1. BASIS OF PREPARATION:
The financial statements are prepared under the historical cost
convention, in accordance with Indian Generally Accepted Accounting
Principles (GAAP), the mandatory accounting standards issued by the
Institute of Chartered Accountant of India and the provisions of the
Companies Act, 1956, as adopted consistently by the company.
2. USE OF ESTIMATES:
The presentation of financial statements in conformity with the
generally accepted accounting principles requires estimates and
assumptions to be made that affect the reported amount of revenues and
expenses during the reporting period. Difference between the actual and
estimates are recognized in the period in which the results are known /
2. Fixed Assets & Depreciation:
i. Fixed assets are stated at the cost, less accumulated depreciation
and impairment losses. Cost comprises purchase price, duties, levies
and any other costs relating to the acquisition and installation of the
assets. Interest and financing charges on borrowed funds, if any, used
to finance the acquisition of fixed assets, which take substantial time
until the assets are ready for use, are capitalized and included in the
cost of the asset.
ii. Capital work-in-progress includes advances paid towards the
acquisition of fixed assets, and the cost of assets not put to use
before the year-end, are disclosed under capital work-in-progress.
iii. Fixed Assets acquired under finance lease are capitalized at the
lower of the fair value and the present value of the minimum lease
iv. Depreciation on the Fixed Assets of the Company is provided on
Straight-line method as per Schedule XIV of the Companies Act, 1956 on
v. The Fixed Assets of National Population Register (NPR) project are
depreciated over a period of 36 months which is the expected useful
life of the Asset.
vi. Capital Expenditure incurred on Projects Division is written-off
over the tenure of the project period for the projects where the
company is required to transfer the assets to the customer at the end
of the project period and for other capital assets the depreciation is
provided as per the clause (iv) above.
vii. Assets acquired under finance lease, where there is reasonable
certainty that the company shall obtain ownership of the assets at the
end of the lease term, such assets are depreciated as per the clause
3. Revenue Recognition:
The company generally follows mercantile system of accounting and
recognizes significant items of income on accrual basis.
a) Revenue from sale of goods is recognized on transfer of significant
risks and reward of ownership in the goods to the customers.
b) Revenue from sale of software products is recognized when the sale
is completed with the passing of title to the customers and revenue
from software development on the time-and-material basis is recognized
based on software developed and billed to clients as per the terms of
c) Revenue from Technical Services is recognized on a pro-rata basis
over the period in which such services are rendered.
d) Revenue from Maintenance Contracts is recognized on a pro-rata basis
over the period in which such services are rendered.
e) Revenue from Agency Commission is recognized as and when it is
f) Interest Income on term deposits is recognized using the
time-proportion method, based on interest rates implicit in the
g) Revenue from Projects Division is recognized on pro-rate basis as
per the terms of the contract over the life of the project.
h) Other items of income are accounted as and when right to receive
i) Unbilled revenues represent cost and earnings in excess of billings
as at the balance sheet date.
j) Income on investments and dividends on units is recognized as and
when right to receive the same is established.
Expenses are accounted on the accrual basis and provisions are made for
all known losses and liabilities. The cost of software purchased for
use in software development and services is charged to revenue in the
same year. Provisions for deductions towards under performance of
service level deliverables on services are estimated by the management,
determined on the basis of past experience.
Items of inventories are measured at lower of cost or net realizable
value. Cost of inventories comprise of all cost of purchase, cost of
conversion and other cost incurred in bringing the inventory to their
present location and condition. Raw materials and the finished goods
are valued on the basis of First In First Out (FIFO) method.
i. Long-Term Investments are carried at cost, and provision is made to
recognize any decline, other than temporary, in the value of such
ii. Current investments are carried at the lower of cost and
quoted/fair value, computed category wise.
