a) Basis of preparation
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis. These financial statements have been
prepared to comply in all material aspects with the accounting
standards notified under Section 211(3C) [Companies (Accounting
Standards) Rules, 2006, as amended] and the other relevant provisions
of the Companies Act, 1956.
All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle and other
criteria set out in the Schedule VI to the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP
requires the management to make estimates and assumptions that affect
the reported balances of assets and liabilities and disclosures
relating to contingent assets and liabilities as at the date of the
financial statements and reported amounts of income and expenses during
the period. Examples of such estimates include provisions for doubtful
debts, future obligations under employee retirement benefit plans,
income taxes, the useful lives and provision for impairment of fixed
assets and intangible assets.
Management believes that the estimates used in the preparation of
financial statements are prudent and reasonable. Future results could
differ from these estimates.
c) Tangible assets, intangible assets and capital work-in-progress
Tangible assets and intangible assets are stated at cost of
acquisition, less accumulated depreciation/ amortisation and
impairments, if any.Cost includes taxes, duties, freight and other
incidental expenses related to acquisition.
Capital work-in-progress comprises cost of fixed assets that are not
yet ready for their intended use at the year end.
d) Depreciation and amortisation
Depreciation on additions and disposals is provided pro-rata for the
period of use.
Depreciation is provided on straight line basis at higher of the rates
based on useful lives of the fixed assets as estimated by the
management and those stipulated in Schedule XIV to the Companies Act,
Assets individually costing Rs. 5,000 or less are depreciated fully in
the year of acquisition Leasehold land is amortised over the primary
period of the lease
Investments that are readily realisable and are intended to be held for
not more than one year from the date, on which such investments are
made, are classified as current investments. All other investments are
classified as long term investments. Current investments are carried at
cost or fair value, whichever is lower. Long-term investments are
carried at cost. However, provision for diminution is made to recognise
a decline, other than temporary, in the value of the investments, such
reduction being determined and made for each investment individually.
(f) Foreign currency translation
On initial recognition, all foreign currency transactions are recorded
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction. Subsequent Recognition
As at the reporting date, non-monetary items which are carried in terms
of historical cost denominated in a foreign currency are reported using
the exchange rate at the date of the transaction. All non-monetary
items which are carried at fair value or other similar valuation
denominated in a foreign currency are reported using the exchange rates
that existed when the values were determined.
All monetary assets and liabilities in foreign currency are restated at
the end of accounting period.
Exchange differences on restatement of all other monetary items are
recognised in the Statement of Profit and Loss.
g) Revenue recognition
Income from Communications and information technology staffing support
services comprise income from time and material and fixed price
contracts. Revenue from ''time and material'' contracts is
recognised, as and when related services are performed and accepted by
the customer. Revenue from fixed price contracts is recognised using
the percentage of completion method of accounting, under which the
sales value of performance, including the profit thereon, is determined
by relating the actual man hours of work performed to date to the
estimated total man hours for each contract. Provision for estimated
losses on uncompleted contracts are recorded in the period in which
such losses become probable, based on current contract estimates.
Unbilled receivables represent costs incurred and revenues recognised
on contracts, to be billed in subsequent periods as per the terms of
Interest and Other income are accounted for on accrual basis except
where the receipt of income is uncertain in which case it is accounted
for on receipt basis.
h) Employee benefits
Contributions to the employees'' provident fund, which is a defined
contribution scheme, are charged to the Profit and Loss account in the
year in which the contributions are due. Leave encashment costs are
provided for, based on an actuarial valuation carried out by an
independent actuary at the balance sheet date. Gratuity costs, which
are defined benefits, are based on an actuarial valuation carried out
by an independent actuary at the balance sheet date.
i) Current and deferred tax
Income tax payable in India is determined in accordance with the
provisions of the Income Tax Act, 1961. Minimum Alternative Tax (MAT)
credit, which is equal to the excess of MAT (calculated in accordance
with provisions of Section 115JB of the Income tax Act, 1961) over
normal income-tax is recognised as an asset by crediting the Statement
of Profit and Loss only when and to the extent there is convincing
evidence that the Company will be able to avail the said credit against
normal tax payable during the period of ten succeeding assessment
Deferred tax expense or benefit 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 and liabilities are measured
using the tax rates and tax laws that have been enacted or
substantively enacted by the balance sheet date. In the event of
unabsorbed depreciation and carry forward of losses, deferred tax
assets are recognised only to the extent that there is virtual
certainty that sufficient future taxable income will be available to
realise such assets. In other situations, deferred tax assets are
recognised only to the extent that there is reasonable certainty that
sufficient future taxable income will be available to realise these
Advance taxes and provisions for current income taxes are presented in
the balance sheet after off-setting advance tax paid and income tax
provision arising in the same tax jurisdiction and the Company intends
to settle the asset and liability on a net basis.
j) Provisions and contingent liabilities
Provisions: Provisions are recognised when there is a present
obligation as a result of a past event, it is probable that an outflow
of resources embodying economic benefits will be required to settle the
obligation and there is a reliable estimate of the amount of the
obligation. Provisions are measured at the best estimate of the
expenditure required to settle the present obligation at the Balance
sheet date and are not discounted to its present value.
Contingent Liabilities: Contingent liabilities are disclosed when there
is a possible obligation arising from past events, the existence of
which will be confirmed only by the occurrence or non occurrence of one
or more uncertain future events not wholly within the control of the
company or a present obligation that arises from past events where it
is either not probable that an outflow of resources will be required to
settle or a reliable estimate of the amount cannot be made, is termed
as a contingent liability.
Assets given under operating lease are reflected in the financial
statements under fixed assets. Further, lease income from such
operating lease arrangements have been recognised in the statement of
profit and loss on a straight line basis over the lease term.
l) Cash & cash equivalents
In the cash flow statement, cash and cash equivalents includes cash in
hand, demand deposits with banks, other short-term highly liquid
investments with original maturities of three months or less.
m) Earnings per share
Basic earnings per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period. Earnings
considered in ascertaining the Company''s earnings per share is the
net profit for the period after deducting preference dividends and any
attributable tax thereto for the period. The weighted average number of
equity shares outstanding during the period and for all periods
presented is adjusted for events, such as bonus shares, other than the
conversion of potential equity shares that have changed the number of
equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period is
adjusted for the effects of all dilutive potential equity shares.
n) Stock based compensation
Compensation cost relating to employee stock options granted by the
Company has been accounted in accordance with the SEBI (Employees
Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines,
1999 issued by Securities and Exchange Board of India. Accordingly,
the excess of the market price of the underlying equity share as at the
date of grant of the option over the exercise price of the options on
the date of grant has been recognized as employee compensation expense
and is reflected as ''Employee Stock Options Outstanding'' under the
head ''Reserves and Surplus''.