2 MATERIAL ACCOUNTING POLICIES:
2.1 Basis of Preparation:
In accordance with the notification issued by the Ministry
of Corporate Affairs, the Company has adopted Indian
Accounting Standards ('Ind AS') notified under the
Companies (Indian Accounting Standards) Rules, 2015 with
effect from April 1, 2017. The financial statements of the
Company are prepared and presented in accordance with
Ind AS.
The financial statements have been prepared on
the historical cost basis, except for certain financial
instruments which are measured at fair values at the end
of each reporting period, as explained in the accounting
policies below. Historical cost is generally based on the fair
value of the consideration given in exchange for goods
and services.
2.2 Summary of material accounting policies:
a) Use of Estimates:
The preparation of financial statements in
conformity with Ind AS requires the management
to make judgements, estimates and assumptions
that affect the reported amounts of revenues,
expenses, assets and liabilities and the disclosure
of contingent liabilities, at the end of the reporting
period. Although these estimates are based on the
management's best knowledge of current events
and actions, uncertainty about these assumptions
and estimates could result in the outcomes requiring
a material adjustment to the carrying amounts of
assets or liabilities in future periods. Any revision to
accounting estimates is recognized prospectively.
b) Current versus non-current classification:
The Company presents assets and liabilities
in the balance sheet based on current/ non¬
current classification.
An asset is treated as current when it is:
• Expected to be realised or intended to be sold or
consumed in normal operating cycle.
• Held primarily for the purpose of trading
• Expected to be realised within twelve months
after the reporting period, or
• Cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for
at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is treated as current when:
• It is expected to be settled in normal
operating cycle
• It is held primarily for the purpose of trading
• It is due to be settled within twelve months after
the reporting period, or
• There is no unconditional right to defer the
settlement of the liability for at least twelve
months after the reporting period
All other liabilities are classified as non-current.
Defferred tax assets/ liabilities are classified as non¬
current assets/ liabilities.
c) Property, Plant & Equipment:
Property, plant and equipment ("PPE") are stated at
the cost of acquisition less accumulated depreciation
and write down for, impairment if any. Direct costs
are capitalised until the assets are ready to be put
to use. Subsequent costs are included in the asset's
carrying amount or recognized as a separate asset,
as appropriate, only when it is probable that future
economic benefits associated with the item will
flow to the entity and the cost of the item can be
measured reliably. All other expenses on existing
assets, including day-to-day repair and maintenance
expenditure and cost of replacing parts, which do
not meet the definition of PPE as per Ind AS 16 are
charged to the statement of profit and loss for the
period during which such expenses are incurred.
Gains or losses arising from de-recognition of PPE are
measured as the difference between the net disposal
proceeds and the carrying amount of PPE and are
recognized in the statement of profit and loss when
the PPE is derecognized.
d) Depreciation:
Depreciation is provided on straight-line method
as per the rates specified in schedule II of the
Companies Act, 2013 ("the Act"). Depreciation
for the assets purchased/sold during the year is
proportionately charged. The assets' residual values
and useful lives are reviewed at each financial year
end or whenever there are indicators for revision, and
adjusted prospectively.
e) Investment Properties:
Investment property represents properties held for
rental yields and/or for capital appreciation or both
rather than for:
(a) use in the production or supply of services or
for administrative purposes; or
(b) sale in the ordinary course of business.
Investment property is stated at the cost of
acquisition less accumulated depreciation.
Subsequent costs are included in the asset's
carrying amount or recognized as a separate asset,
as appropriate, only when it is probable that future
economic benefits associated with the item will
flow to the entity and the cost of the item can be
measured reliably. All other expenses on existing
assets, including day-to-day repair and maintenance
expenditure and cost of replacing parts, which do
not meet the definition of Investment Property as
per Ind AS 40 are charged to the statement of profit
and loss for the period during which such expenses
are incurred.
f) Intangible Assets:
Intangible assets acquired separately are measured
on intial cost. Subsequently, carried at cost less
accumulated amortization and accumulated
impariment losses, if any.
Intangible assets comprising of computer software
is amortised on a over a period of three years as
estimated by the management.
Gains or losses arising from de-recognition of an
intangible asset are measured as a difference between
the net disposal proceeds and the carrying amount
of the asset and are recognised in the statement of
profit or loss when asset is derecognised.
g) Leases:
Where Company is a Lessee:
The Company's lease asset classes primarily consist
of leases for buildings. The Company assesses
whether a contract contains a lease, at inception of
a contract. A contract is, or contains, a lease if the
contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys
the right to control the use of an identified asset, the
Company assesses whether:
(i) the contact involves the use of an identified asset
(ii) the Company has substantially all of the
economic benefits from use of the asset
through the period of the lease
(iii) the Company has the right to direct the use of
the asset.
At the date of commencement of the lease, the
Company recognizes a right-of-use asset ("ROU")
and a corresponding lease liability for all lease
arrangements in which it is a lessee, except for leases
with a term of twelve months or less (short-term
leases) and low value leases. For these short-term and
low value leases, the Company recognizes the lease
payments as an operating expense on a straight-line
basis over the term of the lease.
Certain lease arrangements includes the options to
extend or terminate the lease before the end of the
lease term. ROU assets and lease liabilities includes
these options when it is reasonably certain that they
will be exercised.
