The financial statements have been prepared to comply in all material
respects with the notified Accounting Standards (AS) under the
Companies (Accounting Standards) Rules, 2006 and the relevant
provisions of the Companies Act, 1956 (''the Act''). The financial
statements have been prepared under the historical cost convention on
an accrual basis. The accounting policies have been consistently
applied by the Company and are consistent with those used in the prior
All assets and liabilities have been clasified as current and non
current as per the Company''s normal operating cycle and other criteria
set out in the revised Schedule VI to the Companies Act, 1956. Based on
the nature of services and the time between the acquisition ofassets
for processing and their realisation in cash and cash equivalents, the
Company has ascertained its operating cycle as 12 months for the
purpose of current - non current classification ofassets and
1.2 Use ofEstimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
year end. Although these estimates are based upon management''s best
knowledge of current events and actions, actual results could differ
from these estimates. Any revision in accounting estimates is
recognised prospectively in current and future periods.
1.3 Tangible Assets and Depreciation
(i) Tangible assets are stated at cost of acquisition less accumulated
depreciation and impairment losses. Cost comprises the purchase price
and any directly attributable costs of bringing the assets to their
working condition for their intended use.
(ii) Depreciation is provided on a straight line method (SLM) based on
estimated useful life of fixed assets determined by management (which
are higher than the rates prescribed under Schedule XIV to the Act) as
(iii) Leasehold improvements are amortised over the period of lease or
five years, whichever is lower. Assets acquired on finance lease are
depreciated at the lower of lease term and estimated useful life as
stated above. Assets individually costing up to Rupees five thousand
are fully depreciated in the year of purchase.
1.4 Intangible Assets
Intangible assets are recognised only if it is probable that future
economic benefits that are attributable to the asset will flow to the
enterprise and the cost ofthe asset can be measured reliably.
Intangible assets comprise of goodwill, computer software, computer
software license rights, license to use intellectual property and
software development costs.
(i) Goodwill arising on acquisition is the difference between the cost
of an acquired business and the aggregate ofthe fairvalue ofthat
entity''s identifiable assets and liabilities and the same is amortised
on a straight line basis over its economic life or the period defined
in the Court scheme.
(ii) Costs incurred towards development of computer software meant for
internal use are capitalised subsequent to establishing technological
feasibility. Computer software is amortised over an estimated useful
life of two to six years.
(iii) Computer software licences are capitalised on the basis of costs
incurred to acquire and bring to use the specific software, and are
amortised on straight line basis over an estimated useful life oftwo to
(iv) License to use intellectual property rights are amortised on
straight line basis over an estimated useful life ofsix years.
(v) The amortisation period and method used for intangible assets are
reviewed at each financial year end.
1.5 Borrowing Costs
Borrowing costs that are directly attributable to the acquisition or
construction of a qualifying asset are capitalised as part of the cost
of that asset till such time the asset is ready for its intended use. A
qualifying asset is an asset that necessarily takes a substantial
period oftime to get ready for its intended use.
1.6 Lease accounting Finance lease:
Assets acquired under lease where the Company has substantially all the
risks and rewards of ownership are classified as finance lease. Such
lease is capitalised at the inception of the lease at lower of the fair
value or the present value of the 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. Lease management fees, legal charges and
other initial direct costs are capitalised.
Assets acquired on lease where a significant portion ofthe risks and
rewards of ownership are retained by the lessor are classified as
operating lease. Lease rentals on assets taken on operating lease are
recognised as an expense in the Statement of Profit and Loss on a
straight line basis over the lease term.
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in the value is made to
recognise a decline, other than temporary, in the value ofthe
Inventories comprise licenses purchased by the Company for resale to
customers and are stated at the lower of cost and net realisable value.
Cost of licenses is determined using the first-in-first-out method.
1.9 Impairment of assets
At each balance sheet date, the Company assesses whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount. The recoverable
amount is the greater of the asset''s net selling price and value in
use. In assessing value in use, the estimated future cash flows are
discounted to their present value at the weighted average cost of
capital. If the carrying amount ofthe asset exceeds its recoverable
amount, an impairment loss is recognised in the Statement of Profit and
Loss to the extent the carrying amount exceeds the recoverable amount.
