expenses are translated at average rate.
 
 b) All monetary and non-monetary assets and liabilities are translated
 at the rate prevailing on the balance sheet date.
 
 c) Resulting exchange difference is accumulated in Foreign Currency
 Translation Reserve Account until the disposal of the net investment in
 the said non integral foreign operation.
 
 J.  Employee Benefits
 
 a) Post employment benefits and other long term benefits
 
 Payments to defined contribution retirement schemes and other similar
 funds are expensed as incurred.
 
 For defined benefit schemes and other long term benefit plans viz.
 gratuity and compensated absences expected to occur after twelve
 months, the cost of providing benefits is determined using the
 Projected Unit Credit Method, with actuarial valuations being carried
 out at balance sheet date. Actuarial gains and losses are recognized in
 full in the profit and loss account for the period in which they occur.
 Past service cost is recognized immediately to the extent that the
 benefits are already vested, and otherwise is amortized on a straight
 line basis over the average period until the benefits become vested.
 The retirement benefit obligation recognized in the balance sheet
 represents the present value of the defined benefit obligation as
 adjusted for unrecognized past service cost, as reduced by the fair
 value of scheme assets. Any asset resulting from this calculation is
 limited to the present value of the available refunds and reduction in
 contributions to the scheme.
 
 b) Short term employee benefits
 
 The undiscounted amount of short term employee benefits expected to be
 paid in exchange for the services rendered by employees is recognized
 as an expense during the period when the employee renders those
 services. These benefits include compensated absences such as leave
 expected to be availed within a year and performance incentives.
 
 K.  Borrowing Costs
 
 Borrowing costs that are attributable to the acquisition or
 construction of qualifying assets are capitalized as part of the cost
 of such assets. A qualifying asset is one that necessarily takes a
 substantial period of time to get ready for its intended use or sale.
 Premium relating to redemption of zero coupon convertible bonds is
 debited to Securities Premium Account as permitted under section 78 of
 the Companies Act, 1956. All other borrowing costs are charged to
 revenue.
 
 L.  Income Taxes
 
 Income taxes are accounted for in accordance with Accounting Standard
 (AS-22) Accounting for Taxes on Income. Tax expense comprises current
 tax, deferred tax and wealth tax. Current tax is the amount of tax
 payable on the taxable income for the year as determined in accordance
 with the provisions of Income-Tax Act, 1961. The Company recognizes
 deferred tax (subject to consideration of prudence) based on the tax
 effect of timing differences, being differences between taxable income
 and accounting income that originate in one period and are capable of
 reversal in one or more subsequent periods. The effect on deferred tax
 assets and liabilities of a change in tax rates is recognised in the
 statement of profit and loss using the tax rates and tax laws that have
 been enacted or substantively enacted by the balance sheet date.
 Deferred tax assets are not recognised on unabsorbed depreciation and
 carry forward of losses unless there is virtual certainty that
 sufficient future taxable income will be available against which such
 deferred tax assets can be realized.
 
 M. Stock based Compensation
 
 The compensation cost of stock options granted to employees is measured
 by the intrinsic value method, i.e. difference between the market price
 of the Company''s shares on the date of grant of options and the
 exercise price to be paid by the option holders. The compensation cost,
 if any, is amortized uniformly over the vesting period of the options.
 
 N.  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 assets. 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 an impairment loss and is
 recognised in the Profit and Loss Account. If at the Balance Sheet date
 there is an indication that if a previously assessed impairment loss no
 longer exists, the recoverable amount is reassessed and the asset is
 reflected at lower of the carrying amount that would have been
 determined had no impairment loss been recognised or recoverable
 amount.
 
 O.  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 disclosed by way of notes
 to the accounts. Contingent assets are neither recognized nor disclosed
 in the financial statements.