1. Basis of Preparation of financial statements
a. The financial statements have been prepared under the historical
cost convention in accordance with generally accepted Accounting
Principles and the provisions of the Companies Act, 1956.
b. Accounting policies not specifically referred to otherwise are
consistent throughout the year under audit and in consonance with
generally accepted Accounting Principles followed by the company.
2. Unsecured Loans:
No Interest has been provided for on the Unsecured Loan Rs 8,72,628/-
taken from the Director, R. Rajasankar.
3. Fixed Assets:
a. Fixed assets are stated at cost of acquisition less depreciation.
b. Depreciation on fixed assets is provided under straight line method
on pro-rata basis at the rates and in the manner prescribed in schedule
XIV of the Companies Act, 1956.
Investments include 3,00,000 equity shares of Rs. 10/- each in Archana
Software Limited, a company under the same management. (Quoted value as
on 31.03.2002 Rs. 6/-)
5. Current Assets:
a. Sundry Debtors are stated in book value which represents the money
to be received from customers.
b. Land for the Project: The land for the projects represents the
amount advanced as per the agreements.
c. Inventory: The Inventories are valued at cost.
6. Current Liabilities:
a. Unclaimed Dividend Account:
The reconciliation of Unclaimed Dividend account with the corresponding
Dividend Bank Accounts is in progress.
b. Provision for Taxation:
By taking into account the available deductions under the Income-Tax
Act, 1961 and the Pre-paid taxes, the provision for taxation is not
7. Miscellaneous Expenditure:
The Management has viewed that the benefits of Software development
shall spread over the subsequent years and has therefore decided to
defer fully the software development expenses of Rs 13,51,410/- to be
written off in the subsequent years. The amortization of Share Issue
Expenses for an amount of Rs. 23,07,580/- is post-poned to the next
subsequent years due to inadequacy of profits.
8. Retirement Benefits:
a. The Company is yet to comply with provisions of the Employees Provi-
dent Fund Act and Employees State Insurance Act.
b. Liability in respect of gratuity to employees as on 31.03.2002 has
not been ascertained and no gratuity Fund has been created by the Com-
9. Basis of Accounting:
All the Income and Expenditure items having a material bearing on the
financial statements are recognized on accrual basis except
non-provision of interest on the unsecured loans taken from the
Director, Note No. 8 supra regarding non compliance with the Provisions
of P. F. Act and E.S.I Act and Non contribution to Gratuity Fund. Had
Interest been provided for loan from Director and charged during the
current year, Profit would have come down to the extent of Rs. 1,
80,688/- worked at 18% market rate of interest.
10. Income From Operations:
Sales include sale of Flats representing the sale value of the flats to
be received for the completed work certified by the Chartered Engineer.
Sales also include the sale proceeds of the residential Plots at Sakthi
Nagar and Nemilicherry.
11. AS - 22 Deferred Taxes
Consequent to Accounting Standard 22 - Accounting for Taxes on Income
becoming mandatory with effect from 1st April, 2001 the Company
recorded the deferred tax balance of Rs. 63,13,640/- that has
accumulated prior to the adoption of this standard upto 31.03.2001.
However the same has not been shown separately in the Liability side of
the Balance Sheet due to inadequate free reserves. The deferred tax
liability for the current year 2001-2002 amounting to Rs. 1,87,868, if
effected, shall reflect the deferred tax liability of Rs. 61,25,772/-
as on 31.03 2002 which shall be charged to free reserves in future
depending on the availability of sufficient free reserves.