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8.35 (0.89%)
9.2 (0.98%) | Accounting Policy | Year : Mar '12 | ||||
(a) Basis for preparation of accounts: The accompanying financial statements have been prepared to comply in all material aspects with generally accepted accounting principles applicable in India, the Accounting Standards and the relevant provisions of the Companies Act, 1956. (b) Use of Estimates: The preparation of financial statements, in conformity with the generally accepted accounting principles, requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amounts of revenues and expenses during the reported period. Differences between the actual results and estimates are recognised in the period in which the results are known / materialised. (c) Fixed Assets including intangible assets: Fixed assets are stated at cost less accumulated depreciation. Costs comprise of purchase price and attributable costs, if any. (d) Leases: Assets taken on lease are accounted for as fixed assets in accordance with Accounting Standard 19 on Leases, (AS 19). (i) Finance lease Where the Company, as a lessor, leases assets under finance leases such amounts are recognized as receivables at an amount equal to the net investment in the lease and the finance income is based on constant rate of return on the outstanding net investment. Assets taken on finance lease are accounted for as fixed assets at fair value. Lease payments are apportioned between finance charge and reduction of outstanding liability. (ii) Operating lease Lease arrangements under which all risks and rewards of ownership are effectively retained by the lessor are classifi ed as operating lease. Lease rental under operating lease are recognised in Statement of Profi t and Loss on straight line basis. (e) Depreciation / amortization of fixed assets: (ii) Leasehold land is amortised over the period of lease. (iii) Leasehold improvements are amortised over the period of lease or expected period of occupancy whichever is less. (iv) Intellectual property rights are amortised over a period of seven years. (v) Assets costing upto Rs. 5,000 are fully depreciated in the year of purchase. (vi) The cost of software purchased for internal use is capitalized and depreciated in full in the month in which it is put to use. (f) Impairment of Assets: At the end of each period, the Company determines whether a provision should be made for impairment loss on assets by considering the indications that an impairment loss may have occurred in accordance with Accounting Standard 28 on ''''Impairment of Assets''''. Where the recoverable amount of any asset is lower than its carrying amount, a provision for impairment loss on assets is made for the difference. Recoverable amount is the higher of an asset''s net selling price and value in use. In assessing value in use, the estimated future cash fl ows expected from the continuing use of the asset and from its disposal are discounted to their present value using a pre tax discount rate that refl ects the current market assessments of time value of money and the risks specific to the asset. Reversal of impairment loss if any is recognised immediately as income in the Statement of Profit and Loss. (g) Investments: Long term investments are carried at cost. Provision is made to recognise a decline other than temporary in the carrying amount of long term investment. Current investments are carried at lower of cost and fair value. (h) Inventories: Components and parts: Components and parts are valued at lower of cost and net realizable value. Cost is determined on First-In-First Out basis. Finished Goods: Valued at the lower of the cost or net realisable value. Cost is determined on First-In-First Out basis. (i) Revenue recognition: Revenue from software services and business process outsourcing services include revenue earned from services rendered on ''time and material'' basis, time bound fixed price engagements and system integration projects. All revenues from services, as rendered, are recognised when persuasive evidence of an arrangement exists, the sale price is fixed or determinable and collectability is reasonably assured and are reported net of sales incentives, discounts based on the terms of the contract and applicable indirect taxes. The Company also performs time bound fixed price engagements, under which revenue is recognized using the proportionate completion method of accounting, unless work completed cannot be reasonably estimated. Provision for estimated losses, if any on uncompleted contracts are recorded in the period in which such losses become probable based on the current contract estimates. The cumulative impact of any revision in estimates of the percentage of work completed is reflected in the year in which the change becomes known. Liquidated damages and penalties are accounted as per the contract terms wherever there is a delayed delivery attributable to the Company and when there is a reasonable certainty with which the same can be estimated. Revenues from the sale of software and hardware products are recognised upon delivery/deemed delivery, which is when title passes to the customer, along with risk and rewards. Unbilled revenues comprise revenues recognised in relation to efforts incurred, not billed as of the period end, where services are performed in accordance with agreed terms. The Company recognizes unearned finance income as fi nancing revenue over the lease term using the effective interest method. Dividend income is recognized when the Company''s right to receive dividend is established. Interest income is recognized on time proportion basis. (j) (a) F oreign currency transactions: Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary items are translated at the period end rates. The exchange difference between the rate prevailing on the date of transaction and on the date of settlement as also on translation of monetary items at the end of the period is recognised as income or expense, as the case may be. Any premium or discount arising at the inception of the forward exchange contract is recognized as income or expense over the life of the contract, except in the case where the contract is designated as a cash fl ow hedge. (b) Derivative instruments and hedge accounting: The Company uses foreign currency forward contracts / options to hedge its risks associated with foreign currency fluctuations relating to certain forecasted transactions. Effective April 1st 2007 the Company designates some of these as cash fl ow hedges applying the recognition and measurement principles set out in the Accounting Standard 30 Financial Instruments: Recognition and Measurements(AS 30). The use of foreign currency forward contracts/options is governed by the Company''s policies approved by the Board of Directors, which provide written principles on the use of such financial derivatives consistent with the Company''s risk management strategy. The counter party to the Company''s foreign currency forward contracts is generally a bank. The Company does not use derivative financial instruments for speculative purposes. Foreign currency forward contract/ option derivative instruments are initially measured at fair value and are re-measured at subsequent reporting dates. Changes in the fair value of these derivatives that are designated and effective as hedges of future cash fl ows are recognized directly in reserves and the ineffective portion is recognized immediately in Statement of Profit and Loss. The accumulated gains and losses on the derivatives in reserves are transferred to Statement of Profit and Loss in the same period in which gains or losses on the item hedged are recognized in Statement of Profit and Loss. Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognized in the Statement of Profit and Loss as they arise. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. When hedge accounting is discontinued for a cash fl ow hedge, the net gain or loss will remain in reserves and be reclassifi ed to Statement of Profit and Loss in the same period or periods during which the formerly hedged transaction is reported in Statement of Profit and Loss. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognized in reserves is transferred to Statement of Profit and Loss (k) Employee Retirement benefits: (a) Gratuity: The Company accounts for its gratuity liability, a defi ned retirement benefit plan covering eligible employees. The gratuity plan provides for a lump sum payment to employees at retirement, death, incapacitation or termination of the employment based on the respective employee''s salary and the tenure of the employment. Liabilities with regard to a Gratuity plan are determined based on the actuarial valuation carried out by an independent actuary as at the Balance Sheet date using the Projected Unit Credit method. Actuarial gains and losses are recognised in full in the Statement of Profit and Loss in the year in which they occur. (Refer note 29 below) (b) Provident fund: The eligible employees of the Company are entitled to receive the benefits of Provident fund, a defi ned contribution plan, in which both employees and the Company make monthly contributions at a specifi ed percentage of the covered employees'' salary (currently at 12% of the basic salary) and super annuation contributions, which are charged to the Statement of Profit and Loss on accrual basis. The provident fund contributions are paid to the Regional Provident Fund Commissioner by the Company. The Company has no further obligations for future provident fund and superannuation fund benefits other than its annual contributions. (c) Compensated absences: The Company provides for the encashment of leave subject to certain Company''s rules. The employees are entitled to accumulate leave subject to certain limits, for future encashment or availment. The liability is provided based on the number of days of unavailed leave at each balance sheet date on the basis of an independent actuarial valuation using the Projected Unit Credit method. Actuarial gains and losses are recognised in full in the Statement of Profit and Loss in the year in which they occur. The Company also offers a short term benefit in the form of encashment of unavailed accumulated leave above certain limit for all of its employees and same is being provided for in the books at actual cost. (d) Other short term employee benefits: Other short-term employee benefits, including overseas social security contributions and performance incentives expected to be paid in exchange for the services rendered by employees, are recognised during the period when the employee renders the service. (l) Borrowing costs: Borrowing costs that are attributable to the acquisition or construction 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 or sale. All other borrowing costs are charged to revenue. (m) Taxation: Tax expense comprises of current tax and deferred tax. Current tax is measured at the amount expected to be paid to/recovered from the tax authorities, based on estimated tax liability computed after taking credit for allowances and exemption in accordance with the local tax laws existing in the respective countries. Minimum Alternative Tax (MAT) paid in accordance with the tax laws, which gives rise to future economic benefits in the form of adjustment of future income tax liability is considered as an asset if there is convincing evidence that the Company will pay normal tax after the tax holiday period. Accordingly, it is recognized as an asset in the Balance Sheet when it is probable that the future economic benefit associated with it will fl ow to the Company and the asset can be measured reliably. Deferred tax assets and liabilities are recognised for future tax consequences attributable to timing differences between taxable income and accounting income that are capable of reversal in one or more subsequent years and are measured using relevant enacted tax rates. The carrying amount of deferred tax assets at each Balance Sheet date is reduced to the extent that it is no longer reasonably certain that sufficient future taxable income will be available against which the deferred tax asset can be realized. Tax on distributed Profits payable in accordance with the provisions of the Income-Tax Act, 1961 is disclosed in accordance with the Guidance Note on Accounting for Corporate Dividend Tax issued by the ICAI. (n) Employee Stock Option Plans: Stock options granted to the employees are accounted as per the accounting treatment prescribed by the Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 (ESOP Guidelines) issued by Securities and Exchange Board of India (SEBI) and the Guidance Note on Accounting for Employee Share-based Payments, issued by the ICAI. Employees eligible for Employee Stock Option Plan 2010 are granted an option to purchase shares of TML at predetermined exercise price. These options vest over a period of three years from the date of grant. The stock compensation cost is computed under the intrinsic value method and amortised on a straight line basis over the total vesting period of three years. (o) Provision, Contingent Liabilities and Contingent Assets: Provision is recognised, when the Company has a present obligation as a result of arising out of past events and it becomes probable that any outfl ow of resources embodying economic benefits will be required to settle the obligation, in respect of which a reliable estimate can be made. Contingent liabilities are not recognised in the financial statement. A Contingent asset is neither recognised nor disclosed in Financial statements. |
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| Source : Dion Global Solutions Limited | |||||
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