2.1 Basis of preparation
 
 The financial statements have been prepared and presented under the
 historical cost convention (except for certain financial instruments,
 which are measured on fair value basis) on accrual basis of accounting,
 in accordance with accounting principles generally accepted in India
 and comply with the Accounting Standards notifi ed in the Companies
 (Accounting Standard) Rules, 2006 issued by the Central government in
 consultation with the National Advisory Committee on Accounting
 Standards and with the relevant provisions of the Companies Act, 1956,
 to the extent applicable and Accounting Standard 30,Financial
 Instruments: Recognition and Measurement (AS 30) read with
 Accounting Standard 31 – Financial Instruments: Presentation (AS 31)
 issued by the Institute of Chartered Accountants of India. From 1 July
 2008 effective 1 April 2008, the Company has early adopted AS 30 read
 with AS 31 issued by ICAI. The financial statements are presented in
 Indian rupees rounded off to the nearest thousand.
 
 2.2 Use of estimates
 
 The preparation of the financial statements in conformity with
 generally accepted accounting principles (GAAP) in India requires
 management to make estimates and assumptions that affect the reported
 amount of assets and liabilities and disclosure of contingent
 liabilities on the date of the financial statements. Management
 believes that the estimates made in the preparation of financial
 statements are prudent and reasonable. Actual results could differ from
 those estimates. Any revisions to accounting estimates are recognised
 prospectively in current and future periods.
 
 2.3 Revenue recognition
 
 Revenue from contact centre and transaction processing services
 comprises from both time/unit price and fi xed fee based service
 contracts. Revenue from time/ unit price based contracts is recognised
 on completion of the related services and is billed in accordance with
 the contractual terms specifi ed in the customer contracts. Revenue
 from fi xed fee based service contracts is recognised on achievement of
 performance milestones specifi ed in the customer contracts.
 
 Unbilled receivables represent costs incurred and revenues recognised
 on contracts to be billed in subsequent periods as per the terms of the
 contract.
 
 Dividend income is recognised when the right to receive dividend is
 established.
 
 Interest income is recognised using the time proportion method, based
 on the underlying interest rates.
 
 2.4 Fixed assets and depreciation
 
 Software purchased together with the related hardware is capitalised
 and depreciated at the rates applicable to related assets.  Intangible
 assets other than above mentioned software are amortised over the best
 estimate of the useful life from the date the assets are available for
 use. Further, the useful life is reviewed at the end of each reporting
 period for any changes in the estimates of useful life and accordingly
 the asset is amortised over the remaining useful life.
 
 Goodwill on acquisition is amortised over five years.
 
 Individual assets costing upto Rs. 5 are depreciated in full in the
 period of purchase.
 
 a.  Financial assets
 
 The Company assesses at each balance sheet date whether there is any
 objective evidence that a financial asset or group of financial
 assets is impaired. If any such indication exists, the Company
 estimates the amount of impairment loss. The amount of loss for
 short-term receivables is measured as the difference between the assets
 carrying amount and undiscounted amount of future cash flows.
 Reduction, if any, is recognised in the Profit and loss account. If at
 the balance sheet date there is any indication that a previously
 assessed impairment loss no longer exists, the recognised impairment
 loss is reversed, subject to maximum of initial carrying amount of the
 short-term receivable.
 
 b.  Non-financial assets
 
 The Company assesses at each balance sheet date whether there is any
 indication that a non financial 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 an impairment loss and
 is recognised in the Profit and loss account. If at the balance sheet
 date there is an indication that a previously assessed impairment loss
 no longer exists, the recoverable amount is reassessed and the asset is
 refl ected at the recoverable amount subject to a maximum of
 depreciated historical cost.
 
 2.5 Employee Benefits
 
 Gratuity and leave encashment
 
 The Companys gratuity scheme with insurer is a defi ned benefit plan.
 The Companys net obligation in respect of the gratuity benefit scheme
 is calculated by estimating the amount of future benefit that
 employees have earned in return for their service in the current and
 prior periods; that benefit is discounted to determine its present
 value, and the fair value of any plan assets is deducted.  The present
 value of the obligation under such defi ned benefit plan is determined
 based on actuarial valuation by an independent actuary using the
 Projected Unit Credit Method, which recognises each period of service
 as giving rise to additional unit of employee benefit entitlement and
 measures each unit separately to build up the fi nal obligation. The
 obligation is measured at the present value of the estimated future
 cash flows. The discount rates used for determining the present value
 of the obligation under defi ned benefit plan are based on the market
 yields on Government securities as at the Balance Sheet date. When the
 calculation results in a benefit to the Company, the recognised asset
 is limited to the net total of any unrecognised actuarial losses and
 past service costs and the present value of any future refunds from the
 plan or reductions in future contributions to the plan. Actuarial gains
 and losses are recognised immediately in the Profit and Loss account.
 
 Provision for leave encashment cost has been made based on actuarial
 valuation by an independent actuary at balance sheet date.
 
