Accounting Policies of CG-VAK Software & Exports Ltd. Company

Mar 31, 2024

3 MATERIAL ACCOUNTING POLICIES

(a) Property, plant and equipment

Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Freehold land is not depreciated. Property, plant and equipment are carried at cost less accumulated depreciation and impairment losses, if any. The cost of property, plant and equipment comprises its purchase price/ acquisition cost, net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying property, plant and equipment up to the date the asset is ready for its intended use. Machinery spares which can be used only in connection with an item of Property, plant and equipment and whose use is expected to be irregular are capitalised and depreciated over the useful life of the principal item of the relevant assets. Subsequent expenditure on property, plant and equipment after its purchase / completion is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

Depreciation on Property, plant and equipment (other than freehold land) has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013.

The estimated useful life of the tangible assets are reviewed at the end of the each financial year and the depreciation period is revised to reflect the changed pattern, if any.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of

property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the statement of profit and loss.

For transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as of April 1, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.

(b) Intangible assets

Intangible assets include cost of software and designs. Intangible assets are initially measured at acquisition cost including any directly attributable costs of preparing the asset for its intended use.Intangible assets with finite lives are amortized over their estimated useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. Intangible Assets with indefinite useful lives are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

(c) Impairment of tangible and intangible assets

At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

If the recoverable amount of the assets are estimated to be less than their carrying amounts, the carrying amounts of those assets are reduced to their recoverable amounts. Impairment losses are recognised immediately in the Statement of Profit and Loss. When impairment losses are subsequently reversed, the carrying amount of those assets are increased to their revised estimates of their recoverable amounts, so that the increased carrying amounts do not exceed the carrying amounts that would have been determined had no impairment losses recognised for those assets in prior years. The reversal of impairment losses are recognised immediately in the Statement of Profit and Loss.

(d) Revenue recognition

Company is engaged in providing of offshore software services .Revenue towards satisfaction of performance obligation is measured at the amount of transaction price allocated to performance obligation. The transaction price of services rendered is net of variable consideration on account of various discounts offered by the company as part of the contract

Revenue is recognized when a customer obtains control of promised goods or services and thus has the ability to direct the use and obtain the benefits from goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. For each contract with a customer, the company applies the below five step process before revenue can be recognized.

• Identify the contract with the customer

• Identify the separate performance obligation

• Determine the transaction price of the contract

• Allocate the transaction price to performance obligation and

• Recognize revenue at a point in time as performance obligations are satisfied.

b) Interest income: Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

c) Dividend income: Dividend is recognised when the right to receive payment is established.

(e) Foreign currencies

In preparing the financial statements of the Company, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date.

Exchange differences on monetary items are recognised in the statement of profit and loss in the period in which they arise except for exchange differences on transactions designated as fair value hedge.

(f) Leases

The Company’s lease asset classes primarily consist of leases for buildings. The Company, at the inception of a contract, assesses whether the contract is a lease or not lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a time in exchange for a consideration. This policy hasbeen applied to contracts existing and entered into on or after April 1,2019.

The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term.The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the Company’s incremental borrowing rate. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change

in the Company’s estimate of the amount expected to be payable under a residual value guarantee, or if the Company

changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liabi remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

In the comparative period, Lease payments under operating leases are recognised as an expense on a straight line basis in the statement of profit and loss over the lease term except where the lease payments are structured to increase in line with expected general inflation.

(g) Employee benefits

The Company participates in various employee benefit plans. The employment benefits are classified as either defined contribution plans or defined benefit plans. Under a defined contribution plan, the Company’s only obligation is to pay a fixed amount with no obligation to pay further contributions. The expenditure for defined contribution plans is recognized as expense during the period when the employee provides service. Under a defined benefit plan, it is the Company’s obligation to provide agreed benefits to the employees. The related actuarial risks fall on the Company. The present value of the defined benefit obligations is calculated using the projected unit credit method.

