2.1 Statement of Compliance
The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS)
as prescribed under section 133 of the Companies Act, 2013 ("the Act"), read with rule 3 of the Companies
(Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards Amendment)
Rules, 2016 and other provisions of the Act to the extent notified and applicable.
2.2 Basis of Preparation & Presentation
These financial statements have been prepared and presented under historical cost basis, except for
certain financial instruments which are measured at fair values or at amortised cost 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. Fair value is the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between the
market participants at the measurement date.
The statement of financial position (including statement of changes in equity) and the statement of
profit and loss are prepared and presented in the format prescribed in Division II of Schedule III to the
Companies Act, 2013. The cash flow statement has been prepared and presented as per the
requirements of Ind AS 7 "Cash Flow Statements". The disclosure requirements with respect to items in
the balance sheet and statement of profit and loss, as prescribed in Schedule III to the Act, are
presented by way of notes forming part of accounts along with the other notes required to be disclosed
under the notified Accounting Standards.
All assets and liabilities have been classified as current or non-current as per the Company's normal
operating cycle and other criteria as set out under Ind AS and in the Schedule III to the Act. Based on the
nature of the services and their realisation in Cash and Cash Equivalents, the Company has ascertained
its operating cycle as twelve months for the purpose of current or noncurrent classification of assets and
liabilities.
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.
The Company's financial statements are presented in Indian Rupees ('), which is also its functional
currency. All amounts have been rounded off to the nearest lakhs unless otherwise indicated. Per share
data are presented in Indian Rupees.
2.3 Key Accounting Estimate and Judgements
The preparation of financial statements requires management to make judgments, estimates and
assumptions in the application of accounting policies that affect the reported balances of Assets and
Liabilities, Disclosure relating to Contingent Liabilities as at date of financial statements and reported
statement of Income and Expense for the period presented. Management believes that the estimates
used in the preparation of the financial statements are prudent and reasonable. Estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised prospectively.
The areas involving critical estimates or judgements pertaining to, useful life of property, plant and
equipment including intangible asset, provision for Income tax, valuation of deferred tax assets and
other provisions and contingent liabilities. Estimates and judgements are continually evaluated. They are
based on historical experience and other factors, including expectations of future events that may have
a financial impact on the Company and that are believed to be reasonable under the circumstances.
Useful life of Property, Plant and Equipment including intangible asset:
The Company reviews the useful life and residual value of property, plant and equipment at the end of
each reporting period. This reassessment may result in change in depreciation expense in future
periods. (The policy for the same has been explained under Note 2.5 and 2.6)
Income Taxes:
The Company provides for tax considering the applicable tax regulations and based on probable
estimates. The recognition of deferred tax assets is based on availability of sufficient taxable profits in
the Company against which such assets can be utilized. (The policy for the same has been explained
under Note 2.8).
Provisions and contingent liabilities:
Provision is recognised when the Company has a present obligation as a result of past event and it is
probable that an outflow of resources will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions and contingent liabilities are reviewed at each balance sheet
date and adjusted to reflect the current best estimates. (The policy for the same has been explained
under Note 2.13).
Fair Value Measurements:
When the fair value of the financial assets or financial liabilities recorded or disclosed in the Financial
Statements cannot be measured at quoted price in the active markets, their fair value is measured
using the valuation techniques. The input to these valuation techniques are taken from observable
markets, wherever possible, but where these is not feasible, a degree of judgment is required in
establishing fair values. The policy for the same has been explained under Note 2.16 and Note 2.16)
2.4 Revenue Recognition
Revenue from software services is recognized either on time and material basis or fixed price basis, as
the case may be. Revenue on time and material and job contracts is recognized as and when the
related services are performed (units delivered, efforts expended, number of transactions processed
etc.) and Unbilled revenue is accounted on estimate basis in respect of contracts where the contractual
right to consideration is based on completion of contractual milestones and other technical
measurements. Revenue on fixed price contracts is recognized where performance obligations are
satisfied over time and there is no uncertainty as to measurement or collectability of consideration on
the percentage of completion method. Efforts and costs expended have been used to measure progress
towards completion since there is direct relationship between input and productivity. Revenue
recognised for any fee or commission to which it expects to be entitled in exchange for arranging for the
other party to provide its goods or services.
Revenue from sale of licenses Product, where the customer obtains a "right to use" the licenses is
recognized at the point in time when the related license is made available to the customer. Revenue
from licenses/hardware where the customer obtains a "right to access" is recognized over the access
period.
Arrangements to deliver software products generally have three elements: license, implementation and
annual maintenance. In accordance with the principles of Ind AS 115, when implementation services are
provided in conjunction with the licensing arrangement, the license and implementation have been
identified as two separate performance obligations. The transaction price for such contracts are
allocated to each performance obligations based on their respective selling prices. Maintenance
revenue in respect of software products and other products/equipment is recognised on pro rata basis
over the period of the underlying maintenance agreement. Revenue is net of discounts/ price incentives
which are estimated and accounted based on the terms of the contracts and excludes applicable
indirect taxes.
Unearned and deferred revenue represents contractual billings/money received in excess of revenue
recognised as per the terms of the contract. Dividend income is recognised when the Company's right to
receive payment is established. Interest income is recognised on a time proportion basis using effective
interest rate method.
2.5 Property, Plant and Equipment
Property plant and equipment (PPE) are stated at cost less accumulated depreciation and impairment
losses if any. Cost includes expenditure directly attributable to the acquisition of the asset and cost
incurred for bringing the asset to its present location and condition for its intended use.
Depreciation is provided on a pro-rata basis on the straight line method based on estimated useful
life prescribed under Schedule II to the Companies Act, 2013.
Individual assets costing up to Rupees five thousand are depreciated in full in the period of purchase.