The lease liability is initially measured at amortized
cost at the present value of the future lease
payments. The lease payments are discounted using
the interest rate implicit in the lease or, if not readily
determinable, using the incremental borrowing rates
in the country of domicile of these leases. Lease
liabilities are remeasured with a corresponding
adjustment to the related right of use asset if the
Company changes its assessment if whether it will
exercise an extension or a termination option.
Lease liability and ROU asset have been separately
presented in the Balance Sheet and lease payments
have been classified as financing cash flows.
The borrowing rate applied to lease liabilities for
discouting is 12.55%
h) Employee Benefits:
(i) Short term employee benefits:
The employee benefits payable wholly within
twelve months of rendering the service are
classified as short term employee benefits.
Benefits such as salaries, leave travel allowance,
short term compensated absences etc. and
the expected cost of bonus are recognised in
the period in which the employee renders the
related service.
(ii) Defined Benefit Plans:
Gratuity, which is a defined benefit plan, is
accrued based on an independent actuarial
valuation, which is done based on project unit
credit method as at the balance sheet date.
The Company recognizes the net obligation of
a defined benefit plan in its balance sheet as
an asset or liability. Gains and losses through
re-measurements of the net defined benefit
liability/ (asset) are recognized in other
comprehensive income. In accordance with
Ind AS, re-measurement gains and losses on
defined benefit plans recognized in OCI are not
to be subsequently reclassified to statement
of profit and loss. As required under Ind AS
compliant Schedule III, the Company recognizes
re-measurement gains and losses on defined
benefit plans (net of tax) to retained earnings.
The Company doesn't have a policy for
encashment of leave
i) Revenue Recognition:
The Company derives revenues primarily from IT
related services. Effective April 01,2018, the Company
has adopted Ind AS 115, "Revenue from Contracts
with Customers". Revenue is recognized upon
transfer of control of promised services to customers
in an amount that refelects the considereation we
expect to receive in for those services.
Revenue on time-and-material contracts are
recognized as the related services are performed
and revenue from the end of the last invoicing
to the reporting date is recognized as unbilled
revenue. Revenue from fixed-price, fixed-timeframe
contracts, where the performance obligations
are satisfied over time and where there is no
uncertainty as to measurement or collectability of
consideration, is recognized as per the percentage-
of-completion method. When there is uncertainty as
to measurement or ultimate collectability, revenue
recognition is postponed until such uncertainty is
resolved. Efforts or costs expended have been used
to measure progress towards completion as there is
a direct relationship between input and productivity.
The Company recognised incentive from government
in respect of Service Exports from India Scheme
based on claim lodged by the Company.
j) Taxation:
Income tax expense comprises current tax expense
and the net change in the deferred tax asset or
liability during the year. Current and deferred tax
are recognized in statement of profit or loss, except
when they relate to items that are recognized in
other comprehensive income or directly in equity,
in which case, the current and deferred tax are
also recognized in other comprehensive income or
directly in equity, respectively.
Current income tax expense comprises taxes on
income from operations in India and in foreign
jurisdictions. Income tax payable in India is
determined in accordance with the provisions of the
Income Tax Act, 1961. Tax expense relating to foreign
operations is determined in accordance with tax laws
applicable in countries where such operations are
domiciled. Minimum Alternative Tax (MAT) paid in
accordance with the tax laws in India, which gives rise
to future economic benefits in the form of adjustment
of future income tax liability, is considered as an asset
if there is convincing evidence that the Company will
pay normal income tax in future years. Accordingly,
MAT is recognised as an asset in the balance sheet
when the asset can be measured reliably and it is
probable that the future economic benefit associated
with the assets will fructify.
Deferred income tax is recognized on temporary
differences at the balance sheet date between the
tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes, except
when the deferred income tax arises from the initial
recognition of goodwill or an asset or liability in a
transaction that is not a business combination and
affects neither accounting nor taxable profit or loss
at the time of the transaction.
Deferred income tax assets are recognized for all
deductible temporary differences, carry forward
of unused tax credits and unused tax losses, to the
extent that it is probable that taxable profit will be
available against which the deductible temporary
differences, and the carry forward of unused tax
credits and unused tax losses can be utilized.
The carrying amount of deferred income tax assets is
reviewed at each balance sheet date and reduced to
the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of
the deferred income tax asset to be utilized.
Deferred income tax assets and liabilities are
measured at the tax rates that are expected to apply
in the period when the asset is realized or the liability
is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at the
balance sheet date.
k) Inventories:
Cost is ascertained on a weighted average basis, is
defined as being all expenditure, which has been
incurred in bringing the product or service to its
present location and condition or net realizable
values whichever is lower. Net realizable value is
the estimated selling price in the ordinary course
of business, less estimated costs of completion and
estimated costs necessary to make the sale.
l) Foreign Currency Transactions:
Functional Currency:
The functional currency of the Company is the
Indian rupee.
Transactions and translations:
Foreign currency transactions are recorded at
exchange rates prevailing on the date of the
transaction. Foreign currency denominated
monetary assets and liabilities are restated into the
functional currency using exchange rates prevailing
on the balance sheet date. Gains and losses arising
on settlement and restatement of foreign currency
denominated monetary assets and liabilities are
included in the statement of profit and loss.
|