7. Impairment of Assets
An asset is treated as impaired when the carrying cost of assets
exceeds its recoverable value. An impairment loss is charged to the
Profit and Loss Account in the year in which an asset is identified as
impaired. The impairment loss recognized in prior accounting periods is
reversed if there has been a change in the estimate of recoverable
8. Benefits to employees:
i. Short-Term employee benefits are recognized as an expense at the
undiscounted amount in the profit and loss account of the year in which
the related services are rendered.
ii. Post employment benefits are recognized as an expense in the profit
and loss account for the year in which the employee has rendered
services. The expense is recognized at the present value of the amount
payable to the amount payable towards contributions. The present value
is determined using the market yields of government bonds, at the
balance sheet date, as the discounting rate.
iii. Other long-term/short-term employee benefits are recognized as an
expense in the profit and loss account for the period in which the
employee has rendered services. Estimated liability on account of
long-term benefits is discounted to the current value, using the yield
on government bonds, as on the date of balance sheet, as the
iv. Actuarial gains and losses in respect of post employment and other
long-term benefits are charged to the profit and loss account.
v. Provident Fund:
The company makes contribution to Provident Fund administered by the
Central Government under the Provident Fund Act, 1952.
9. Foreign Currency transaction:
i. Transactions denominated in foreign currencies are normally recorded
at the exchange rate prevailing at the time of transaction.
ii. Monetary items denominated in foreign currencies at the year-end
and not covered by forward exchange contracts are translated at the
rates of exchange at the balance sheet date and resulting gain or loss
is recognized in the profit and loss account.
10. 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
substantial period of time to get ready for intended use. All other
borrowing costs are charged to revenue.
11. Provision, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow or resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
12. Product Warranty Expenses:
Liabilities for warranties are recognized at the time, the claim is
passed. The necessary provisions are made with respective to warranties
claimed and passed pertaining to the year, as are received up to the
end of one month from the close of the year.
13. Claims Receivable:
Claims receivable are accounted for depending on the certainty of
receipt and claims payable are accounted at the time of acceptance.
14. Income Tax:
Provision for income tax is made for both current and deferred taxes.
Provision for current Income tax is made at current tax rates based on
assessable income. Deferred income taxes are recognized for the future
tax consequences attributable to timing differences between the
financial statements carrying amounts of existing assets and
liabilities and their respective tax bases.The effect on deferred tax
assets and liabilities of a change in tax rates was recognized using
the tax rates and tax laws that have been enacted or substantively
enacted by balance sheet date. Deferred tax assets are recognized and
carried forward only to the extent that there is a reasonable certainty
that sufficient future taxable income will be available against which
such deferred tax assets can be realized.
15. Earnings per share
1. Basic Earnings per Share: In determining earnings per share, the
company considers the net profit after tax and includes the post-tax
effect of any extra-ordinary items. The number of shares used in
computing the basic earnings per share is the weighted average number
of shares outstanding during the year.
2. Diluted Earnings per share is calculated by dividing the net
earnings available to existing and potential Equity Shareholders by
aggregate of the weighted average number of Equity Shares considered
for deriving basic earnings per share and also the weighted average
number of equity shares that could have been issued on the conversion
of all dilutive potential equity shares. Dilutive potential equity
shares are deemed converted as of the beginning of the period, unless
issued at a later date.
The number of shares and potential dilutive equity shares are adjusted
for any bonus issues.
a) FINANCE LEASE:
1. Assets given under finance lease are recognized as a sale
transaction in the Profit and Loss Account and are treated like other
The Finance Lease amount is shown as the receivables at an amount equal
to the net investment in the lease.
Finance lease income is recognized over the period of the lease so as
to yield a constant rate of return on the net investment in the lease.
2. Assets acquired under leases where the company has substantially
transferred all the risk and rewards of ownership are classified as
finance lease. Such assets are capitalized at the inception of the
lease at the lower of fair value or present value of minimum lease
payments and a liability is created for an equivalent amount. Each
lease rental paid is allocated between the liability and the interest
cost, so as to obtain a constant periodic rate of interest on the
outstanding liability for each period.
b) OPERATING LEASE:
1. Rentals are expensed with reference to the Lease terms and other
Sales are stated at net of returns and exclusive of sales tax.