I. Significant Accounting Policies:
 
 1. Basis of Preparation of Financial Statements:
 
 a) The financial statements are prepared under the historical cost
 convention in accordance with the generally accepted accounting
 principles in India, the applicable Accounting Standards issued by the
 Institute of Chartered Accountants of India and relevant presentational
 requirements of the Companies Act, 1956 as adopted consistently by the
 Company.
 
 b) Accounting policies not specifically referred to otherwise are in
 consonance with prudent accounting principles.
 
 c) All income and expenditure items having material bearing on the
 financial statements are recognized on accrual basis.
 
 2. Use of Estimates:
 
 The presentation of financial statements requires estimates and
 assumptions to be made that affect the reported amount of assets and
 liabilities on the date of the financial statements and the reported
 amount of revenues and expenses during the reporting period. Difference
 between the actual results and estimates are recognized in the period
 in which the results are known/materialized.
 
 3. Fixed Assets:
 
 Fixed assets are stated at cost less accumulated depreciation. All
 costs, directly attributable to bringing the asset to the present
 condition for the intended use, are capitalized.
 
 Assets under installation/construction, advances paid towards
 acquisition of fixed assets, direct costs and related incidental
 expenses incurred on assets that are not ready for their intended use
 or not put to use as on the Balance Sheet date are stated as capital
 work-in-progress.
 
 4. Depreciation:
 
 a) Depreciation on fixed assets has been provided on straight line
 method based on useful life of assets as estimated by the Management
 and depreciation on the assets acquired during the year is provided on
 pro-rata basis.
 
 b) Depreciation is charged at one hundred percent in respect of the
 individual assets costing less than Rs. 5,000 in the year of purchase.
 
 c) The management has estimated the useful lives of the assets as
 under:
 
 Assets : Years
 
 Buildings : 28
 
 Computers : 2-5
 
 Other Assets : 5
 
 Leasehold Improvements : over the lease period or useful Life whichever
 is lower.
 
 5. Revenue Recognition:
 
 Revenue from software development on time-and-material basis is
 recognized based on software developed, and billed to clients as per
 the terms of the specific contracts. For fixed price contracts revenue
 is recognized on the percentage of completion basis. The revenue from
 IT enabled services is recognized based on number of hours serviced and
 as per the contracted terms with the respective customers. Interest is
 recognized using the time-proportion method based on rates implicit in
 the transaction.
 
 6. Foreign Currency Transactions:
 
 Fixed Assets are accounted at the rate prevailing on the dates of
 transactions.
 
 Current Assets, other advances and Current Liabilities are accounted at
 the rate prevailing on the date of the Balance Sheet.
 
 In case of sales made to clients, income is accounted on the basis of
 the exchange rate as on the date of transaction.
 
 Expenditure in foreign currency during the month is accounted at a rate
 which approximates the actual rate during that month.
 
 Exchange differences expected to be arising on foreign currency
 transactions are recognized in the Profit and Loss account as Income or
 Expense in the year in which they arise.
 
 7. R & D Expenditure:
 
 Salaries wages and other related cost of personnel engaged in research
 and development and other material expenditure except the depreciation
 provided on the assets, attributable to the research and development of
 the Company is grouped under R & D Expenditure and charged to Profit
 and Loss account
 
 8. Retirement Benefits:
 
 a) Provident Fund: Contribution to Provident fund is made at the
 predetermined rate, to the appropriate authorities and is charged to
 revenue account.
 
 b) Provision for gratuity and superannuation have been made as per the
 internal estimates made by the management.
 
 9. Earnings per share:
 
 The earnings considered in ascertaining the Companys Earnings Per
 Share comprises the net profit after tax (and includes the post tax
 effect of any extra ordinary items). The number of shares used in
 computing Basic Earnings Per Share is the weighted average number of
 shares outstanding during the year. The number of shares used in
 computing Diluted Earnings Per Share comprises of weighted average
 shares considered for deriving Basic Earnings Per Share, and also the
 weighted average number of equity shares which 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
 year, unless they have been issued at a later date. The diluted
 potential equity shares have been adjusted for the proceeds receivable
 had the shares been actually issued at fair value (i.e. average market
 value of the outstanding shares).