(a) Basis of Preparation of Financial Statements:
The financial statements are prepared and presented under the
historical cost conventions, on accrual basis of accounting to comply
in all material respects, with the mandatory Accounting Standards as
notified by the Companies (Accounting Standards) Rules, 2006 as amended
(''the Rules'') and the relevant provisions of the Companies Act,1956
(''the Act''). The accounting policies have been consistently applied by
the Company and the Accounting Policies not referred to otherwise are
in conformity with Indian Generally Accepted Accounting Principles
(b) Use of Estimates:
The preparation of financial statements in conformity with the ''Indian
GAAP'' requires management to make estimates and assumptions that may
affect the reported amounts of Assets and Liabilities and disclosures
relating to Contingent Liabilities as at the date of the financial
statements and the reported amounts of incomes and expenses during the
reporting period. Although these estimates are based upon management''s
best knowledge of current events and actions, actual results could
differ from these estimates. Differences between the actual results and
estimates are recognized in the year in which the results are known/
(c) Fixed Assets
(I) Fixed Assets are stated at cost, less accumulated depreciation and
impairment, if any. Cost includes all expenditure necessary to bring
the asset to its working condition for its intended use.
(ii) Capital work-in-progress comprises advances paid to acquire fixed
assets along with incidental expenses incurred to acquire such fixed
assets that are not ready for their intended use at the reporting date.
Depreciation is being provided on all tangible assets on Straight Line
Method as per the rates and in the manner prescribed in Schedule XIV
to the Companies Act, 1956.
Intangible assets are recognized when it is probable that the future
economic benefits that are attributable to the assets will flow to
enterprise and the cost of the assets can be measured reliably. The
Intangible assets are recorded at the consideration paid for the
acquisition of such assets and are carried at cost less accumulated
amortization and impairment loss, if any.
(f) Impairment of Assets:
An asset is treated as impaired when the carrying cost of the asset
exceeds its recoverable value. An impairment loss is charged to profit
& loss account in the year in which an asset identified as impaired.
The impairment loss recognized in prior accounting period is reversed
if there has been a change in the estimate of recoverable amount.
(g) Foreign Currency Transactions:
(i) Initial Recognition:
Transactions in foreign currency are recorded at the original rate of
exchange in force at the time, transactions are affected.
Foreign currency monetary items are reported using the closing rates as
on the date of financial statements.
(iii) Exchange Difference:
Exchange difference arising on the settlement of transactions of
monetary items or on reporting such monetary items at rates different
from those at which they were initially recorded during the year or
reported in previous financial statements, are recognized as income or
expense in the year in which they arise/reported.
Investments that are readily realizable and intended to be held for not
more than a year are classified as Current Investments. All other
investments are classified as long term investments.
Current investments are carried at lower of cost and fair value
determined on an individual investment basis.
Long term investments including investment in subsidiaries are carried
at Cost. Cost includes any incidental costs incurred towards
acquisition of said investment. However, provision if necessary for
diminution in value is made to recognize a decline other than the one
temporary in nature.
(i) Revenue Recognition:
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the company and the revenue can be
I) Sale of Goods:
Revenue is recognized when the significant risks and rewards in respect
of ownership of products are transferred by the company. Sales are
recorded net of Returns, Sales tax/Value added tax and applicable trade
discounts and allowances.
ii) Software Development and Licensing:
Revenue is primarily derived from sale of developed software and
related services and from licensing of the software products. Software
sales are recognized only on customers'' acceptance of delivery.
Annual Technical Services revenue and revenue from fixed-price
maintenance contracts are recognized proportionately over the period in
which services are rendered.
Interest income is recognized on time proportionate basis taking into
account the amount outstanding and the rate applicable.
Dividend income from investment is recognized when the right to receive
the payment is established.
Other revenue (including in respect of insurance or other claims or
refunds, etc.) is accounted for in the year in which the right to
receive the payment is established.
The cost of software / hardware purchased / developed and incidental
cost incurred for software development are expensed during the year.
Cost of maintenance services for software developed is not provided
for, even since in many of the related services and licensing of
software products do stipulate free maintenance as part of the
contract. The maintenance obligation are in the opinion of the
management, not material in value and based on empirical experience,
not expected to crystallize in the near future and hence not provided
Cost of warranties is also not provided for in the context of its
specific exclusion in terms with the customers. Provisions are made
for all known losses and liabilities.
Raw Materials, works-in-progress and finished/traded goods are valued
at lower of cost or net realizable value.
Self-developed software is valued at cost of development or at net
realizable value, whichever is lower.
(l) Research & Development:
Revenue expenditure on Research & Development is expensed as and when
incurred and Capital expenditure incurred on Research & Development is
added to the Cost of respective fixed assets.
