(i) Basis of Preparation
The financial statements are prepared under the historical cost
convention in accordance with generally accepted accounting principles
and applicable accounting standards.
Use of estimates
The preparation of financial statements requires the management of the
Company to make estimates and assumptions that affect the reported
balances of assets and liabilities and disclosures relating to the
contingent liabilities as at the date of financial statements and
reported amounts of income and expenses during the year. Example of
such estimates include provision for doubtful debts, employee benefits,
provision for income taxes, accounting for contract costs expected to
be incurred to complete software development and the useful lives of
(ii) Fixed Assets
Fixed Assets are stated at Cost less depreciation/amortization. Cost of
acquisition includes freight, duties and installation expenses net of
taxes and duties eligible for credit.
Advances paid for acquisition of fixed assets and cost of assets (net
of taxes and duties eligible for credit) not put to use before the
year-end are disclosed under Capital Work-in-Progress.
Assets are capitalised when they are ready for use / put to use.
(iii) Intangible Assets
Intellectual Property Rights (IPR) is stated at cost less amortization.
All costs incurred for development are carried forward till development
The Intangible assets are tested for impairment for both value and
availability for use at the end of year and impairment loss is provided
and deducted from the carrying amounts.
Long-term investments are stated at cost. Diminution is provided for
decline in the carrying cost of long-term investments, if the decline
is other than temporary.
Stock of Courseware is valued on FIFO basis at lower of cost and net
(vi) Revenue and Expenditure recognition
Revenue is recognized and expenditure is accounted for on their
accrual, where there is no uncertainty as to measurement or
collectibles other than the following
(vii) Employee Benefits
Short term employee benefits are charged at the undiscounted amount to
Profit and Loss Account in the year in which the related service is
Defined contributions towards retirement benefits in the form of
Provident Fund and Employees State Insurance Scheme for the year are
charged to Profit and Loss Account.
Defined benefit plan - Gratuity and Long term compensated absence
Liability in respect of defined benefit plan in the form of gratuity is
determined based on actuarial valuation made by an independent actuary
using Projected Unit Credit Method as at the balance sheet date and are
unfunded. Liabilities for long term compensated absences are recognised
in the same manner.
(viii) Foreign Currency Transactions
Transactions in foreign exchange are accounted at the rates prevailing
on the dates of Transactions.
Foreign Currency IiabiIities/Assets at the close of the year are
restated, adopting the year end rates. The resultant difference, if
any, is recognized as income or expense in Profit and Loss Account.
Exchange difference, arising on forward contracts, is recognized in the
statement of Profit and Loss in the reporting period in which the
exchange rates change.
Premium / discounts arising on forward contract are amortized as
expense or income over the life of the contract.
Any Profit or Loss arising on cancellation or renewal of a forward
exchange contract is recognized as income or as expense for the period.
(ix) Depreciation/ Amortization
Depreciation is provided on Straight Line method at the rates specified
in Schedule XIV to the Companies Act, 1956 other than the following for
which depreciation/ amortization is on Straight-line basis as under
Depreciation on additions / deductions in respect of fixed assets are
charged pro-rata from / up to the date in which the asset is available
for use / disposal
Assets costing less than Rs.5,000/- are capitalised and 100%
depreciation is provided in the year of addition.
(x) Segment Reporting
The Company has identified business segments as primary reporting
segments and geographical segments as its secondary segment.
The Company has identified three business segments;-
a) Software Development & Services
b) Education & Training
Revenue and expenses have been identified to respective segments on the
basis of operating activities of the Enterprise. Revenue and expenses
which relate to the enterprise as a whole and are not allocable to a
segment on a reasonable basis has been disclosed as un-allocable
revenue and expenses.
There are no inter-segmental transfers.
Segment assets and liabilities represent assets and liabilities in
respective segments. Other assets and liabilities that cannot be
allocated to a segment on a reasonable basis have been disclosed as
un-allocable assets and liabilities. Geographical segments have been
identified by treating sales in India and Rest of the world as
reportable geographical segments.
Finance Leases are accounted in accordance with AS 19
(xii) Taxes on Income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of Income Tax Act
1961. Deferred tax is recognised, on timing differences, being the
difference between taxable income and accounting income that originate
in one period and are capable of reversal in one or more subsequent
periods. Deferred tax assets in respect of unabsorbed depreciation and
carry forward of losses are recognised if there is virtual certainty
that there will be sufficient future taxable income available to
realise such losses.
(xiii) Impairment of Assets
Impairment loss, if any, is provided to the extent, the carrying amount
of assets exceeds their recoverable amount. Impairment loss is
aggregated with depreciation
A provision is recognised when there is a present obligation as a
result of a past event, it is probable that an outflow of resources
will be required to settle the obligation and in respect of which
reliable estimate can be made. Provision is not discounted to its
present value and is determined based on the best estimate required to
settle the obligation at the year-end date. These are reviewed at each
year-end date and adjusted to reflect the best current estimate.
Contingent Liabilities are disclosed by way of notes in the Financial
Contingent Assets are neither recognised nor disclosed.
(xv) Debit balance/Credit balances outstanding for a period of three
years and more are provided for / written back to Statement of Profit &