B Significant Accounting Policies
Basis of preparation of Financial Statements
The financial statements of the company have been prepared
in accordance with generally accepted accounting principles
in Indian Accounting Statndars (Ind-AS). The Company has
prepared these financial statements to comply in all material
respects with the Indian accounting standards notified under
the Companies (Indian Accounting Standards) Rules, 2015
and Companies (Indian Accounting Standards) Amendment
Rules, 2016 as applicable and the relevant provisions of the
Companies Act, 2013. The financial statements have been
prepared on an accrual basis and under the historical cost
convention.
Basis of measurement
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year.
Use of estimates
The preparation of financial statements in conformity with India
Accounting Statndars requires the management to make
judgments, estimates and assumptions that affect the reported
amounts of revenues, expenses, balance of 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.
C Property, plant and equipment
Property, Plant and equiptment are stated at cost, net of
accumulated depreciation and accumulated impairment
losses, if any. The cost comprises purchase price, borrowing
costs if capitalization criteria are met and directly attributable
cost of bringing the asset to its working condition for the
intended use. Any trade discounts and rebates are deducted
in arriving at the purchase price.
In case of revaluation of fixed assets, any revaluation surplus
is credited to the revaluation reserve, except to the extent
that it reverses a revaluation decrease of the same asset
previously recognized in the statement of profit and loss, in
which case the increase is recognized in the statement of profit
and loss. A revaluation deficit is recognized in the statement
of profit and loss, except to the extent that it offsets an existing
surplus on the same asset recognized in the asset revaluation
reserve.
Subsequent expenditure related to an item of fixed asset is
added to its book value only if it increases the future benefits
from the existing asset beyond its previously assessed
standard of performance. All other expenses on existing fixed
assets, including day-to-day repair and maintenance
expenditure and cost of replacing parts, are charged to the
statement of profit and loss for the period during which such
expenses are incurred.
The Company did not elect to exercise an irrevocable option
to amortize exchange rate fluctuation on long term foreign
currency monetary asset/ liability over the life of the asset/
liability or by March 31,2012, whichever is earlier, subsequent
to the amendment to Ind AS-21 by the Ministry of Corporate
affairs.
Gains or losses arising from derecognition of fixed assets
are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are
recognized in the statement of profit and loss when the asset
is derecognized.
D Borrowing costs
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings
and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment
to the interest cost.
Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily takes
a substantial period of time to get ready for its intended use or
sale are capitalized as part of the cost of the respective asset.
All other borrowing costs are expensed in the period they occur.
E Impairment of tangible and intangible assets
The Company assesses at each reporting date whether there
is an indication that an asset may be impaired. If any indication
exists, or when annual impairment testing for an asset is
required, the company estimates the asset's recoverable
amount. An asset's recoverable amount is the higher of an
asset's or cash-generating unit's (CGU) net selling price and
its value in use. The recoverable amount is determined for an
individual asset, unless the asset does not generate cash
inflows that are largely independent of those from other assets
or groups of assets. Where the carrying amount of an asset
or CGU exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable
amount. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset. In
determining net selling price, recent market transactions are
taken into account, if available. If no such transactions can be
identified, an appropriate valuation model is used.
The Company bases its impairment calculation on detailed
budgets and forecast calculations which are prepared
separately for each of the company's cash-generating units
to which the individual assets are allocated. These budgets
and forecast calculations are generally covering a period of
five years. For longer periods, a long term growth rate is
calculated and applied to project future cash flows after the
fifth year.
Impairment losses of continuing operations, including
impairment on inventories, are recognized in the statement of
profit and loss, except for previously revalued tangible fixed
assets, where the revaluation was taken to revaluation reserve.
In this case, the impairment is also recognized in the
revaluation reserve up to the amount of any previous
revaluation.
After impairment, depreciation is provided on the revised
carrying amount of the asset over its remaining useful life.
