(i) Basis of preparation of financial statements
The financial statements are prepared under the historical cost
convention, on the accrual basis of accounting and in accordance with
accounting principles generally accepted in India (Indian GAAP) and
comply with the Accounting Standards notified by the Central Government
of India under the Companies (Accounting Standards) Rules, 2006, and
relevant provisions of the Companies Act, 1956.
(ii) Use of Estimates
The preparation of the financial statements in conformity with the
Generally Accepted Accounting Principles requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Management
believes that the estimates used in the preparation of financial
statements are prudent and reasonable. Differences between the actual
results and estimates are regrouped in the period in which the results
(iii) Fixed Assets and Intangibles
Fixed assets and intangibles (software - purchased as well as developed
in-house) are stated at cost less accumulated depreciation. The cost of
assets comprises its purchase price, including import duties and other
non-refundable taxes or levies, wherever applicable, and any directly
attributable cost of bringing the asset to its working condition for
its intended use. Internally developed software is stated at direct
cost attributable to the asset including other applicable costs less
(iv) Depreciation / Amortization
Depreciation has been provided on the Written Down Value method at the
rates prescribed under Schedule XIV to the Companies Act, 1956. Assets
individually costing less than Rs5,000 added in the year of purchase are
Computer software (purchased and developed in-house) of the publishing
solutions business is amortized over a period of 2 to 5 years, based on
the future economic benefits, as estimated by the management.
The cost of improvements to leasehold premises is amortized over the
primary / extended period of lease.
In the foreign branch of the company located in United States of
America , Fixed Assets are depreciated based on their estimated useful
life as follows:
Plant & Machinery - 5 years.
Intangible Software - 5 years.
Furniture & Fixtures - 7 years.
Leasehold improvements - 3 years.
(v) Impairment of Assets
The carrying values of assets of the cash-generating units at each
Balance Sheet date are reviewed for impairment. If any indication of
such impairment exists, the recoverable amounts of those assets are
estimated and impairment loss is recognized, if the carrying amount of
those assets exceeds their recoverable amount. The recoverable amount
is the greater of the net selling price and their value in use. Value
in use is arrived at by discounting the estimated future cash flows to
their present value based on appropriate discount factor.
Long-term Investments are carried at cost. Provision for diminution, if
any, in the value of long-term investments is made, to recognize a
decline, other than temporary. Such diminution is determined for each
investment individually. Current Investments are stated at lower of
cost or fair value.
Inventories comprising Work in Process, are valued at the lower of cost
and net realizable value. The cost comprises material cost, direct
labour and appropriate proportion of overheads. The quantity measured
in pages considered for valuation is adjusted for pages where no
realization is expected.
(viii) Revenue Recognition
Revenue is recognized on delivery of projects or as per terms specified
in contracts/purchase orders received from customers.
Revenues for web-site design and development are recognized based on
the percentage of completion of the project. Revenues from web-site
hosting are recognized ratably over the year for which the site is
hosted and on man-hours basis for BPO operations.
Dividend income from investment in units of Mutual Funds is recognized
on accrual basis when the right to receive the same is established
based, on declaration by the Mutual Funds.
Rental Income is recognized as per contractual terms. Interest income
is accounted on accrual basis.
(ix) Foreign Currency Transactions
(a) Transactions in foreign currency are accounted at the exchange
rates prevailing on the date of the transaction and the realized
exchange loss/gain are dealt with in the Profit and Loss account.
(b) Monetary assets and liabilities denominated in foreign currency are
restated at the rates of exchange as on the Balance Sheet date and the
exchange gain/loss is suitably dealt with in the Profit and Loss
(c) Overseas Operations
In accordance with Accounting Standard 11 (Revised), ''Accounting for
the effects of changes in foreign exchange rates'', the branches located
outside India have been classified as Integral Foreign Operations.
Non-monetary assets are translated at the rates as on the date of the
transaction. Monetary assets and liabilities are translated at the
closing rate. Income and expenses are translated at the monthly average
rate. The resultant exchange differences are dealt with in the Profit
and Loss account.
(x) Employee Benefits Defined contribution plans:
a. Provident Fund: Fixed contributions to defined contribution plans
such as Provident Fund and Employee State Insurance made on a monthly
basis to relevant authorities are charged to the Profit and Loss
account as they fall due.
b. Superannuation Fund: The Company makes contribution to a scheme
administered by the Life Insurance Corporation of India (LIC) to
discharge its liabilities towards superannuation to certain employees
and the same is charged to the Profit and Loss account.
Defined benefit plans
Gratuity: The Company accounts for its liability for future gratuity
benefits, as at the Balance Sheet date. This is determined through
actuarial valuation using the projected unit credit method. The Company
makes its contribution to a fund administered by the LIC. Actuarial
gains and losses are immediately recognized in the Profit and Loss
Other Long term benefits: Liability for compensated absences payable at
the time of retirement / resignation is determined on actuarial basis
as at the Balance Sheet date, using the projected unit credit method.
The Company makes its contribution to a fund administered by the LIC.
Actuarial gains and losses are immediately recognized in the Profit and
Short term employee benefits: Short term employee benefits are
recognized as an expense as per the Company''s scheme based on expected
obligations on an undiscounted basis.
With respect to the overseas branch, the Company provides for employee
benefits as per the local regulations.
Current income tax expenses comprise taxes on income from operations in
India and in foreign jurisdictions. Income tax payable in India is
determined in accordance with the provisions of the Income Tax
Minimum Alternate Tax (MAT) paid in accordance with the tax laws which
gives rise to future economic benefits in the form of adjustment of
future income tax liability, is considered as an asset if there is
convincing evidence that the Company will pay normal tax in the
subsequent years. Accordingly, it is recognized as an asset in the
Balance Sheet when it is probable that the future economic benefit
associated with it will flow to the Company and the asset can be
Deferred tax is calculated at the rates and laws that have been enacted
or substantially enacted as of the Balance Sheet date and is recognized
on timing differences that originate in one period and are capable of
reversal in one or more subsequent periods. Deferred tax assets,
subject to consideration of prudence are recognized and carried forward
only to the extent that they can be realized.
(xii) Cash Flow Statement
The Cash Flow Statement has been prepared in accordance with the
Indirect method prescribed in Accounting Standard 3 - ''Cash flow
statements''. The cash flows from operating, investing and financing
activities of the Company are segregated.
(xiii) Provisions, Contingent Liabilities and Contingent Assets
Provisions and Contingencies: A provision is recognized when the
Company has a present obligation as a result of past events and 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 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. Contingent Liabilities are not
recognized but are disclosed in the notes.
Contingent assets are neither recognized nor disclosed in the financial