Note: 2 Significant Accounting Policies
1 Basis of preparation:
The 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 Rule 7 of the Companies (Accounts)
Rules, 2014 and the relevant provisions of the
Companies Act, 2013. The financial statements
have been prepared on accrual basis under the
historical cost convention.
2 Revenue recognition:
The company derives its revenues primarily from
Sale of computer servers, laptops, hardware
pheripheral devices & derives service revenue
from sale of customized softwares . Revenue from
services provided under fixed price contracts,
where the outcome can be estimated reliably, is
recognized based on contract activity. Revenue on
time-and-material contracts are recognized as the
related services are performed and the revenues
from the end of the last billing to the balance sheet
date are recognized as unbilled revenues.
The Company's contracts with customers include
contracts with multiple products and services.
The Company derives revenue from IT services
comprising software development and related
services, maintenance, consulting and package
implementation, licensing of software products and
platforms across the Company's core and digital
offerings and business process management
services. In some cases, the company engages in
some fixed price development contracts, including
contracts with multiple performance obligations.
Revenue recognition in such contracts involve
judgments relating to identification of distinct
performance obligations, determination of
transaction price for such performance obligations
and the appropriateness of the basis used to
measure revenue over a period. In case of fixed
price development contracts where performance
obligations are satisfied over a period of time,
revenue is recognized based on management's
estimate of contract efforts. The estimation of total
efforts or costs involves significant judgement
and is assessed throughout the period of the
contract to reflect any changes based on the latest
available information.
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 in accordance with AS-9, Revenue
Recognition. Sales are recognized on accrual basis,
and only after transfer of services to the customer.
Interest Income: Revenue is recognized on the
time proportion basis after taking into account the
amount outstanding and the rate applicable.
Dividend Income: Dividend Income is recognised
when the owners right to receive payment
is established.
Other Income : Other items of income and
expenditure are recognized on accrual basis and
as a going concern basis, and the accounting
policies are consistent with the generally accepted
accounting policies.
3 Property Plant and Equipment including
Intangible assets:
Property Plant and Equipments are stated at cost,
less accumulated depreciation. Cost includes
cost of acquisition including material cost, freight,
installation cost, duties and taxes, and other
incidental expenses, incurred up to the installation
stage, related to such acquisition. Property, Plant
and Equipments purchased in India by foreign
currency are recorded in Rupees, converted at the
exchange rate prevailed on the date of purchase.
Intangible assets that are acquired by the
Company are measured initially at cost. After initial
recognition, an intangible asset is carried at its
cost less any accumulated amortisation and any
accumulated impairment loss.
4 Depreciation & Amortisation:
The Company has applied the estimated useful
lives as specified in Schedule II of the Companies
Act 2013 and calculated the depreciation based
on useful life of assets. Depreciation on new
assets acquired during the year is provided from
the date of acquisition to the end of the financial
year. In respect of the assets sold during the year,
depreciation is provided from the beginning of the
year till the date of its disposal.
Intangible assets are amortised on a straight-line
basis over the estimated useful life as specified
in Schedule II of the Companies Act 2013.
The amortisation expense on intangible assets with
finite lives is recognised in the statement of profit
and loss. In respect of the assets sold during the
year, amortisation is provided from the beginning
of the year till the date of its disposal.
5 Impairment of assets:
The Management periodically assesses using,
external and internal sources, whether there is
an indication that an asset may be impaired.
An impairment loss is recognised wherever the
carrying value of an asset exceeds its recoverable
amount. The recoverable amount is higher of the
asset's net selling price and value in use, which
means the present value of future cash flows
expected to arise from the continuing use of the asset
and its eventual disposal. Reversal of impairment
loss is recognised immediately as income in the
profit and loss account.
6 Use of estimates:
The preparation of the financial statements in
conformity with Generally Accepted Accounting
Principles requires the Management to make
estimates and assumptions that affect the reported
balances of assets and liabilities and disclosures
relating to contingent assets and liabilities as at the
date of the financial statements and the reported
amounts of income and expenses during the year.
Examples of such estimates include provisions for
doubtful debts, income taxes, post - sales customer
support and the useful lives of Property Plant and
Equipments and intangible assets.
7 Inventories:
Hardware, Software and Product
Components:
Product Components are valued at lower of cost or
net realizable value. Cost is determined on First-In¬
First Out basis.
Projects in Progress / Work in Progress:
Hardware equipments, softwares, development
cost and other items are carried at the lower of
cost and net realisable value. Cost is determined
on a specific identification basis. Cost includes
material cost, freight and other incidental expenses
incurred in bringing the inventory to the present
location / condition.
8 Trade Receivables:
A receivable represents the Company's right to
an amount of consideration that is unconditional
(i.e., only the passage of time is required before
payment of the consideration is due).
9 Foreign currency transactions:
Domestic Operation:
I. Initial recognition :
A foreign currency transactions are recorded,
on initial recognition 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.
II. Measurement :
Foreign currency monetary items are reported
using the closing rate.
Non-monetary items which are carried 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 carried at fair
value or other similar valuation denominated
in a foreign currency are reported using the
exchange rates that existed when the values
were determined.
III. Treatment of Foreign exchange :
Exchange differences arising on settlement/
restatement of foreign currency monetary
assets and liabilities of the Company are
recognised as income or expenses in the
Statement of Profit and Loss
10 Employee Benefits:
A. Post-Employment benefits:
Defined benefit plan:
Gratuity liability is a defined benefit obligation
and is unfunded. The Company accounts for
liability for future gratuity benefits based on
the actuarial valuation using Projected Unit
Credit Method carried out as at the end of
each financial year.
Defined contribution Plan:
Provident Fund: Eligible employees receive
benefit from provident fund covered under the
Provident Fund Act. Both the employee and
the company make monthly contributions.
The employer contribution is charged off to
Profit & Loss Account as an expense.
11 Taxes on Income:
Income Tax expense is accounted for in accordance
with AS-22 "Accounting for Taxes on Income" for
both Current Tax and Deferred Tax stated below:
A. Current Tax:
Provision for current tax is made in accordance
with the provisions of the Income Tax Act, 1961.
B. Deferred Tax:
Deferred tax is recognised, subject to the
consideration of prudence, as the tax effect
of timing difference between the taxable
income and accounting income computed
for the current accounting year using the
tax rates and tax laws that have been
enacted or substantially enacted by the
balance sheet date.
Deferred tax assets are recognised and
carried forward to the extent that there is a
reasonable certainty, except arising from
unabsorbed depreciation and carried forward
losses, that sufficient future taxable income
will be available against which such deferred
tax assets can be realised.
|