a. Basis of preparation of financial statements:
The financial statements have been prepared to comply in all material
respects with the Notified accounting standards by Companies
(Accounting Standards) Rules, 2006 (as amended) and the relevant
provisions of the Companies Act, 1956 (''the Act''). The financial
statements have been prepared under the historical cost convention on
an accrual basis. The accounting policies have been consistently
applied by the Company and are consistent with those applied in the
b. Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period end. Although these estimates are based upon management''s best
knowledge of current events and actions, actual results could differ
from these estimates.
c. 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
reliably measured and is recognized on accrual basis.
d. Fixed assets:
All fixed assets are stated at historical cost less accumulated
depreciation and impairment loss, if any. Cost comprises the purchase
price and any attributable cost of bringing the asset to its working
condition for its intended use.
Software cost related to computers are capitalized and amortized using
the written down value method at a rate of 40% per annum.
i. Depreciation on fixed assets has been provided on the written down
value method as per the useful lives of the assets estimated by the
management or the rates prescribed under Schedule XIV of the Companies
Act, 1956, whichever is higher.
ii. Fixed assets costing upto Rs. 5,000 individually are fully
depreciated in the year of purchase.
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset''s net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital. After
impairment, depreciation is provided on the revised carrying amount of
the asset over its remaining useful life.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased assets are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss Account on a straight-line basis over the lease
i. Income taxes:
Tax expense comprises of current tax and deferred. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act. Deferred income taxes
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 recognized 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 realized. The carrying
amount of the deferred tax assets are reviewed at each balance sheet
date. The Company writes down the carrying amount of the deferred tax
assets to the extent that it is no longer reasonably certain or
virtually certain as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be that
sufficient future taxable income will be available.
j. Earnings per Share:
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividend and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as fraction of an equity share to the
extent that they were entitled to participate in dividends related to a
fully paid equity share during the reporting period. For the purpose of
calculating diluted earnings per share, the net profit or loss for the
period attributable to equity shareholders and the weighted average
number of shares outstanding during the period are adjusted for the
effects of all dilutive potential equity shares.
A provision is recognized when an enterprise has a present obligation
as a result of past event; 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 its
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
l. Employee Benefits
Salary, bonus and other emoluments are charged to revenue in the year
in which they are incurred.
The Company is not covered under the Employees State Insurance Act and
the Provident Fund Act.
The company does not have any policy to pay leave encashment. Hence, no
liability on this account has been provided in the books of account.
In accordance with Accounting Standard 15, provision for Gratuity has
been made on the basis of actuarial valuation based on projected unit
credit method. The gratuity liability is wholly unfunded.