1.1 Basis of preparation of Financial Statements:
The financial statements have been prepared under the historical cost
convention, on the basis of going concern and on accrual method of
accounting, in accordance with Normally Accepted Accounting Principles
and provisions of the Companies Act, 1956 as adopted consistently by
the Company. All incomes and expenditures having material bearing on
financial statements are recognized on accrual basis. The Company has
complied with all the mandatory Accounting Standards (AS) to the extent
applicable as prescribed by the Company''s (Accounting Standards) Rules,
2006, the provisions of the Companies Act 1956. The Accounting policies
have been consistently applied except where a newly issued Accounting
Standard is initially adopted or a revision to an existing Accounting
Standard requires a change in the Accounting Policy hitherto in use.
1.2 Presentation and disclosure of financial statements
During the year ended 31st March 2012, the Revised Schedule VI notified
under the Companies Act, 1956 has become applicable to the Company, for
preparation and presentation of its financial statements. The Company
has also reclassified the previous year figures in accordance with the
requirements applicable in the current year.
1.3 Use of Estimates:
The preparation of the financial statements in conformity with Normally
Accepted Accounting Principles requires estimates and assumptions to be
made that affect the reported amounts of the assets and liabilities on
the date of financial statements and the report amount of revenues and
expenses during the reported period. Difference between the actual
results and estimates are recognized in the period in which it gets
1.4 Revenue Recognition
Revenue from services is recognized based on time and material and
billed to the clients as per the terms of the contract. In the case of
fixed price contracts, revenue is recognized on periodical basis based
on units executed and delivered.
Revenue from sale of software is recognized on delivery and transfer of
ownership of the software to the clients.
Revenue from sale of software licenses are recognized upon delivery
where there is no customization required. In case of customization the
same is recognized over the life of the contract using the
proportionate completion method.
Other Income: Interest Income is accounted on accrual basis. Dividend
income is accounted for when right to receive is established.
1.5 Fixed Asset, Depreciation and Amortisation
a) Fixed Assets:
Fixed Assets are stated at cost less accumulated depreciation. For this
purpose cost comprises of cost of acquisition and all costs directly
attributable to bringing the asset to the present condition for its
intended use. Capital work in progress comprises advance paid to
acquire fixed assets and the cost of fixed assets that are not ready
for their intended use at the balance sheet date.
b) Metho d of Depreciation:
Depreciation is provided during the year under Straight Line method, on
pro-rata basis on assets put to use at the rates prescribed under
Schedule XIV of the Companies Act, 1956. Individual low cost assets
(acquired for less than Rs. 5,000/-) are entirely depreciated in the year
1.6 Investments :
Investments are valued at cost inclusive of all expenses incidental to
their acquisition. All the investments are intended to be held for a
period of more than one year from the date on which investments are
made are classified as long term investments. All long term investments
are carried at cost. No provision for diminution in value of long term
investments is made. Overseas Investments are carried at their original
rupee cost of acquisition.
1.7 Foreign Currency Transactions:
Transactions in foreign currency are recorded at the rates of exchange
prevailing on the date of transactions. Exchange differences are
recorded when the amount actually received on sales or actually paid
when expenditure is incurred, is converted into Indian Rupees. The
exchange differences arising on foreign currency transactions are
recognized as income or expense in the year in which they arise.
Forward premia/discount in respect of forward exchange contracts are
recognized over the life of the contract.
Fixed assets purchased are recorded at cost, based on the exchange rate
as of the date of purchase.
Monetary current assets and monetary current liabilities that are
denominated in foreign currency are translated at the exchange rate
prevailing at the date of balance sheet. In case of items which are
covered by forward exchange contracts, the difference between the
exchange rate prevailing at the Balance Sheet date and the rate on the
day of contract is recognized as exchange difference. The resulting
difference is also recorded in the Statement of Profit and Loss.
1.8 Retiring Benefits:
The Company has Defined Contribution Plan for its Employees'' Retirement
Benefits comprising of Provident Fund, Employees'' State Insurance Fund
which are recognized by the Income Tax Authorities. The Company and
eligible employees make monthly contributions to the Provident
Fund equal to specified percentage of the covered employees'' salary.
The Company also contributes to Employees'' State Insurance Fund and has
no further obligation to the plan beyond its monthly contribution.
The Company has Defined Benefit Plan comprising of Gratuity. The
benefits are based on final salary and cost of the benefit is entirely
borne by the Company. The benefits of the scheme are paid in accordance
with the Payment of Gratuity Act, 1972 without any monetary limit. The
liability for Gratuity is determined on the basis of an independent
actuarial valuation done at the year end. The liability is computed
based on current salary levels projected to the probable due date. The
method employed is projected unit credit method.
As per Company Policy the unused accumulated leave balance lapses at
the yearend and no employee is entitled to cash compensation for unused
accumulated leave balance at the end of the year , hence, no provision
is required to be made.
1.9 Income Tax
Tax expense comprises of current and deferred tax.
Current income tax is measured at the amount expected to be paid to the
tax authorities in accordance with the Income-tax Act, 1961 after
complying with the various provisions of the Act.
Provision for deferred tax is made using the applicable rate of
taxation, for all timing differences which arise during the year and
are reversed in subsequent periods.
Minimum alternative tax (MAT) paid in accordance to 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 when there is
convincing evidence that the Company will pay normal income tax after
the tax holiday period. Accordingly MAT is recognized as asset in the
balance sheet when it is probable that the future economic benefit
associated with it will flow to the Company and the asset can be
Work in Progress is valued at cost. Traded goods are valued at lower of
cost or net realizable value.
The Company has internally generated software for its captive use for
the various long term projects received. The direct cost of this
software is capitalized and shown as Intangible assets under the Group
Fixed Assets. This amount would be amortized beginning from the year
subsequent to the year in which the said is put to use. The
amortization period would be the project period or three equal yearly
installments whichever is less.
1.12 Earning Per Share:
In determining earnings per share, the Company considers the net profit
after tax. The number of shares used in computing basic earnings per
share is the weighted average number of shares outstanding during the
period. The number of shares used in computing diluted earnings per
share comprises the weighted average 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.
1.13 Contingent Liability:
Claims against the Company are recognized when Board of Directors
determine that it is probable that the liability will be payable.
Claims made by the Company are recognized when formal intimation of the
agreement of the Claim is received from the counter parties. Contingent
Liabilities are not recognized but are disclosed in the notes (Refer
In respect of Operating leases, lease rentals are expensed with
reference to the terms of lease.
1.15 Miscellaneous Expenditure (to the extent not written off or
Expenses incurred would be amortized over a period of ten years
beginning from the date of incurrence.
1.16 Accounting policies not specifically referred to are consistent
with the Indian Normally Accepted Accounting Principles.