1 Basis of preparation of consolidated financial statements
 
 The financial statements are prepared in accordance with Indian
 Generally Accepted Accounting Principles (GAAP) under the historical
 cost convention on the accrual basis. GAAP comprises mandatory
 accounting standards as specified in the Companies (Accounting
 Standards) Rules, 2006 and guidelines issued by the Securities and
 Exchange Board of India. Accounting policies have been consistently
 applied except where a newly issued accounting standard is initially
 adopted or a revision to an existing accounting standard requires a
 change in the accounting policy hitherto in use. Management evaluates
 all recently issued or revised accounting standards on an on-going
 basis.  The financial statements are prepared in accordance with the
 principles and procedures required for the preparation and presentation
 of consolidated financial statements as laid down under the accounting
 standard on Consolidated Financia Statements as specified in the
 Companies (Accounting Standards) Rules, 2006. The financial statements
 of Megasoft Limited and its subsidiaries have been combined on a
 line-by-line basis by adding together book values of like items of
 assets, liabilities, income and expenses after eliminating intragroup
 balances and transactions and resulting unrealized gain / loss. The
 consolidated financial statements are prepared by applying uniform
 accounting policies in use at the Group. Minority interests have been
 excluded.  Exchange difference resulting from the difference due to
 translation of foreign currency assets and liabilities in subsidiaries
 is disclosed as foreign currency translation reserve.
 
 2 Use of Estimates
 
 The preparation of consolidated financial statements in conformity with
 GAAP requires management to make estimates and assumptions that affect
 the reported amounts of assets and liabilities, disclosure of
 contingent liabilities at the date of financia statements and the
 reported amounts of revenues and expenses during the reporting period.
 Examples of such estimates include estimates of carrying value of work
 in progress, provision for doubtful debts and useful life of fixed
 assets. Actual results could differ from estimates.
 
 3 Revenue Recognition
 
 Revenue from software development on the time and materia basis is
 recognised based on software developed and billed to clients as per the
 terms of specific contracts. In the case of fixed- price contracts,
 revenue is recognised based on the milestones achieved as specified in
 the contracts or on the percentage of completion basis. Provision for
 estimated losses on incomplete contract is recorded in the period in
 which such losses become probable based on the current estimates.
 Revenues from product icenses and related revenues are recognised as
 follows:
 
 - Licence fees, on delivery and subsequent milestone schedule as per
 the terms of the contract with the end user.
 
 - Product maintenance revenues, over the period of the maintenance
 contract.
 
 4 Fixed Assets & Depreciation
 
 Fixed assets are stated at cost of acquisition less accumulated
 depreciation. Direct costs such as freight, installation costs, duties
 and taxes are included in the cost of the asset until the assets are
 ready to be put to use. Assets acquired under hire purchase / leases
 are capitalized and the corresponding liability is recorded at an
 amount equal to the fair value of the hired / leased asset or the
 present value of the minimum hire / lease payments, whichever is lower,
 at the inception of the lease / hire purchase. Lease rentals in respect
 of leased assets are charged to Profit and Loss Account. Initial costs
 incurred in connection with specific leasing / hire purchase activities
 directly attributable to activities performed for a finance lease /
 hire purchase are included as part of the amount recognised as an asset
 under the lease / hire purchase.  Depreciation on fixed assets is
 provided using the straightline method other than in German subsidiary,
 wherein reducing balance method is followed, in accordance with the
 rates specified under the local laws of the respective countries.
 Depreciation is charged on a pro-rata basis on fixed assets purchased /
 sold during the period. Depreciation on assets acquired under finance
 lease / hire purchase is provided using the straight-line method over
 the shorter of the lease / hire purchase term and useful life of the
 asset.
 
 5 Investments
 
 Investments in other companies are classified as long-term investments
 and are stated at cost. Any diminution in value is to be determined for
 each investment individually on the basis of its expected benefits to
 the Company. The exact quantum of such benefits is dependent on a
 number of uncertain future events.
 
 6 Foreign Currency transactions
 
 The Consolidated Financial Statements are prepared in Indian Rupees,
 which is the functional currency for Megasoft Limited.  The translation
 of the functional currencies into the reporting currency is performed
 for assets and liabilities of the foreign subsidiary companies currency
 using the current exchange rates in effect at the balance sheet date,
 for revenues, costs and expenses using average exchange rates
 prevailing during the reporting periods and for share capital, using
 the exchange rate at the date of the transaction. The resultant
 translation exchange gain/loss has been disclosed as Foreign Currency
 Translation Reserve under Reserves & Surplus.
 
 All income and expenditure transactions of the foreign branch during
 the year are included in these accounts at the average rate of
 exchange. Monetary assets and liabilities at rates prevailing on the
 balance sheet date. Non-monetary assets and liabilities are translated
 at the rate prevailing on the date of the transaction.  Depreciation is
 translated at the rates used for the translation of the values of the
 assets on which depreciation is computed. Net gain/loss on foreign
 currency translation is recognised in the Profit & Loss Account.
 
 In case of forward exchange contract or any other financial instruments
 that is in substance a forward exchange contract to hedge the foreign
 currency risk which is on account of firm commitment and / or is a
 highly probable forecast transaction, the premium or discount arising
 at the inception of the contract is amortised as expense or income over
 the life of the contract.  Gains / Losses on settlement of transaction
 arising on cancellation or renewal of such a forward exchange contract
 are recognised as income or expense for the period.
 
 In all other cases the gain or loss on contract is computed by
 multiplying the foreign currency amount of the forward exchange
 contract by the difference between the forward rate available at the
 reporting date for the remaining maturity of the contract and the
 contracted forward rate (or the forward rate last used to measure a
 gain or loss on that contract for an earlier period) is recognised in
 the profit and loss account for the period.
 
 7 Retirement benefits India
 
 Contributions to provident fund are deposited with a recognised
 provident fund. Provision for gratuity and leave encashment is made on
 the basis of an actuarial valuation.
 
 Subsidiary companies
 
 Retirement benefits are provided to employees of subsidiary companies
 in accordance with the local laws and regulations prevailing in the
 country in which the subsidiary company is located.
 
 8 Borrowing cost
 
 Borrowing costs other than those directly attributable to qualifying
 Fixed Assets are recognised as an expense in the period in which they
 are incurred.
 
 9 Taxes
 
 Current tax
 
 Current tax is measured at the amount expected to be paid out or
 recovered from the tax administration adopting the applicable rates in
 force.  Deferred tax
 
 Deferred tax charge or credit reflects the tax effects of timing
 differences between accounting income and taxable income for the
 period. The deferred tax charge or credit and the corresponding
 deferred tax liabilities or assets are recognised using the tax rates
 that have been enacted or substantially enacted by the balance sheet
 date. Deferred tax assets are recognised only to the extent there is
 reasonable certainty that the assets can be realised in future.
 However, where there is unabsorbed depreciation or carry forward of
 losses, deferred tax assets are recognized only if there is virtual
 certainty of realisation of such assets. Deferred tax assets are
 reviewed at each balance sheet date and written down or written up to
 reflect the amount that is reasonable / virtual certainty (as the case
 may be) to be realised.
 
 The break-up of major components of the deferred tax assets and
 liabilities as of each year end Balance Sheet date have been arrived at
 after setting off deferred tax assets and liabilities where the Group
 has a legally enforceable right to set-off assets against liabilities
 and where such assets and liabilities relate to taxes on income levied
 by the same governing laws.