1.14 Provisions, Contingent Liabilities and Contingent Assets

Contingent Liabilities are disclosed in respect of possible obligations that arise from past events
but their existence will be confirmed by the occurrence or non-occurrence of one or more uncertain
future events not wholly within the control of the Company or where any present obligation cannot
be measured in terms of future outflow of resources or where a reliable estimate of the obligation
cannot be made.

Provisions for legal claims, service warranties, volume discounts and returns are recognised when
the company has a present legal or constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the obligation and the amount can be reliably
estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in
settlement is determined by considering the class of obligations as a whole. A provision is
recognised even if the likelihood of an outflow with respect to anyone item included in the same
class of obligations.

Provisions are measured at the present value of management’s best estimate of the expenditure
required to settle the present obligation at the end of the reporting period. The discount rate used
to determine the present value is a pre-tax rate that reflects current market assessments of the
time value of money and the risks specific to the liability. The increase in the provision due to the
passage of time is recognised as interest expense.

A contingent assets is disclosed and not recognised, where an inflow of economic benefits
is probable.

1.15 Employee benefits
Short-term obligation

Liabilities for salaries, including non-monetary benefits that are expected to be settled wholly
within 12 months after the end of the period in which the employees render the related service are
recognised in respect of employee's services up to the end of the reporting period and are measured
at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as
current employee benefit obligations in the balance sheet.

Other long-term employee benefits obligations

The liabilities for earned leave are not expected to be settled wholly within 12 months after the end
of the period in which the employees render the related service. They are therefore measured as the
present value of expected future payments to be made in respect of services provided by employees
up to the end of the reporting period using the projected unit credit method. The benefits are

discounted using the market yields at the end of the reporting period that have terms
approximating to the terms of the related obligation. Remeasurements as a result of experience
adjustments and changes in actuarial assumptions are recognised in profit or loss. The
obligations are presented as current liabilities in the balance sheet if the entity does not have an
unconditional right to defer settlement for at least twelve months after the reporting period,
regardless of when the actual settlement is expected to occur.

Post employment obligation

The Company operates the following post-employment schemes: defined benefit plan, i.e.,
gratuity, defined contribution plans such as provident fund.

Gratuity obligations

The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is
the present value of the defined benefit obligation at the end of the reporting period less the fan-
value of plan assets. The defined benefit obligation is calculated annually by actuaries using the
projected unit credit method.

The present value of the defined benefit obligation denominated in INK is determined by
discounting the estimated future cash outflows by reference to market yields at the end of the
reporting period on government bonds that have terms approximating to the terms of the related
obligation.

The net interest cost is calculated by applying the discount rate to the net balance of the defined
benefit obligation and the fair value of plan assets.

This cost is included in employee benefit expense in the statement of profit and loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial
assumptions are recognised in the period in which they occur, directly in other comprehensive
income. They arc included in retained earnings in the statement of changes in equity and in the
balance sheet.

Changes in the present value of the defined benefit obligation resulting from plan amendments or
curtailments arc recognised immediately in profit or loss as past service cost.

Defined contribution plans

The Company pays provident fund and employee state insurance contributions to government
administered Employee Provident Fund Organisation and Employee Stale Insurance Corporation
respectively. The Company has no further payment obligations once the contributions have been
paid. The contributions are accounted for as defined contribution plans and the contributions are
recognised as employee benefit expense when they are due. Prepaid contributions are recognised
as an asset to the extent that a cash refund or a reduction in the future payments is available.

1.16 Dividends

Provision is made for the amount of any dividend declared, being appropriately authorised and no
longer at the discretion of the entity, on or before the end of the reporting period but not distributed
at the end of the reporting period.

1.17 Earnings per share

Basic earnings per share is calculated by dividing: the profit attributable to owners of the
Company by the weighted average number of equity shares outstanding during the financial year.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per
share to take into account: the after income tax effect of interest and other financing costs
associated with dilutive potential equity shares, and the weighted average number of additional
equity shares that would have been outstanding assuming the conversion of all dilutive potential
equity shares.

1.18 Inventories

Inventories represents the WIP in respect of Project Management Consultancy Services in progress
and remained unbilled. Inventories have been valued at cost.

1.19 Accounting for Joint Venture Operations

The Financial Statements reflect the share of the Company's assets and liabilities as well as
income and expenditure of Joint Venture. Operations which are accounted for according to the
participating interest of the company as per the various Joint Venture Agreements on a line by line
basis along with similar items in the company's financial statements.

1.20 Provision for current and deferred tax

Provision for current and deferred tax is made after taking into consideration benefits admissible
under the Provision of Income Tax Act 1961, Deferred tax resulting from timing differences
"between book and taxable profit is accounted for using the tax rates and laws that have been
enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised
and carried forward only to the extent that there is reasonable/virtual certainty that asset will be
realized against future taxable profits.

Note 2

Critical Accounting Judgements, Estimates and Assumptions

The preparation of the financial statements requires management to exercise judgment and to
make estimates and assumptions. These estimates and associated assumptions are based on
historical experiences and various other factors that ore believed to be reasonable under the
circumstances. Actual results may differ from these estimates. The estimates and underlying
assumptions are. reviewed on an ongoing basis. Revision to accounting estimates are recognised
in the period in which the estimate is revised if the revision affect only that period, or in the period
of the revision and future periods if the revision affects both current and future period.

The areas involving critical estimates or judgements are as under:

a Estimation of current tax expenses and payable:

Taxes recognized in the financial statements reflect management s best estimate of the outcome
based on the facts known at the balance sheet date. These facts include but are not limited to
interpretation of tax laws of various jurisdictions where the Company operates. Any difference
between the estimates and final tax assessments will impact the income tax as well the resulting
assets and liabilities.

b Estimated fair value of unlisted securities:

The fair value of financial instruments that are not traded in an active market is determined using
valuation techniques. The Company uses its judgement to select a variety of methods and make
assumptions that are mainly based on t he market conditions existing at the end of each reporting
period.

c Useful lives of property, plant and equipment and Intangible assets:

Depreciation and amortization is based on management estimates of the future useful lives of the
property, plant and equipment and intangible assets. Estimates may change due to technological
developments, competition, changes in market conditions and other factors and may result in
changes in the estimated useful life and in the depreciation and amortisation charges.

d Estimation of defined benefit obligation:

The liabilities of the company arising from employee benefit obligations and the related current
service cost, are determined on an actuarial basis using various assumptions.

e Impairment of financial assets (including trade receivables):

Allowance for doubtful receivables represent the estimate of losses that could arise due to inability
of the Customer to make payments when due. These estimates are based on the customer ageing,
customer category, specific credit circumstances and the historical experience of the group as well
as forward looking estimates at the end of each reporting period.

f Estimation of Provisions and contingencies:

Provisions arc liabilities of uncertain amount or timing recognised where a legal or constructive
obligation exists at the balance sheet date, as a result of a past event, where the amount of the
obligation can be reliably estimated and where the outflow of economic benefit is probable.
Contingent liabilities arc possible obligations that may arise from past event whose existence will
be confirmed only by the occurrence or non-occurrence of one or more uncertain future events
which are not fully within the control of the Company. The Company exercises judgement and
estimates in recognizing the provisions and assessing the exposure to contingent liabilities
relating to pending litigations. Judgement is necessary in assessing the likelihood of the success
of the pending claim and to quantify the possible range of financial settlement. Due to this
inherent uncertainty in the evaluation process, actual losses may be different from originally
estimated provision.