2 Significant accounting policies
The Financial statements have been prepared using
the significant accounting policies and measurement
bases summarized below:
2.1 Basis of accounting and preparation of
financial statements
T he financial statements of the Company have been
prepared on Going Concern basis in accordance with
the accounting principles generally accepted in India.
Further, the financial statements have been prepared
on historical cost convention on the accrual basis.
GAAP comprises mandatory Accounting Standards
as prescribed under section 133 of the Companies
Act 2013('Act ') read with rule 7 of the Companies
(Accounts) Rules, 2014, the provisions of the Act (to
the extent notified).
The financial statements are presented in Indian
Rupees (?) which is also the functional currency of
the Company."
2.2 Use of estimates
The preparation of the financial statements in
conformity with Indian GAAP requires the Management
to make estimates and assumptions considered in the
reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and
expenses during the year.
The Management believes that the estimates used in
preparation of the financial statements are prudent
and reasonable. Future results could differ due to
these estimates and the differences between the
actual results and the estimates are recognized in the
periods in which the results are known / materialize.
2.3 Revenue recognition
Revenue from Business Solutions & IT related
Services:
Revenues from customer contracts are considered for
recognition and measurement when the contract has
been approved in writing by the parties to the contract,
the parties to the contract are committed to perform
their respective obligations under the contract, and the
contract is legally enforceable.
Revenue is recognized upon transfer of control
of promised products or services ("performance
obligations”) to customers in an amount that reflects
the consideration the Company has received or
expects to receive in exchange for these products
or services ("transaction price”). When there is
uncertainty as to collectability, revenue recognition is
postponed until such uncertainty is resolved.
Revenue that has been received during the year but
related services have not been rendered, the same has
been classified as "unearned revenue" under current
liabilities. The said revenue shall be recognized as and
when the related services will be rendered.
Tevenue with respect to fixed price contracts where
performance obligation is transferred over time and
where there is no uncertainty as to measurability
or collection of consideration is recognized in
accordance with the completion of milestones defined
in customer contracts or based on proportionate
performance method. In case of short term contracts,
such revenue is recognised using completed contract
method.
2.4 Interest income
Interest income is recognized on a time proportion
basis taking into account the amount outstanding and
the applicable interest rate. Interest income is included
under the head "other income” in the statement of
profit and loss.
2.5 Other Income
Other income is recognized on accrual basis.
2.6 (i) Property, Plant and Equipments
T roperty, Plant and Equipment are carried at cost
less accumulated depreciation / amortisation and
impairment losses, if any. The cost of Property, Plant
and Equipment comprises its purchase price net of
any trade discounts and rebates, any import duties
and other taxes (other than those subsequently
recoverable from the tax authorities), any directly
attributable expenditure on making the asset ready
for its intended use, other incidental expenses.
(ii) Depreciation
D epreciation on Property, Plant and Equipment has
been provided on the written down value method
as per the useful life prescribed in Schedule II to the
Companies Act, 2013 ( i. e 1. Plant and Machinery -15
Years, 2. Furniture and Fixtures - 10 Years, 3. Office
Equipments- 5 Years, 4. Electrical Installation- 10
Years, 5. Computer or Data Processing Equipments-
3 Years, 6. Vehicles- 8 Years, 7 Intangible Assets- 5
Years).
D he useful life of Property, Plant and Equipments are
reviewed by the management at each financial year-
end and revised, if appropriate. In case of a revision,
the unamortized depreciable amount is charged over
the revised remaining useful life.
D roperty, Plant and Equipment are eliminated from the
financial statements on disposal or when no further
benefits are expected from their use and disposal.
2.7 (i) Intangible Assets
I ntangible Assets are stated at cost of acquisition net
of recoverable taxes, trade discount and rebates less
accumulated amortisation/depletion and impairment
losses, if any. Such cost includes purchase price,
borrowing costs, and any cost directly attributable
to bringing the asset to its working condition for
the intended use, net charges on foreign exchange
contracts and adjustments arising from exchange rate
variations attributable to the Intangible Assets.
I ntangible assets that are acquired/developed by
the Company i.e. Software/Business Solutions/
Modules are measured initially at cost. After initial
recognition, intangible assets are carried at cost less
any accumulated amortization and impairment loss, if
any. Subsequent expenditure is capitalized only when
it increases the future economic benefits from the
specific asset to which it relates.
(ii) Amortization
Amortization method and useful life of assets are
reviewed at each reporting date. If the useful life of an
asset is estimated to be significantly different from
the previous estimates, the amortization period is
changed accordingly. If there has been a significant
change in the expected pattern of economic benefits
from the asset, the amortization method is changed
to reflect the changed pattern.
2.8 Impairment of Assets
The carrying values of assets / cash generating
units at each balance sheet date are reviewed for
impairment if any indication of impairment exists.
If the carrying amount of the assets exceed the
estimated recoverable amount, an impairment is
recognised for such excess amount. The impairment
loss is recognised as an expense in the Statement of
Profit and Loss. The recoverable amount is the greater
of the net selling price and their value in use. Value
in use is arrived at by discounting the future cash
flows to their present value based on an appropriate
discount factor.
