1. Company Information
2. Significant accounting policies
2.1. Basis of accounting and preparation of financial statements
The Financial Statements of the Company have been prepared in accordance with the generally accepted accounting principles in India (the "Indian GAAP"). The Company has prepared these financial statements on going concern basis to comply in all material respects with the accounting standards notified under section 133 of the Companies Act 2013 (The Act'), read together with the Companies (Accounts) Rules 2014 and Companies (Accounting Standards Amendment Rules), 2016. The Financial Statements have been prepared on an accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those of the previous year.
All assets and liabilities have been classified as current or non-current as per the company's normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature or products and the time between acquisition of asset for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.
2.2. Use of estimates
The preparation of the Financial Statements in conformity with Indian GAAP requires the Management to make judgements, estimates and assumptions that affect the reported amounts of revenues, - expenses, 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 and liabilities in future periods.
2.3. Inventories
Inventories comprise all costs of purchase, conversion and other costs incurred in bringing the inventories to their present location and condition. Raw materials are valued at lower of cost or net realisable value. Cost is determined on the basis of weighted average method. Finished goods produced and purchased for sale and work in progress are carried at cost or net realisable value whichever is lower. Stores. spares and tools and other consumables, other than obsolete and slow moving items, are carried at cost.
2.4. Research and development expenses
Research costs are expensed as incurred. Development expenditure, on an
individual project, is recognized as an intangible asset when the Company can
demonstrate:
• The technical feasibility of completing the intangible asset so that it will be available for use or sale
• Its intention to complete and its ability and intention to use or sell the asset
• How the asset will generate future economic benefits.
• The availability of resources to complete the asset
• The ability to measure reliably the expenditure during development Subsequently, following initial recognition of the development expenditure as an asset, the cost model is applied requiring the asset to be carried at cost less any accumulated amortization and accumulated impairment losses. Amortization of the asset begins when development is complete and the asset is available for use. It is amortized over the period of expected future benefit. Amortization expense is recognized in the statement of profit and loss. During the period of development, the asset is tested for impairment annually.
2.5. Cash and cash equivalents
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.
2.6. Cash flow statement
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary Items and 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.
2.7. Depreciation and Amortisation
Depreciation and amortization on assets is provided using the written down value method over the useful lives of the assets at the lives specified in Schedule II to the Companies Act, 2013.
Depreciation and amortisation methods, useful lives and residual values are reviewed periodically, at end of each financial year.
2.8. Revenue recognition
Revenue from software is recognized at a point in time at the inception of the arrangement when control transfers to the client in case of One-time subscription. Revenue from software is recognized over a period of time for the committed term of the contract in case of Periodic subscription. In case of renewals of subscriptions with existing customers, revenue is recognized at a point in time when the renewal is agreed on signing of contracts. In case of Annual Maintenance Contracts, the revenue is recognised as per the terms of contract.
2.9. Other income
Interest income is accounted on accrual basis.
2.10. Property, plant and equipment
Property, plant and equipment are carried at cost of acquisition or construction, less accumulated depreciation and Impairment losses, if any. The cost of an item of property, plant and equipment comprises its purchase price, including any import duties and other taxes (other than those subsequently recoverable from the taxing authorities), and any directly attributable expenditure on making the asset ready for its intended use.
Subsequent expenditures related to an item of property, plant and equipment are added to its book value only if they increase the future benefits from the existing assets beyond it previously assessed standard of performance.
Capital work in progress
Projects under which assets are not ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.
2.11. Intangible assets
Intangible assets are carried at cost less accumulated amortisation and impairment losses, if any. The cost of an intangible asset comprises its purchase price, including any import duties and other taxes (other than those subsequently recoverable from the taxing authorities), and any directly attributable expenditure on making the asset ready for its intended use and net of any trade discounts and rebates. Subsequent expenditure on an intangible asset after its purchase / completion is recognized as an expense when incurred unless it is probable that such expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standards of performance and such expenditure can be measured and attributed to the asset reliably, in which case such expenditure is added to the cost of the asset.
2.12. Foreign currency transactions and translations
Transactions denominated in foreign currency are recorded at exchange rates prevailing at the date of transaction or a rates that closely approximate the rate at the date of transaction.
Exchange differences arising on settlement / reinstatement of short-term foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profit and Loss under the head other income. Foreign currency monetary items (other than derivative contracts) of the Company, outstanding at the balance sheet date are restated at the year-end rates. Non-monetary items of the Company are carried at historical cost.
2.13. Investments
Long-term investments are carried individually at cost less provision for diminution other than temporary in the value of such investments. Current investments are carried individually at lower of cost and fair value. Cost of investment includes expenses directly incurred on acquisition of such Investments.
2.14. Employee benefits
Employee benefits include provident fund, employee state insurance scheme, gratuity fund and compensated absences. Also, the Employee benefits include the amount of gratuity paid by the company to its employees every year.
Defined contribution plans:
The Company's contribution to provident fund and employee state insurance scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made as and when services are rendered by the employees.
Defined benefit plans:
For defined benefit plans in the form of gratuity, the cost of providing benefits is determined at each balance sheet date and are recognised in the Statement of Profit and Loss in the period in -which they occur.
2.15. Borrowing costs
General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in Statement of Profit and Loss in the period in which they are incurred.
2.16. Segment reporting Business Segment:
The company is principally engaged in sell of software and allied services which are considered by the management to constitute a single reportable business segment.
Geographical Segment:
Information regarding geographical revenue is as follows:
(Amount is rupees '000)
India: Rs.2,75,280.26 Foreign: Rs.75,157.28
Geographical revenue is allocated based on the location of the customers.
All the assets are domestic assets.
2.17. Earnings per share
Basic earnings per share is computed by dividing the profit or (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted for share splits / reverse share splits and bonus shares, as appropriate share splits.
2.18. Taxes on income
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income-tax Act, 1961 and other applicable tax laws.
Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised, However, if there are unabsorbed depreciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realise the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on Income levied by the same governing tax laws end the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their realisability.
2.19. Impairment of assets
The carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment. If an indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognized. 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 an appropriate discount factor. When there Is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, except in case of revalued assets.
2.20. Provisions and contingencies
A provision is recognised when the Company has a present obligation as a result of past events 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 (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent liabilities are disclosed for
(1) possible obligations which will be confirmed only by future events not wholly within the control of the Company or
(2) present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Contingent assets are not recognised in the financial Statements.
The company shall recognise the provision of any Taxation only when the issue reaches its finality or in case of any adverse judgement is passed by the appellate authority.
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