(m) Employees Benefits:
(I) Provident Fund:
The eligible employees of the Company are entitled to receive benefits
under the provident fund, a defined contribution plan, in which both
employees and the Company makes monthly contribution at a specified
percentage of the covered employee''s salary. The Company has no further
obligation under the provident fund plan beyond its monthly
Gratuity liability is a defined benefit obligation and is provided for
on actuarial valuation made as at the balance sheet date.
(n) Borrowing Cost:
Borrowing Costs that are attributable to the Acquisition, Construction
or Production 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. All other
borrowing costs are charged to revenue.
(o) Income Tax:
Tax expense for a year comprises of Current tax and Deferred tax.
Current tax is measured at the amount expected to be paid to the tax
authorities, after taking into consideration, the applicable deductions
and exemptions admissible under the provisions of the Income Tax Act,
Deferred tax reflects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years. Deferred tax is measured based
on the tax rates and the tax laws enacted or substantively enacted at
the balance sheet date. Deferred tax assets are recognised only to the
extent that there is reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realised. If there is unabsorbed depreciation or carry forward
of losses under tax laws, deferred tax assets are recognised only to
the extent that there is virtual certainty supported by convincing
evidence that sufficient future taxable income will be available
against which such deferred tax assets can be realised.
Deferred tax resulting from timing differences which originate during
the tax holiday period but are expected to reverse after such tax
holiday period is recognised in the year in which the timing
differences originate using the tax rates and laws enacted or
substantively enacted at the balance sheet date. At each balance sheet
date, the company reassesses unrecognised deferred tax assets. It
recognises unrealised deferred tax assets to the extent it has become
reasonably certain or virtually certain, as the case may be, that
sufficient taxable income will be available against which the deferred
tax can be realised.
Minimum Alternative Tax (MAT) credit is recognised as an asset only
when and to the extent there is convincing evidence that the Company
will pay income tax higher than that computed under MAT, during the
period that MAT is permitted to be set off under the income Tax Act,
1961 (specified period). In the year, in which the MAT credit becomes
eligible to be recognised as an asset in accordance with the
recommendations contained in the guidance note issued by the Institute
of Chartered Accountants of India (ICAI), the said asset is created
byway of a credit to the profit and loss account and shown as MAT credit
entitlement. The Company reviews the same at each balance sheet date
and writes down the carrying amount of MAT credit entitlement to the
extent there is no longer convincing evidence to the effect that the
Company will pay income tax higher than MAT during the specified
(p) Segment Reporting
Segment Reporting as per Accounting Standard 17: The Company operates
solely in the Information Technology Solutions Segment. The analysis of
geographical segments is based on the areas in which the products of
the Company are sold.
(q) Provisions, Contingent Liabilities and Contingent assets:
Provisions involving substantial degree of estimation in measurement
are recognised 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 recognised but are disclosed in the
notes to accounts. Contingent assets are neither recognised nor
disclosed in the financial statements.
(r) Cash Flow Statement:
The Cash Flow Statement is prepared by the Indirect Method set out in
Accounting Standard 3 on Cash Flow Statement and presents the cash
flows by Operating, Investing and Financing activities of the Company.
Lease under which the Company assumes substantially all the risks and
rewards of ownership are classified as finance leases. Such assets
acquired are capitalized at fair value of the asset or present value of
the minimum lease payments at the inception of the leases, whichever is
lower. Lease payments under operating leases are recognised as an
expense on a straight line basis in the statement of profit and loss
over the lease term.
The Company has only one class of share referred to as equity shares
having a par value of Rs 10/- Each holder of equity shares is entitled
to one vote per share.
The Company declares and pays dividend in Indian rupees. The dividend
proposed by the Board of Directors is subject to the approval of the
shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holder of equity shares
will be entitled to receive any of the remaining assets of the company,
after distribution of all preferential amounts . However , no such
preferential amount exist currently . The distribution will be in
proportion to number of equity shares held by the shareholders.
* Cash Credit\Overdraft borrowings are secured against Current Assets,
entire Fixed Asset and property situated at Mahape belonging to Micro
Cloud Computing Pvt.Ltd and Corporate Guarantee of Micro Cloud Computing
Pvt Ltd and personal Guarantee of Directors Dr. P Sekhar and Ms
* As per Technical evaluation done by the Company certain
Software were un economical to use due to change in Technology and hence
Were not Supposed to give future economic benefit and accordingly these
asset was charged to Statement of Profit & loss during last Financial
** The Company has provided for the exchange rate fluctuation on FCCB
Outstanding on the Financial Statement date that are yet to be