Significant Accounting Policies
a) Basis of preparation of standalone financial statements:
The standalone financial statements of the Company have been prepared in accordance with
the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the
Accounting Standards specified under Section 133 of the Companies Act, 2013, read with
relevant rules there under and other accounting principles generally accepted in India. The
standalone financial statements have been prepared on accrual basis under the historical cost
convention. The accounting policies adopted in the preparation of the standalone financial
statements are consistent with those followed in the previous year
All assets and liabilities have been classified as current and non-current as per normal
operating cycle of the Company and other criteria set out in the Schedule III of the Companies
Act, 2013.
b) Revenue recognition:
i) Revenue is recognised to the extent that it is probable that the economic benefits will flow
to the company and the revenue can be reliably measured.
ii) Revenue from maintenance contracts are recognised pro rata over the period of the contract
as and when services are rendered.
iii) All other income and expenditure are recognised and accounted for on accrual basis.
c) Use of estimates:
The preparation of standalone 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 recognised in the period in which the
results are known/ materialised.
d) Cash and Cash Equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short¬
term balances (with an original maturity of three months or less from the date of acquisition),
highly liquid investments that are readily convertible into known amounts of cash and which
are subject to insignificant risk of changes in value.
e) Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit/loss before tax is adjusted
for the effects of transactions of non-cash nature and any deferrals or accruals of past or future
cash receipts or payments. The cash flows from operating, investing and financing activities
of the Company are segregated based on the available information.
f) Inventories
Inventories are valued at lower of cost and net realizable value, including necessary provision
for obsolescence. Cost is determined using the weighted average method.
Work in Progress are valued at cost including related overhead costs.
g) Tangible Fixed Assets:
i. An item is classified as Tangible fixed asset only if it satisfies the recognition criteria stated
in AS 10 (i.e.) is probable that future economic benefits will flow to the company and the
cost of such item could be measured. Stores and Spares fulfilling the above conditions are
also classified as fixed assets. Fixed assets are initially recognized at its purchase price
including all costs directly attributable to bring the asset in a ready to use condition. All
subsequent cost incurred such as day to day running expenses, repair and maintenance
expenses are treated as revenue expenses except when such expenditure satisfied the
recognition criteria stated above. Cost Model is followed after initial recognition i.e. Fixed
Assets are carried at cost less accumulated depreciation/amortization/impairment.
ii. Depreciation: Fixed assets are depreciated using the Written Down Value method. Useful
lives of assets necessary for calculation of depreciation rates are taken as specified in
Schedule II of Companies Act, 2013.
iii. Fixed assets retired from active use and held for sale are stated at the lower of their net
book value and net realizable value and are disclosed separately.
iv. Capital Work-in-Progress: Projects under which tangible fixed assets are not yet ready for
their intended use and other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable borrowing costs.
h) Intangible Assets/Intangible Asset under Development:
Intangible Assets are recorded at the consideration paid for acquisition of such assets and are
carried at cost less accumulated amortization and impairment.
Software Products Developed/Purchased which are held for use in the production or supply
of goods and services, for rental to others or for administrative purposes have been recognized
as Intangible Assets.
Research Costs are expensed as incurred. Software product development cost are expensed
as incurred unless technical and commercial feasibility of the product is demonstrated, future
economic benefits are probable, the company has an intention and ability to complete and use
or sell the software and the costs can be measured reliably. The costs which can be capitalized
include the cost of materials, directs labour, and overhead cost that are directly or indirectly
attributable to preparing the asset for intended use.
Self-Generated Intangible assets which are ready for sale are amortized on Straight Line
method over their estimated useful life or 10 years, whichever is lower. The estimated useful
life of the intangible assets and the amortization period are reviewed at the end of each
financial year and the amortization period is revised to reflect the changed pattern, if any.
Subsequent Expenditure on Self-Generated Intangible Assets are capitalized only if it will
enable the asset to generate future economic benefits in excess of its originally assessed
standard of performance and the expenditure can be measured and attributed to the asset
reliably. Amortization of subsequent expenditure is done in line with that of the original cost
over the remaining life of the asset.
Intangible Asset under Development: - All Software Development Expenses eligible for
capitalization are recognized as “Intangible Assets under Development” until the Software
Product is ready for market.
i) Impairment of assets:
The carrying value of assets/cash generating units at each balance sheet date is reviewed for
impairment if any indication of impairment exists. If the carrying amount of the assets exceeds
the estimated recoverable amount, impairment is recognized for such excess amount. The
impairment loss is recognized as an expense in the Statement of Profit and Loss, unless the
asset is carried at revalued amount, in which case any impairment loss of the revalued asset
is treated as a revaluation decrease to the extent a revaluation reserve is available for that
asset.
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 recognized 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 recognized in the Statement of Profit and Loss, to the extent the amount
was previously charged to the Statement of Profit and Loss. In case of revalued assets such
reversal is not recognized.
j) Investments:
Investments are classified into current and long-term investments. Current investments are
stated at lower of cost and fair value. Long-term investments are stated at cost. A provision
for diminution is made to recognise a decline, other than temporary, in the value of long-term
investments.
k) Employee benefits:
Wages, salaries, paid annual leave, sick leave and bonuses are accrued in the year in which
the services are rendered by the employees. The company does not permit accumulating of
unused leaves. The company does not provide any long-term employee benefits except
gratuity.
The company is not having any defined contribution plan and nor has made any provision for
payment of Gratuity
l) Borrowing cost:
Borrowing cost attributable to the acquisition or construction of qualifying assets are
capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use. All other borrowing costs are
charged to revenue.
m) Taxation:
The tax expense for the period comprises current and deferred tax. Tax is recognized in
Statement of Profit and Loss, except to the extent that it relates to items recognized in the
reserves directly. In such cases, the tax is also recognized in the reserves.
- Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from
or paid to the taxation authorities, based on tax rates and laws that are enacted or
substantively enacted at the Balance sheet date.
- Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding tax bases used in the
computation of taxable profit. Deferred tax liabilities and assets are measured at the tax rates
that are expected to apply in the period in which the liability is settled or the asset realized,
based on tax rates (and tax laws) that have been enacted or substantively enacted by the end
of the reporting period. The carrying amount of Deferred tax liabilities and assets are reviewed
at the end of each reporting period.
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