The residual values, useful lives and method of depreciation of PPE is reviewed at each financial year
end and adjusted prospectively.
2.6 Intangible Assets
Separately purchased intangible assets are initially measured at cost. Intangible assets acquired in a
business combination are recognised at fair value at the acquisition date. Subsequently, intangible
assets are carried at cost less any accumulated amortisation and accumulated impairment losses, if
any. The useful lives of intangible assets are assessed as either finite or indefinite. The assessment of
indefinite life is reviewed annually to determine whether the indefinite life continues, if not, it is
impaired or changed prospectively basis revised estimates.
Finite-life intangible assets are amortised on a straight-line basis over the period of their expected
useful lives. The amortisation period and the amortisation method for finite-life intangible assets is
reviewed at each financial year end and adjusted prospectively, if appropriate. Computer Software is
amortised over a period of 5 years or over license period, whichever is lower.
2.7 Leases
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The Company as a Lessee:
The Company recognises 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 leases of low value assets. For these short term and leases of low value assets, the
Company recognises the lease payments as an operating expense on a straight-line basis over the
term of the lease.
The Company as a Lessor:
Leases under which the Company is a lessor are classified as finance or operating leases. Lease
contracts where all the risks and rewards are substantially transferred to the lessee, the lease
contracts are classified as finance leases. All other leases are classified as operating leases
Income Taxes:
Income tax expense for the year comprises of current tax and deferred tax. Income Tax is recognised in
Statement of Profit and Loss, except to the extent that it relates to items recognized in the
comprehensive income or in equity. In which case, the tax is also recognised in other comprehensive
income or equity.
Current tax is the expected tax payable/receivable on the taxable income/loss for the year using
applicable tax rates at the Balance Sheet date, and any adjustment to taxes in respect of previous
years. Management periodically evaluates positions taken in tax return with respect to situations in
which applicable tax regulations are subject to interpretation and establishes provisions where
appropriate.
Deferred tax is recognised in respect of temporary differences between the carrying amount of assets
and liabilities for financial reporting purposes and the corresponding tax base used for computation of
taxable Income.
A deferred tax liability is recognised based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted, or substantively enacted, by the end
of the reporting period. Deferred tax assets are recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be utilised. Deferred tax assets are
reviewed at each reporting date and reduced to the extent that it is no longer probable that the
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either
in OCI or in equity).
Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off
the recognised amounts and there is an intention to settle the asset and the liability on a net basis.
Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set
off current tax assets against current tax liabilities; and the deferred tax assets and the deferred tax
liabilities relate to income taxes levied by the same taxation authority.
The Company uses estimates and judgements based on the relevant rulings in the areas of allowances
and disallowances which are exercised while determining the provision for income tax. Tax on income for
the current period is determined basis of taxable income and tax credits computed in accordance with
the provisions of the Income Tax Act,1961 and based on the expected outcome of assessments/appeals.
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2.9 Borrowing Costs
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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 capitalised as
part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur.
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing
of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to
the borrowing costs.
2.10 Foreign Currency Transactions
Transactions in foreign currency are recorded at the exchange rate prevailing on the date of
transactions. Net exchange gain or loss resulting in respect of foreign exchange transactions settled
during the year is recognized in the Statement of Profit and Loss.
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 Statement of Profit and Loss in the year in which they arise.
Non-monetary foreign currency items are carried at cost.
2.11 Employee Benefits
i. Short-Term Employee Benefits:
Employee benefits payable wholly within twelve months of availing employee service are classified as
short-term employee benefits. This benefits includes salaries and wages, bonus and ex- gratia and
compensated absences. The undiscounted amount of short-term employee benefits to be paid in
exchange of employees services are recognised in the period in which the employee renders the
related service.
ii. Long Term Employee Benefits:
Defined Contribution Plans
A defined contribution plan is a post-employment benefit plan under which an entity pays specified
contributions to a separate entity and has no obligation to pay any further amounts. The Company
makes specified monthly contributions towards Provident Fund. The Company's contribution is
recognised as an expense in the Statement of Profit and Loss during the period in which employee
renders the related service.
The Company's gratuity benefit scheme is a defined benefit plan. The Company's net obligation in
respect of a defined benefit plan is calculated by estimating the amount of future benefit that
employees have earned in return for their service in the current and prior periods; that benefit is
discounted to determine its present value, and the fair value of any plan assets is deducted.
The present value of the obligation under such defined benefit plan is determined based on actuarial
valuation using the Projected Unit Credit Method, which recognizes each period of service as giving
rise to additional unit of employee benefit entitlement and measures each unit separately to build up
the final obligation.
The obligation is measured at the present value of the estimated future cash flows. The discount rates
used for determining the present value of the obligation under defined benefit plan, are based on the
market yields on Government securities as at the Balance Sheet date.
When the calculation results in a benefit to the Company, the recognised asset is limited to the net
total of any unrecognised actuarial losses and past service costs and the present value of any future
refunds from the plan or reductions in future contributions to the plan.
Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss.
Remeasurement which comprise of actuarial gain and losses, the return of plan assets (excluding
interest) and the effect of asset ceiling ( if any, excluding interest) are recognised in OCI.
Plan Assets of Defined Benefit Plans have been measured at fair value, if any.
2.12 Earnings Per Share (EPS)
In determining Earnings per Share, the Company considers net profit after tax and includes post tax
effect of any exceptional item. Number of shares used in computing basic earnings per share is the
weighted average number of the shares, excluding the shares owned by the Trust, outstanding during
the period. Dilutive earning per share is computed and disclosed after adjusting effect of all dilutive
potential equity shares, if any except when result will be anti - dilutive. Dilutive potential equity Shares
are deemed converted as at the beginning of the period, unless issued at a later date.
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