 The employees of the Company are entitled to compensated absence. The
 employees can carry-forward a portion of the unutilised accrued
 compensated absence and utilise it in future periods or receive cash
 compensation at termination of employment for the unutilised accrued
 compensated absence. The Company records an obligation for compensated
 absences in the period in which the employee renders the services that
 increase this entitlement. The Company measures the expected cost of
 compensated absence as the additional amount that the Company expects
 to pay as a result of the unused entitlement that has accumulated at
 the balance sheet date.
 
 Provident fund
 
 All employees of the Company receive benefits from a provident fund,
 which is a defi ned contribution retirement plan in which both, the
 Company and the employees, contribute at a determined rate. Monthly
 contributions payable to the provident fund are charged to the Profit
 and loss account as incurred.
 
 2.6 Investments
 
 Long-term investments are carried at cost and provision is made when in
 the managements opinion there is a decline, other than temporary, in
 the carrying value of such investments. Current investments are valued
 at the lower of cost and market value.
 
 2.7 Taxation
 
 Income tax expense comprises current tax expense and deferred tax
 expense or credit.
 
 Current taxes
 
 Provision for current income-tax is recognised in accordance with the
 provisions of Indian Income-tax Act, 1961 and is made annually based on
 the tax liability after taking credit for tax allowances and
 exemptions. In case of matter under appeal, full provision is made in
 the financial statements when the Company accepts liability.
 
 Deferred taxes
 
 Deferred tax assets and liabilities are recognised for the future tax
 consequences attributable to timing differences that result from
 differences between the Profits offered for income taxes and the profi
 ts as per the financial statements. Deferred tax assets and
 liabilities are measured using the tax rates and the tax laws that have
 been enacted or substantively enacted at the balance sheet date. The
 effect of a change in tax rates on deferred tax assets and liabilities
 is recognised in the period that includes the enactment date. Deferred
 tax assets are recognised only to the extent there is reasonable
 certainty that the assets can be realised in the future, however, where
 there is unabsorbed depreciation or carried forward loss under taxation
 laws, deferred tax assets are recognised only if there is virtual
 certainty of recognition of such assets. Deferred tax assets are
 reassessed for the appropriateness of their respective carrying values
 at each balance sheet date.
 
 The Profits of the Company are exempt from taxes under the Income tax
 Act, 1961, being Profit from industrial undertakings situated in
 Software Technology Park. Under Section 10A / 10B of the Income tax
 Act, 1961, the Company can avail of an exemption of Profits from
 income tax for a period up to fi scal year 2011 in relation to its
 undertakings set up in the Software Technology Park at Bangalore,
 Kolkata and Mumbai. The Company also has operations in Special Economic
 Zones (SEZ). Income from SEZ are eligible for 100% deduction for the fi
 rst five years, 50% deduction for next five years and 50% deduction
 for another five years, subject to fulfi lling certain conditions. In
 this regard, the Company recognises deferred taxes in respect of those
 originating timing differences which reverse after the tax holiday
 period resulting in tax consequences. Timing differences which
 originate and reverse within the tax holiday period do not result in
 tax consequence and, therefore, no deferred taxes are recognised in
 respect of the same.
 
 2.8 Leases
 
 Finance Lease
 
 Assets acquired on fi nance leases, including assets acquired under
 sale and lease back transactions, have been recognised as an asset and
 a liability at the inception of the lease and have been recorded at an
 amount equal to the lower of the fair value of the leased asset or the
 present value of the future minimum lease payments. Such leased assets
 are depreciated over the lease term or its estimated useful life,
 whichever is shorter. Further, the payment of minimum lease payments
 have been apportioned between fi nance charge / (expense) and principal
 repayment.
 
 Assets given out on fi nance lease are shown as amounts recoverable
 from the lessee. The rentals received on such leases are apportioned
 between the financial charge/ (income) and principal amount using the
 implicit rate of return. The fi nance charge/ (income) is recognised as
 income, and principal received is reduced from the amount receivable.
 All initial direct costs incurred are included in the cost of the
 asset.
 
 Operating lease
 
 Lease rentals in respect of assets acquired under operating lease are
 charged off to the Profit and loss account as incurred (refer Schedule
 19).
 
 2.9 Foreign currency transactions, derivative instruments and hedge
 accounting
 
 a.  Foreign currency transactions
 
 Transactions in foreign currency are recorded at the exchange rate
 prevailing on the date of the transaction. Net exchange gain or loss
 resulting in respect of foreign exchange transactions settled during
 the period is recognised in the Profit and loss account. Foreign
 currency denominated current assets and current liabilities at period
 end are translated at the period end exchange rates and the resulting
 net gain or loss is recognised in the Profit and loss account.
 
 b.  Derivative instruments and hedge accounting
 
 The Company is exposed to foreign currency fl uctuations on net
 investments in foreign operations and forecasted cash flows
 denominated in foreign currencies. The Company limits the effects of
 foreign exchange rate fl uctuations by following established risk
 management policies including the use of derivatives. The Company
 enters into derivative financial instruments, where the counterparty
 is a bank.
 
