2. SIGNIFICANT ACCOUNTING POLICIES
a Basis of Preparation of Financials Statements
The financial statements have been prepared in
compliance with Generally Accepted Accounting
Principles ('GAAP') in India, under the historical cost
convention. 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 and the provisions of
the Act (to the extent notified). Accounting policies have
been consistently applied except where a newly issued
accounting standard is initially adopted or a revision to
an existing accounting standard requires a change in the
accounting policy hitherto in use. Accounting Policies
adopted in the preparation of these financial statements
are consistent with those applied in the previous year.
"All the assets and liabilities have been classified as
current or non current as per the companies normal
operating cycle and criteria set out in schedule III
of the Companies Act, 2013. Based on nature of
service and the time between the rendering of service
and their realization in cash and cash equivalent,
the company has ascertained its operating cycle
to be 12 months for the purpose of Current - Non
current classification of assets and liabilities."
b Use of Estimates
"The preparation of financial statements in conformity
with Indian GAAP requires management to make
estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of
contingent liabilities on the date of financial statements.
Actual results could differ from those estimates.
Differences between actual results and estimates
are recognised in the period in which the results get
materialised."
c Cash Flow
"Cash flows are reported using the indirect method,
whereby the profit before tax is adjusted for the effect
of transactions of a non cash nature, any deferrals or
accruals of past or future operating cash receipts or
payments and item of income or expenses associated
with investing or financing cash flows. Cash flows
from operating, investing and financing activities of the
company are segregated."
d Cash and Cash Equivalent
Cash and cash equivalents for the purpose of cash flow
statement comprise of cash in hand, balances with
banks including fixed deposits with original maturity
period of twelve months or less.
e Property, Plant & Equipment
Tangible Assets
"Property, Plant & Equipment's are carried at cost of
acquisition including any attributable cost for bringing
the asset to its working condition for its intended use
and the initial estimate of the costs of decommissioning,
restoration and similar liabilities, less accumulated
depreciation and any accumulated impairment losses.
Estimated costs of decommissioning, restoration and
similar liabilities are discounted to its present value
taking pre-tax rates that reflect(s) current market
assessments of the time value of money and the
risks specific to the liability as a basis for discounting.
Subsequent expenditure related to an item of Property,
Plant & Equipment's are added to its book value only
if they increase the future benefits from the existing
asset beyond its previously assessed standard of
performance. Gains or losses arising from disposal of
assets which are carried at cost are recognised in the
Statement of Profit and Loss in the year of disposal.
The company based on the expected manner of usage
of Property, Plant and Equipment (PPE), using written
down value method (WDV) for charging depreciation.
Depreciation on additions/deletions on property, plant
and Equipment's is calculated on a pro - rata basis from/
up to the date of such additions/deletions."
f Intangible Assets and Amortisation
"Intangible Assets (including Computer Software) are
amortized over the estimated useful life of such assets
as identified by the management. The amortization
period and the amortization method are reviewed at
the end of each financial year. If the estimated useful
life of such assets is significantly different from
previous estimates, the amortization period is changed
accordingly. The management estimates the useful
life of the above intangible assets to be three years.
Life of Intangible assets are as below-"
Server and Networks 3 Years
g Capital Work-in-Progress
Capital work-in-progress, if any, includes cost of PPE
under installation / under development as at the balance
sheet date.
h Impairment
The carrying amounts of assets are reviewed at each
balance sheet date if there is any indication of impairment
based on internal / external factors. An impairment
loss is recognized wherever the carrying amount of an
asset exceeds its recoverable amount. The recoverable
amount is 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 cost of capital.
i Accounting for Leases
"Where the Company is lessee: Leases where the
lessor effectively retains substantially all the risks and
benefits of ownership of the leased item, are classified
as operating leases. Operating lease payments are
recognized as an expense in the statement of profit
and loss on a straight-line basis over the lease term.
Lease arrangements, where the risks and rewards
incidental to the ownership of the assets are transferred
to the lessee, are classified as finance lease."
j Inventories
Company's primary business is IT Enabled Services.
Hence AS-2 "Inventories" is not applicable.
k Revenue Recognition
"Revenue is recognized to the extent that it is probable
that the economic benefit will flow to the company, there
is reasonable certainty of collection and it can be reliably
estimated.
Revenue from sale of services is recognized on an accrual
basis as and when the related services are rendered
as per the terms of the contract with the customer.
Interest and Rent income is recognized on accrual basis."
l Foreign Currency T ransactions
"The Company is exposed to currency fluctuations
on foreign currency transactions. Transactions
denominated in foreign currency are recorded at the
exchange rate prevailing on the date of transactions.
Exchange differences arising on foreign exchange
transactions settled during the year are recognized in the
statement of profit and loss of the year.
Monetary assets and liabilities in foreign currency, which
are outstanding as at the year-end, are translated at the
year-end at the closing exchange rate and the resultant
exchange differences are recognized in the profit and
loss account. Non monetary items are stated in the
balance sheet using the exchange rate at the date of the
transaction.
The Company has entered into forward contract for
hedging its cash flow foreign currency receipt and all
open forward contract has valued Mark to Market as
per prevailing rate. All gain and loss on cancellation of
contact are recognized in statement of Profit and Loss
in the year which contract cancelled."
m Borrowing Costs
Borrowing Costs that are directly attributable to
the acquisition of an asset that necessarily takes a
substantial period of time to get ready for its intended
use are capitalised as part of the cost of that asset
till the date it is put to use. Other borrowing costs are
recognised as an expense in the period in which they are
incurred.
n Employee Benefits
Short term employee benefits
"All employee benefits payable wholly within twelve
months of rendering the service are classified as short
term employee benefits. Benefits such as salaries,
performance incentives , etc, are recognised as an
expense at the undiscounted amount in the Profit and
Loss Account of the year in which the employee renders
the related service."
Long term employee benefits
Long Term and other Employee Benefits are recognized
as an expense in the Statement of Profit and Loss for the
year in which services have been rendered. The company
does not have any post-employment and other long
term benefits except for gratuity, which is an unfunded
Defined Benefit Plan. Liability for the same is provided
on the basis of actuarial valuation, as at the Balance
Sheet date, carried out by independent actuary using
the Projected Unit Credit method. The Actuarial gains
and losses arising during the year are recognized in the
Statement of Profit and Loss for the year.
o Taxation
"Provision for Current Taxation is based on the taxable
profits of the Company computed in accordance with
the provisions of the Income Tax Act, 1961. Provision
for Taxation is set off against tax payments but are
accumulated and carried forward until the completion of
the assessments.
Deferred tax is recognized, subject to the consideration
of prudence, on timing difference being differences
between taxable incomes and accounting income that
originate in one period and are capable of reversal in
one or more subsequent periods. Deferred tax assets
are not recognized unless there is a virtual certainty that
sufficient taxable profits will be available against which
such deferred assets can be realized."
p Investments
"Investments, which are readily realizable and intended
to be held for not more than one year from the date on
which such investments are made, are classified as
current investments. All other investments are classified
as long term investments. Long-term investments are
stated at cost, and provision for diminution is made
when, in the management's opinion, there is a decline,
other than temporary, in the carrying value of such
investments. Current investments are carried at lower of
cost and fair value."
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