j) Provisions and Contingencies:
A provision is recognized if, as a result of a
past event, the Company has a present legal
or constructive obligation that is reasonably
estimable, and it is probable that an outflow of
economic benefits will be required to settle the
obligation. 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 to
reflect the current best estimates.
Onerous Contracts:
Provisions for onerous contracts are recognized
when the expected benefits to be derived by
the Company from a contract are lower than
the unavoidable costs of meeting the future
obligations under the contract. The provision is
measured at present value of the lower of the
expected cost of terminating the contract and
the expected net cost of continuing with the
contract. Before a provision is established, the
Company recognizes any impairment loss on
the assets associated with that contract.
Contingent Liabilities are disclosed in the notes
to accounts. A contingent liability is a possible
obligation that arises due to past events whose
existence will be confirmed by the occurrence
or non-occurrence of one or more uncertain
future events beyond the control of the
Company or a present obligation that is not
recognized because it is not probable that an
outflow of resources will be required to settle
the obligation. A contingent liability also arises
in extremely rare cases where there is a liability
that cannot be recognized because it cannot
be measured reliably.
The Company does not recognise a contingent
liability but discloses its existence in the
financial statements.
Contingent assets are not recognised but
their existence is disclosed in the financial
statements.
k) Foreign Currency:
Functional Currency:
Items included in the financial statements of
Company is measured using the currency of
the primary economic environment in which
the entity operates (‘the functional currency').
These Standalone Financial Statements
are presented in Indian rupees (INR), which
is Company's functional and presentation
currency.
Transactions and Translations:
Foreign currency transactions are translated
into the functional currency using the exchange
rates at the dates of the transactions. Foreign
currency denominated monetary assets and
liabilities are translated into the relevant
functional currency at exchange rates in effect
at the Balance Sheet date. The gains or losses
resulting from such translations are included
in net profit in the Statement of Profit and
Loss. Non-monetary assets and non-monetary
liabilities denominated in a foreign currency
and measured at fair value are translated at
the exchange rate prevalent at the date of the
transaction.
Transaction gains or losses realized upon
settlement of foreign currency transactions
are included in determining net profit for
the period in which transaction is settled.
Exchange differences on account of conversion
of foreign operations are also recognized as
income or as expense in the year in which
they arise. Revenue and expense items
pertaining to foreign operations denominated
in foreign currencies are translated into the
relevant functional currencies using the
monthly weighted average exchange rate of
the respective currencies. The gains or losses
resulting from such transactions are included
in exchange loss/ gain under the head “Other
Expenses” or under the head “Other Income”
respectively in the Statement of Profit and
Loss.
l) Earnings per share:
Basic earnings per equity share are computed
by dividing the net profit/(loss) attributable
to equity holders of the Company by the
weighted average number of equity shares
outstanding during the year. Diluted earnings
per equity share are computed by dividing the
net profit attributable to the equity holders of
the Company by the weighted average number
of equity shares considered for deriving basic
earnings per equity share that could have been
issued upon conversion of all dilutive potential
equity shares.
The dilutive potential equity shares are
adjusted for the proceeds receivable had the
equity shares been actually issued at fair value
(i.e. average market value of the outstanding
equity shares). Dilutive potential equity shares
are deemed converted as of the beginning
of the period, unless issued at a later date.
Dilutive potential equity shares are determined
independently for each period presented.
n) Income taxes:
Income tax expense comprises of current and
deferred income tax. Income tax expense is
recognized in the Statement of Profit and
Loss for items recognised in the Statement of
Profit and Loss. Income tax relating to items
recognised outside the Statement of Profit and
Loss is recognised outside the Statement of
Profit and Loss (either in Other Comprehensive
Income (OCI) or in Equity). Current tax items
are recognised in correlation to the underlying
transactions either in OCI or directly in equity.
Current Tax:
The income tax expense or credit for the period
is the tax payable on the current period's
taxable income based on the applicable
income tax rate for each jurisdiction adjusted
by changes in deferred tax assets and liabilities
attributable to temporary differences and to
unused tax losses.
The current income tax charge is calculated on
the basis ofthe tax laws enacted or substantively
enacted at the end of the reporting period
in the countries where the company and its
subsidiaries operate and generate taxable
income. Management periodically evaluates
positions taken in tax returns with respect to
situations in which applicable tax regulation
is subject to interpretation and considers
whether it is probable that a taxation authority
will accept an uncertain tax treatment. The
Company measures its tax balances either
based on the most likely amount or the
expected value, depending on which method
provides a better prediction of the resolution of
the uncertainty.
n) Deferred Tax:
Deferred income tax assets and liabilities are
recognized for all temporary differences arising
between the tax bases of assets and liabilities
and their carrying amounts in the financial
statements.