Revenue is recognised to the extent that it is probable that economic
benefit will flow to the Company and that revenue can be reliably
(i) Revenue from time and material contracts are recognised as related
services are performed.
(ii) Revenue from fixed price contracts for delivering services is
recognised under the proportionate- completion method wherein revenue
is recognised based on services performed to date as a percentage of
total services to be performed.
(iii) Revenue from maintenance contracts are recognised rateably over
the term of the maintenance contract on a straight-line basis.
(iv) Revenue from certain services are recognised as the services are
rendered, on the basis of an agreed amount in accordance with the
agreement entered into by the Company.
(v) Revenue from sale of user licenses for software application is
recognised on transfer of the title in the user license.
(vi) Interest income is recognised on a time proportion basis taking
into account the amount outstanding and the rate applicable.
(vii) Provision for estimated losses, if any, on incomplete contracts
are recorded in the period in which such losses become probable based
on the current contract estimates.
(viii) Deferred and unearned revenues represent the estimated unearned
portion offees derived from certain fixed-rate claim service
agreements. Deferred revenues are recognised based on the estimated
rate at which the services are provided. These rates are primarily
based on a historical evaluation of actual claim closing rates.
Unearned revenues for fixed fee contracts are recognised on a pro-rata
basis over the term of the underlying service contracts, which are
generally one year.
(ix) Unbilled revenue represents costs and earnings in excess of
billings as at the balance sheet date.
1.11 Foreign currency transactions
(i) Initial recognition:
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
Foreign currency monetary items are reported using the closing rate.
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; and 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.
(iii) Exchange differences:
Exchange differences arising on the settlement of monetary items or on
reporting the Company''s monetary items at rates different from those at
which they were initially recorded during the year, or reported in
prior year financial statements, are recognised as income or as expense
in the year in which they arise except those arising from investments
in non-integral operations. Exchange differences arising on a monetary
item that, in substance, forms part of the Company''s net investment in
a non-integral foreign operation is accumulated in a foreign currency
translation reserve in the financial statements until the disposal
ofthe net investment, at which time they are recognised as income or as
(iv) Forward exchange contracts not intended for trading or speculation
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the
contract. Exchange differences on such contracts are recognised in the
statement of profit and loss in the period in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognised as income or as expense for the
(a) Short term employee benefits:
All employee benefits falling due wholly within twelve months of
rendering the service are classified as short term employee benefits,
which include benefits like salaries, short term compensated absences,
performance incentives, etc. and are recognised as expense in the
period in which the employee renders the related service.
(b) Defined-contribution plans:
The Company''s contribution towards defined contribution plans (where
Company pays pre-defined amounts and does not have any legal or
informal obligation to pay additional sums) for post employment
benefits, namely, Provident Fund, Employee Pension Scheme, etc. are
charged to Statement of Profit and Loss as expense during the period in
which the employees perform the service.
(c) Defined-benefit plans:
The Company has a defined benefit plan for employees in form of
Gratuity, the liability in respect of which is determined on the basis
of valuation carried out by an independent actuary (using the projected
unit credit method) at the balance sheet date.
(d) Other long term employee benefits:
Other long-term employee benefits including compensated absences that
are not expected to occur within twelve months after the end of the
period in which the employee renders related services are recognised as
a liability at the present value of the defined benefit obligation
based on actuarial valuation (under projected unit credit method)
carried out at the balance sheet date.
(e) Actuarial gains and losses:
Actuarial gains and losses comprise experience adjustments and the
effect of changes in the actuarial assumptions, and are recognised
immediately in the Statement of Profit and Loss as income or expense.
(f) Deferred employee stock compensation costs:
Stock options granted to the employees under employee stock option
plans (ESOP''s) are recognised in accordance with the accounting
treatment prescribed by Securities and Exchange Board of India
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999. Accordingly, the excess of market value of the
stock options, as on the date of grant, over the exercise price of the
options, is recognised as deferred employee stock compensation
expenses, and is charged to Statement of Profit and Loss on ''graded
vesting'' basis over the vesting period of the options. The fair value
of the options is measured on the basis of an independent valuation
performed or the market price in respect of stock options granted.