An assessment is made at each reporting date as to whether
there is any indication that previously recognized impairment
losses may no longer exist or may have decreased. If such
indication exists, the company estimates the asset's or cash¬
generating unit's recoverable amount. A previously recognized
impairment loss is reversed only if there has been a change
in the assumptions used to determine the asset's recoverable
amount since the last impairment loss was recognized. The
reversal is limited so that the carrying amount of the asset
does not exceed its recoverable amount, nor exceed the
carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognized for the
asset in prior years. Such reversal is recognized in the
statement of profit and loss unless the asset is carried at a
revalued amount, in which case the reversal is treated as a
revaluation increase.
F 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.
On initial recognition, all investments are measured at cost.
The cost comprises purchase price and directly attributable
acquisition charges such as brokerage, fees and duties. If an
investment is acquired, or partly acquired, by the issue of
shares or other securities, the acquisition cost is the fair value
of the securities issued. If an investment is acquired in
exchange for another asset, the acquisition is determined by
reference to the fair value of the asset given up or by reference
to the fair value of the investment acquired, whichever is more
clearly evident.
Current investments are carried in the financial statements 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 value is made to recognize
a decline other than temporary in the value of the investments.
On disposal of an investment, the difference between its
carrying amount and net disposal proceeds is charged or
credited to the statement of profit and loss.
Investment property
An investment in land or buildings, which is not intended to be
occupied substantially for use by, or in the operations of, the
company, is classified as investment property. Investment
properties are stated at cost, net of accumulated depreciation
and accumulated impairment losses, if any.
The cost comprises purchase price, borrowing costs if
capitalization criteria are met and directly attributable cost of
bringing the investment property to its working condition for
the intended use. Any trade discounts and rebates are
deducted in arriving at the purchase price.
Depreciation on building component of investment property
is calculated on a written down value basis using the rate
prescribed under the Schedule II to the Companies Act, 2013
as mentioned in point (d) above.
On disposal of an investment, the difference between its
carrying amount and net disposal proceeds is charged or
credited to the statement of profit and loss.
G Revenue recognition
Revenue is recognized to the extent that it is probable that
the economic benefits will flow to the Company and the
revenue can be reliably measured. The following specific
recognition criteria must also be met before revenue is
recognized:
Operational Revenue
Revenue from software development services comprises
revenue from time and material and fixed-price contracts.
Revenue from time and material contracts are recognized as
related services are performed.
Revenue from fixed-price contracts are recognized in
accordance with the percentage of completion method / as
per the terms of the contract.
Maintenance revenue is considered on acceptance of the
contract and is accrued over the period of the contract. Other
income is recognized on accrual basis.
Revenue from customer training, support and other services
is recognized as the related services are performed.
Cost and related earnings in excess of billings are classified
as ‘Unbilled revenues' under loans and advances while the
billing in excess of cost and related earnings is classified as
‘Unearned revenue' under current liabilities.
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.
Interest
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.
Dividends
Dividend income is recognized when the company's right to
receive dividend is established by the reporting date.
H Foreign currency translation
Foreign currency transactions and balances
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 transaction.
Conversion
Foreign currency monetary items are retranslated using the
exchange rate prevailing at the reporting date. Non-monetary
items, which are measured in terms of historical cost
denominated in a foreign currency, are reported using the
exchange rate at the date of the transaction. Non-monetary
items, which are measured at fair value or other similar
valuation denominated in a foreign currency, are translated
using the exchange rate at the date when such value was
determined.
Exchange differences
From accounting periods commencing on or after 7 December
2006, the company accounts for exchange differences arising
on translation/settlement of foreign currency monetary items
as below:
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 the foreign
currency translation reserve until the disposal of the net
investment. On the disposal of such net investment, the
cumulative amount of the exchange differences which have
been deferred and which relate to that investment is
recognized as income or as expenses in the same period in
which the gain or loss on disposal is recognized.
The Company did not elect to exercise an irrevocable option
to amortize exchange rate fluctuation on long term foreign
currency monetary asset / liability over the life of the asset/
liability or by March 31,2012, whichever is earlier, subsequent
to the amendment to Ind AS-21 by the Ministry of Corporate
affairs.
Exchange differences arising on other long-term foreign
currency monetary items are accumulated in the “Foreign
Currency Monetary Item Translation Difference Account” and
amortized over the remaining life of the concerned monetary
item.
All other exchange differences are recognized as income or
as expenses in the period in which they arise.