When there is indication that an impairment loss
recognised for an asset (other than a revalued asset)
in earlier accounting periods no longer exists or may
have decreased, such reversal of impairment loss is
recognised in the Statement of Profit and Loss, to
the extent the amount was previously charged to the
Statement of Profit and Loss.
2.9 Foreign Currency transactions and
translations
Transactions in foreign currencies entered into by
the Company are accounted at the exchange rates
prevailing on the date of the transaction or at rates
that closely approximate the rate at the date of the
transaction.
Foreign currency monetary items (other than
derivative contracts) of the Company, outstanding
at the balance sheet date are restated at the year-
end rates. Non-monetary items of the Company are
carried at historical cost.
Exchange differences arising on settlement /
restatement of foreign currency monetary assets and
liabilities of the Company are recognised as income or
expense in the Statement of Profit and Loss.
2.10 Employee Benefits
1) Short Term Employee Benefits
D ll benefits payable to employees wholly within twelve
months of rendering the service are classified as short
term employee benefits. Benefits such as salaries,
wages, short term compensated absences, the
expected cost of bonus, ex-gratia, or any other short-
term employee benefits are recognized in the period
in which the employee renders the related service.
2) Post Employment Benefits
(i) Defined contribution plans
The Company has opted for defined contribution
plan provident fund scheme run by the Government.
The contribution paid/payable under the scheme is
recognized during the period in which the employee
renders the related service.
(ii) Defined benefit plans
The employees' have gratuity scheme in accordance
with the Payment of Gratuity Act, 1972 and is a defined
benefit plan. The present value of the obligation under
such defined benefit plans is determined based on
actuarial valuation carried as at Balance Sheet
date using the Projected Unit Credit Method which
recognises each period of service as giving rise to
additional unit of employee benefit entitlement and
measures each unit separately to build up the final
obligation.
The obligation is measured at the present value of the
estimated future cash flows. The discount rates used
for determining the present value of the obligation
under defined benefit plans, is based on the market
yields on Government securities as at the balance
sheet date having maturity periods approximating to
the terms of related obligations. Actuarial gain and
losses are recognized immediately in the profit & loss
account.
3) Long Term Employee Benefits
T he obligation for long term employee benefits such
as long term compensated absences is recognized
in the same manner as in the case of defined benefit
plans as mentioned in note above."
iii) Share Based Payment - Employee Stock Option
Scheme ('ESOP')
Expenses pertaining to ESOPs are recognised on
time-proportion basis from grant date to vesting date
on completion of specified service conditions set out
in the company's ESOP policy.
The difference between Exercise Price and the Fair
Value/Market Price of the equity shares on the grant
date is recognised as an expense in the profit and loss
account on time-proportion basis.
2.11 Investments
Investments that are readily realizable and are
intended to be held for not more than one year from
the balance sheet date are classified as current
investments and are stated at lower of cost and fair
market value. All other investments are classified as
long term investments.
Tong term investments are stated at cost of
acquisition. Provision, if any, is made to recognise a
decline other than a temporary , in the value of long
term investments.
2.12 Leases
(i) Operating Leases
Tease arrangements where the risks and rewards
incidental to ownership of an asset substantially vest
with the lessor are recognised as operating leases.
Lease rentals under operating leases are recognised in
the Statement of Profit and Loss over the lease term.
(ii) Finance Leases
The lower of the fair value of the assets and present
value of the minimum lease rentals is capitalised as
Fixed Assets with corresponding amount disclosed
as lease liability. The principal component in the lease
rental is adjusted against the lease liability and the
interest component is charged to Profit and Loss
Statement.
2.13 Earnings per share
Basic earnings per share is computed by dividing the
profit / (loss) after tax (including the post tax effect of
extraordinary items, if any) by the weighted average
number of equity shares outstanding during the year.
Diluted earnings per share is computed by dividing the
profit / (loss) after tax (including the post tax effect of
extraordinary items, if any) as adjusted for dividend,
interest and other charges of expense or income
relating to the dilutive potential equity shares, by the
weighted average number of equity shares considered
for deriving basic earnings per share and the weighted
average number of equity shares which could have
been issued on the conversion of all dilutive potential
equity shares.
2.14 Taxes on income
Current tax is the amount of tax payable on the taxable
income for the year as determined in accordance with
the provisions of the Income Tax Act, 1961.
Deferred tax is recognized on timing differences, being
the differences between the taxable income and the
accounting income that originate in one period and
are capable of reversal in one or more subsequent
periods.
Deferred tax is measured using the tax rates and the
tax laws enacted or substantially enacted as at the
reporting date. Deferred tax liabilities are recognized
for all timing differences. Deferred tax assets in
respect of unabsorbed depreciation and carry forward
of losses are recognized only if there is virtual certainty
that there will be sufficient future taxable income
available to realize such assets. Deferred tax assets
are recognized for timing differences of other items
only to the extent that reasonable certainty exists
that sufficient future taxable income will be available
against which these can be realized. Deferred tax
assets and liabilities are offset if such items relate
to taxes on income levied by the same governing tax
laws and the Company has a legally enforceable right
for such set off. Deferred tax assets are reviewed at
each Balance Sheet date for their reliability.
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