Tax expense comprises current and deferred taxes. Current income tax is
measured at the amount expected to be paid to the tax authorities in
accordance with local tax laws applicable in the respective countries.
Deferred income taxes reflect the impact of current year timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets and deferred tax liabilities across various countries of
operation are not set-off against each other as the Company does not
have a legal right to do so. Deferred tax assets are recognised only to
the extent that there is reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realised. In situations where the Company has unabsorbed
depreciation or carry forward tax losses, all deferred tax assets are
recognised only if there is virtual certainty supported by convincing
evidence that they can be realised against future taxable profits.
At each balance sheet date, the Company re-assesses unrecognised
deferred tax assets. It recognises unrecognised deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be, that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
Minimum Alternative Tax (''MAT'') credit is recognised as an asset only
when and to the extent there is convincing evidence that the Company
will pay normal income tax during the specified period. In the year in
which the MAT credit becomes eligible to be recognised as an asset in
accordance with the recommendations contained in the Guidance Note on
Accounting in respect of Minimum Alternative Tax issued by the
Institute of Chartered Accountants of India, the said asset is created
by way of a credit to the Statement of Profit and Loss and disclosed as
MAT Credit Entitlement. The Company reviews the same at each balance
sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal income tax during the specified
1.14 Earnings/ (loss) per share
Basic earnings/ (loss) per share is calculated by dividing the net
profit/ (loss) for the year attributable to equity shareholders by the
weighted average number of equity shares outstanding during the year.
The weighted average number of equity shares outstanding during all the
years presented is adjusted for capital reduction.
For the purpose of calculating diluted earnings/ (loss) per share, the
net profit/ (loss) for the year attributable to equity shareholders and
the weighted average numberofshares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
1.15 Provisions and contingent liabilities
Provisions are recognised when the Company has a present obligation as
a result of past events, for which it is probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation and a reliable estimate of the amount can be made.
Provisions are reviewed regularly and are adjusted where necessary to
reflect the current best estimates of the obligation. When the Company
expects a provision to be reimbursed, the reimbursement is recognised
as a separate asset, only when such reimbursement is virtually certain.
Provisions for onerous contracts (i.e., contracts where the expected
unavoidable costs of meeting the obligations under the contract exceed
the economic benefits expected to be received under it), are recognised
when it is probable that cash outflow of resources embodying economic
benefits will be required to settle a present obligation as a result of
an obligating event based on a reliable estimate of such obligation.
Contingent liabilities are disclosed when there is a possible
obligation or a present obligation that may (but probably will not)
require an outflow of resources.
Identification of segments: The Company''s operating businesses are
organised and managed separately according to the nature of services
rendered. The analysis of geographical segments is based on the
geographical location ofthe Company''s customer.
Intersegment transfers: The Company generally accounts for inter
segment sales and transfers as if the sales or transfers were to third
parties at current market prices.
Allocation of common costs: Common allocable costs are allocated to
each segment according to the relative contribution of each segment to
the total common costs.
Unallocated items: The unallocated items include general corporate
income and expense items which are not allocated to any business
Exceptional items are generally non-recurring items of income and
expense within profit or loss from ordinary activities, which are of
such size, nature or incidence that their disclosure is relevant to
explain the performance of the Company for the year.
1.18 Project workExpenses
Project work expenses represents amounts charged by sub-contractors and
cost of hardware and software incurred for execution of projects. These
expenses are recognised on an accrual basis.
Cash and cash equivalents in the balance sheet comprise of cash at bank
and on hand, demand deposits and short-term investments with an
original maturity ofthree months or less.
1.20 Derivative instruments
With respect to derivative instruments (foreign currency forward
contracts) to hedge the risks associated with highly probable forecast
transactions, the (gain)/ loss arising on forward exchange contracts in
foreign currency, entered into to hedge highly probable forecast
transactions, which qualify for hedge accounting, are accounted for
under Hedging Reserve to be ultimately recognised in the Statement of
Profit and Loss when the forecasted transactions arise, as per the
principles of hedge accounting enunciated in Accounting Standard 30,
Financial Instruments: Recognition and Measurement issued by the
Institute of Chartered Accountants of India.