Forward exchange contracts are entered into to hedge foreign
currency risk of an existing asset / liability.
The premium or discount arising at the inception of forward
exchange contract is amortized and recognized as an expense/
income over the life of the contract. Exchange differences on
such contracts, except the contracts which are long-term
foreign currency monetary items, are recognized 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 such forward exchange contract is also recognized
as income or as expense for the period. Any gain/ loss arising
on forward contracts which are long-term foreign currency
monetary items is recognized in accordance with paragraph
2 and 3.
During the year company have not entered into any forward
exchange contracts
Translation of integral and non-integral foreign operation
The Company classifies all its foreign operations as either
“integral foreign operations” or “non-integral foreign
operations.”
The financial statements of an integral foreign operation are
translated as if the transactions of the foreign operation have
been those of the company itself.
The assets and liabilities of a non-integral foreign operation
are translated into the reporting currency at the exchange rate
prevailing at the reporting date and their statement of profit
and loss are translated at exchange rates prevailing at the
dates of transactions or weighted average weekly rates, where
such rates approximate the exchange rate at the date of
transaction. The exchange differences arising on translation
are accumulated in the foreign currency translation reserve.
On disposal of a non-integral foreign operation, the
accumulated foreign currency translation reserve relating to
that foreign operation is recognized in the statement of profit
and loss.
When there is a change in the classification of a foreign
operation, the translation procedures applicable to the revised
classification are applied from the date of the change in the
classification.
I Retirement and other employee benefits
(i) Short term employee benefit obligations are estimated and
provided for.
(ii) Post employment benefits and other long term employee
benefits
a) Defined Contribution plans
Retirement benefit in the form of provident fund is a
defined contribution scheme. The contributions to the
provident fund are charged to the statement of profit
and loss for the year when the contributions are due.
The company has no obligation, other than the
contribution payable to the provident fund.
b) Defined benefit plans and compensated absences
The Company operates defined benefit plans for its
employees, viz., gratuity. The costs of providing
benefits under these plans are determined on the basis
of actuarial valuation at each year-end. Separate
actuarial valuation is carried out for each plan using
the projected unit credit method. Actuarial gains and
losses for defined benefit plans are recognized in full
in the period in which they occur in the statement of
profit and loss.
Accumulated leave, which is expected to be utilized
within the next 12 months, is treated as short-term
employee benefit. The company measures the
expected cost of such absences as the additional
amount that it expects to pay as a result of the unused
entitlement that has accumulated at the reporting date.
The Company treats accumulated leave expected to
be carried forward beyond twelve months, as long¬
term employee benefit for measurement purposes.
Such long-term compensated absences are provided
for based on the actuarial valuation using the projected
unit credit method at the year-end. Actuarial gains/
losses are immediately taken to the statement of profit
and loss and are not deferred. The company presents
the entire leave as a current liability in the balance
sheet, since it does not have an unconditional right to
defer its settlement for 12 months after the reporting
date.
Expenses incurred towards voluntary retirement
scheme are charged to the statement of profit and loss
immediately.
Presently Company's liability towards gratuity, other
retirement benefits and compensated absences are
not actuarially determined. In accordance with the
Payment of Gratuity Act, 1972 the company provides
for a lump sum payment to eligible employees, at
retirement or termination of employment based on the
last drawn salary and year of employment with the
Company.
J Accounting for Taxes
Tax expense comprises current and deferred tax. Current
income-tax is measured at the amount expected to be paid to
the tax authorities in accordance with the Income-tax Act, 1961
enacted in India and tax laws prevailing in the respective tax
jurisdictions where the company operates. The tax rates and
tax laws used to compute the amount are those that are
enacted or substantively enacted, at the reporting date. Current
income tax relating to items recognized directly in equity is
recognized in equity and not in the statement of profit and
loss.
Deferred income taxes reflect the impact of timing differences
between taxable income and accounting income originating
during the current year and reversal of timing differences for
the earlier years. Deferred tax is measured using the tax rates
and the tax laws enacted or substantively enacted at the
reporting date. Deferred income tax relating to items
recognized directly in equity is recognized in equity and not
in the statement of profit and loss.