 The use of foreign currency forward contracts is governed by the
 Companys policies approved by the board of directors, which provides
 written principles on the use of such financial derivatives consistent
 with the Companys risk management strategy. The Company does not use
 derivative financial instruments for speculative purposes.
 
 The Company uses foreign currency forward contracts and currency
 options to hedge its risks associated with foreign currency fl
 uctuations relating to certain forecasted transactions. The Company
 designates these as cash flow hedges.
 
 Foreign currency derivative instruments are initially measured at fair
 value, and are re-measured at subsequent reporting dates. Changes in
 the fair value of these derivatives that are designated and effective
 as hedges of future cash flows are recognised in shareholders funds
 and the ineffective portion is recognised in the Profit and loss
 account.
 
 Changes in the fair value of derivative financial instruments that do
 not qualify for hedge accounting are recognised in the Profit and loss
 account as they arise.
 
 Hedge accounting is discontinued when the hedging instrument expires or
 is sold, terminated, or exercised, or no longer qualifi es for hedge
 accounting. At that time for forecasted transactions, any cumulative
 gain or loss on the hedging instrument recognised in shareholders
 funds is retained there until the forecasted transaction occurs. If a
 hedged transaction is no longer expected to occur, the net cumulative
 gain or loss recognised in shareholders funds is transferred to the
 Profit and loss account for the period.
 
 The impact of adoption of AS 30 has been described in Schedule 30 to
 the financial statements.
 
 c.  Non-derivative financial instruments and hedge accounting
 
 Financial assets of the Company include cash and bank balances, sundry
 debtors, unbilled receivables, fi nance lease receivables, employee
 travel and other advances, other loans and advances and derivative fi
 nancial instruments with a positive fair value. Financial liabilities
 of the Company comprise secured and unsecured loans, sundry creditors,
 accrued expenses and derivative financial instruments with a negative
 fair value. Financial assets / liabilities are recognised on the
 balance sheet when the Company becomes a party to the contractual
 provisions of the instrument. Financial assets are derecognised when
 all of risks and rewards of the ownership have been transferred. The
 transfer of risks and rewards is evaluated by comparing the exposure,
 before and after the transfer, with the variability in the amounts and
 timing of the net cash flows of the transferred assets.
 
 Short-term receivables with no stated interest rates are measured at
 original invoice amount, if the effect of discounting is immaterial.
 Non-interest-bearing deposits are discounted to their present value.
 
 The Company also designates financial instruments as hedges of net
 investments in non-integral foreign operations. The portion of changes
 in fair value of financial instrument that is determined to be an
 effective hedge is recognised under Finance charge, net together with
 the translation of the related investment. Changes in fair value
 relating to the ineffective portion of hedges are recognised in the
 Profit and loss account as they arise.
 
 The Company measures the financial liabilities, except for derivative
 financial liabilities, at amortised cost using the effective interest
 method. The Company measures the short-term payables with no stated
 rate of interest at original invoice amount, if the effect of
 discounting is immaterial.
 
 2.10 Earnings per share
 
 The basic earnings per equity share are computed by dividing the net
 Profit or loss attributable to the equity shareholders for the period
 by the weighted average number of equity shares outstanding during the
 reporting period. The number of shares used in computing diluted
 earnings per share comprises the weighted average number of shares
 considered for deriving basic earnings per share, and also the weighted
 average number of equity shares which may be issued on the conversion
 of all dilutive potential shares, unless the results would be
 anti-dilutive.
 
 2.11 Provisions and contingencies
 
 The Company creates a provision when there is present obligation as a
 result of a past event that probably requires an outflow of resources
 and a reliable estimate can be made of the amount of the obligation. A
 disclosure for a contingent liability is made when there is a possible
 obligation or a present obligation that may, but probably will not,
 require an outflow of resources. When there is a possible obligation
 or a present obligation in respect of which the likelihood of outflow
 of resources is remote, no provision or disclosure is made.
 
 Provisions are reviewed at each balance sheet date and adjusted to refl
 ect the current best estimate. If it is no longer probable that an
 outflow of resources would be required to settle the obligation, the
 provision is reversed.
 
 Contingent assets are not recognised in the financial statements.
 However, contingent assets are assessed continually and if it is
 virtually certain that an economic benefit will arise, the asset and
 related income are recognised in the period in which the change occurs.
 
 2.12 Onerous contracts
 
 Provisions for onerous contracts are recognised when the expected
 benefits to be derived by the Company from a contract are lower than
 the unavoidable costs of meeting the future obligations under the
 contract. The provision is measured at lower of the expected cost of
 terminating the contract and the expected net cost of fulfi lling the
 contract.
 
 2.13 Foreign currency convertible bonds (FCCB)
 
 a) Foreign Currency Convertible Bonds are considered monetary in
 nature. These are designated as hedging instrument to hedge the net
 investment in non-integral foreign operation. Net gain or loss
 resulting from restatement of this liability at period end rates is
 accounted through Profit and loss account (refer Schedules 18 and 30).
 
 b) Premium payable on redemption of FCCB is amortised on pro-rata basis
 at implicit rate of return over the period of the bonds and charged to
 the Securities Premium account periodically (refer Schedule 30).