Deferred tax assets are recognized for unused
tax losses, unused tax credits and deductible
temporary differences to the extent that it
is probable that future taxable profits will
be available against which they can be used.
Deferred tax assets are reviewed at each
reporting date and are reduced to the extent
that it is no longer probable that the tax benefit
will be realized; such reductions are reversed
when the probability of future taxable profits
improves.
Deferred income tax assets and liabilities are
measured using tax rates and tax laws that
have been enacted or substantially enacted
by the Balance Sheet date and are expected to
apply to taxable income in the years in which
those temporary differences are expected to
be recovered or settled. The effect of changes
in tax rates on deferred income tax assets and
liabilities is recognized as income or expense
in the period that includes the enactment
or substantive enactment date. A deferred
income tax asset is recognized to the extent
that it is probable that future taxable profit
will be available against which the deductible
temporary differences and tax losses can
be utilized. Deferred income taxes are not
provided on the undistributed earnings of
subsidiaries and branches where it is expected
that the earnings of the subsidiary or branch
will not be distributed in the foreseeable future.
The company has adopted lower tax rate
as prescribed u/s 115BAA from the FY 20-21
onwards.
o) Statement of Cash Flows:
The Statement of Cash Flows has been
prepared under the ‘Indirect method' as set
out in Ind AS 7 ‘Statement of Cash Flows',
whereby profit for the period is adjusted for the
effect of transactions of a non-cash nature, any
deferrals or accruals of past or future operating
cash receipts or payments and item of income
or expenses associated with investing or
financing cash flows. The cash flows from
operating, investing and financing activities of
the Company are segregated.
Cash and Cash Equivalents in the Statement of
Cash Flows comprise cash at bank and in hand
and fixed deposits with an original maturity of
three months or less, which are subject to an
insignificant risk of changes in value.
p) Dividends:
The final dividend on shares is recorded
as a liability on the date of approval by the
shareholders, and interim dividends are
recorded as a liability on the date of declaration
by the Company's Board of Directors.
q) Lease:
Where the company is a lessee:
Assets and liabilities arising from a lease are
initially measured on a present value basis.
Lease liabilities include the net present value
of the following lease payments.
(i) Fixed payments (including in-substance
fixed payments), less any lease incentives
receivable.
(ii) Variable lease payments that are based on
an index or a rate, initially measured using
the index or rate as at the commencement
date.
(iii) Amounts expected to be payable by the
Company under residual value guarantees.
(iv) The exercise price of a purchase option
if the Company is reasonably certain to
exercise that option.
(iv) Lease payments to be made under
an extension option if the Company is
reasonably certain to exercise the option,
and
(v) The exercise price of a purchase option
if the Company is reasonably certain to
exercise that option.
Lease payments to be made under reasonably
certain extension options are also included in
the measurement of the liability.
Lease payments are allocated between
principal and finance cost. The finance cost is
charged to profit or loss over the lease period
so as to produce a constant periodic rate
of interest on the remaining balance of the
liability for each period.
Variable lease payments that depend on sales
are recognised in profit or loss in the period
in which the condition that triggers those
payments occurs.
Right-of-use assets are measured at cost
comprising the following:
(i) The amount of the initial measurement of
lease liability
(ii) Any lease payments made at or before
the commencement date less any lease
incentives received
(iii) Any initial direct costs
(iv) Restoration costs
r) Segment reporting
Operating segments are reported in a manner
consistent with the internal reporting provided
to the Chief Operating Decision Maker. The
Company’s operations predominantly relate
to software validation and verification services
relating to banking and financial services and
insurance industry and accordingly, this is the
only primary reportable business segment.
The segment sales information is provided on
a geographical basis classified as India and the
rest of the world.
s) Cash and cash equivalents
For the purpose of presentation in the
statement of cash flows, cash and cash
equivalents includes cash on hand, deposits
held at call with financial institutions, other
short-term, highly liquid investments with
original maturities of three months or less that
are readily convertible to known amounts of
cash and which are subject to an insignificant
risk of changes in value, and bank overdrafts.
t) Trade and other payables
These amounts represent liabilities for services
provided to the Company prior to the end of the
financial year which are unpaid. The amounts
are unsecured and are usually paid in line with
agreed timelines. Trade and other payables are
presented as current liabilities unless payment
is not due within 12 months after the reporting
period. They are recognised initially at their
fair value and subsequently measured at
amortised cost.
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