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible
timing differences 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 realized. In
situations where the company has unabsorbed depreciation
or carry forward tax losses, all deferred tax assets are
recognized only if there is virtual certainty supported by
convincing evidence that they can be realized against future
taxable profits.
In the situations where the company is entitled to a tax holiday
under the Income-tax Act, 1961 enacted in India or tax laws
prevailing in the respective tax jurisdictions where it operates,
no deferred tax (asset or liability) is recognized in respect of
timing differences which reverse during the tax holiday period,
to the extent the company's gross total income is subject to
the deduction during the tax holiday period. Deferred tax in
respect of timing differences which reverse after the tax holiday
period is recognized in the year in which the timing differences
originate. However, the company restricts recognition of
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 realized. For recognition of deferred
taxes, the timing differences which originate first are
considered to reverse first.
At each reporting date, the company re-assesses
unrecognized deferred tax assets. It recognizes unrecognized
deferred tax asset 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 realized.
The carrying amount of deferred tax assets are reviewed at
each reporting date. The company writes-down the carrying
amount of 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 realized. 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
Deferred tax assets and deferred tax liabilities are offset, if a
legally enforceable right exists to set-off current tax assets
against current tax liabilities and the deferred tax assets and
deferred taxes relate to the same taxable entity and the same
taxation authority.
Exchange differences arising out of deferred tax assets pertain
to branch profit tax have been recognised in foreign exchange
translational reserve.
Minimum alternate tax (MAT) paid in a year is charged to the
statement of profit and loss as current tax. The company
recognizes MAT credit available as an asset only to the extent
that there is convincing evidence that the company will pay
normal income tax during the specified period, i.e., the period
for which MAT credit is allowed to be carried forward. In the
year in which the company recognizes MAT credit as an asset
in accordance with the Guidance Note on Accounting for Credit
Available in respect of Minimum Alternative Tax under the
Income-tax Act, 1961, the said asset is created by way of credit
to the statement of profit and loss and shown as “MAT Credit
Entitlement.” The company reviews the “MAT credit
entitlement” asset at each reporting date and writes down the
asset to the extent the company does not have convincing
evidence that it will pay normal tax during the specified period.
K Employee stock compensation cost
In accordance with the SEBI (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines,1999 and
the Guidance Note on Accounting for Employee Share-based
Payments, the cost of equity-settled transactions is measured
using the intrinsic value method and recognized, together with
a corresponding increase in the “Stock options outstanding
account” in reserves. The cumulative expense recognized for
equity-settled transactions at each reporting date until the
vesting date reflects the extent to which the vesting period
has expired and the company's best estimate of the number
of equity instruments that will ultimately vest.
The expense or credit recognized in the statement of profit
and loss for a period represents the movement in cumulative
expense recognized as at the beginning and end of that period
and is recognized in employee benefits expense.
Where the terms of an equity-settled transaction award are
modified, the minimum expense recognized is the expense
as if the terms had not been modified, if the original terms of
the award are met. An additional expense is recognized for
any modification that increases the total intrinsic value of the
share-based payment transaction, or is otherwise beneficial
to the employee as measured at the date of modification.
L Earnings Per Share (EPS)
Basic EPS
Basic earnings per share are calculated by dividing the net
profit or loss for the period attributable to equity shareholders
(after deducting preference dividends and attributable taxes)
by the weighted average number of equity shares outstanding
during the period. Partly paid equity shares are treated as a
fraction of an equity share to the extent that they are entitled
to participate in dividends relative to a fully paid equity share
during the reporting period. The weighted average number of
equity shares outstanding during the period is adjusted for
events such as bonus issue, bonus element in a rights issue,
share split, and reverse share split (consolidation of shares)
that have changed the number of equity shares outstanding,
without a corresponding change in resources.
Diluted EPS
The number of equity shares used in computing diluted
earnings per share comprises the weighted average equity
shares considered for deriving basic earnings per share, and
also the weighted average number of equity shares that could
have been issued on the conversion of all dilutive potential
equity shares. Dilutive potential equity shares are deemed
converted as of the beginning of the period, unless issued at
a later date. The number of equity shares and potentially
dilutive equity shares are adjusted for any stock splits and
bonus shares issued if any.
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