Short-term employee benefits

All short-term employee benefits such as salaries, wages, bonus, and other benefits which fall within 12 months of the period in which the employee renders related services which entitles them to avail such benefits and non-accumulating compensated absences are recognised on an undiscounted basis and charged to the statement of profit and loss.

A liability is recognised for benefits accruing to employees in respect of wages and salaries in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.

Defined contribution plan

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 and when services are rendered by the employees.

Defined benefit plan

In accordance with the Payment of Gratuity Act, 1972, the Company provides for a lump sum payment to eligible employees, at retirement or termination of employment based on the last drawn salary and years of employment with the Company. The gratuity benefit is funded. The Company’s obligation in respect of the gratuity, which is a defined benefit plan, is provided for based on actuarial valuation using the projected unit credit method. Actuarial gains or losses are recognized in other comprehensive income.

Remeasurement, comprising actuarial gains and losses is reflected immediately in the balance sheet with charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected in retained earnings and is not reclassified to the statement of profit and loss.

(h) Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

a) Current tax: 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.

b) Minimum Alternate Tax (MAT): The company has shifted to new regime of taxation(since 2019-20)mentioned under section 115BAA.Under section 115BAA tax rate is 22% plus surcharge and education cess.MAT Provisions are not applicable if tax is charged at a rate mentioned in section 115BAA.No MAT credit of earlier years has been carried forward to current year.

c) Deferred tax: Deferred tax is recognized using the balance sheet approach. Deferred tax assets and liabilities are recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences.

Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be utilised.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

(i) Financial instruments

Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.

Financial assets and liabilities are initially recognised at fair value. Transaction costs that are directly attributable to financial assets and liabilities [other than financial assets and liabilities measured at Fair Value Through Profit and Loss (FVTPL)] are added to or deducted from the fair value of the financial assets or liabilities, as appropriate on initial recognition. Transaction costs directly attributable to acquisition of financial assets or liabilities measured at FVTPL are recognised immediately in the statement ofprofit and loss.

Equity instruments at FVTOCI

All equity instruments are measured at fair value. Equity instruments held for trading is classified as FVTPL. For all other equity instruments, the Company may make an irrevocable election to present subsequent changes in the fair value in OCI. The Company makes such election on an instrument-by-instrument basis.

If the Company decides to classify an equity instrument as FVTOCI, then all fair value changes on the instrument, excluding dividend are recognised in OCI. There is no recycling of the amount from OCI to statement of profit and loss, even on sale of the instrument. However, the Company may transfer the cumulative gain or loss within the equity.

a) Non-derivative Financial assets: All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market place.

All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.

Financial assets at amortised cost

A financial asset is measured at amortised cost if both of the following conditions are met:

a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

b) the contractual terms of the financial asset give rise on specified dates to cash flows that are Solely Payments of Principal and Interest (SPPI) on the principal amount outstanding.

Effective interest method:

The rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial asset or financial liability to the gross carrying amount of a financial asset or to the amortised cost of a financial liability.

b) Derecognition of financial assets: A financial asset is derecognised only when the:- Company has transferred the rights to receive cash flows from the financial asset; or- retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.

When the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.

Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. When the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.

c) Foreign exchange gains and losses: The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.

For foreign currency denominated financial assets measured at amortised cost and FVTPL, the exchange differences are recognised in Statement of Profit and Loss.

d) Financial liabilities:

Initial recognition and measurement

Financial liabilities are recognised when, and only when, the Company becomes a party to the contractual provisions of the financial instrument. The Company determines the classification of its financial liabilities at initial recognition.All financial liabilities are recognised initially at fair value and in the case of financial liabilities not at fair value through the Statement of Profit and Loss as directly attributable transaction costs.

Subsequent measurement

After initial recognition, financial liabilities that are not carried at fair value through profit or loss are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in the Statement of Profit and Loss when the liabilities are derecognised and through the amortisation process.

Derecognition of financial liabilities

The Company derecognises financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or have expired.An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability.

(j) Segment reporting

Operating segments are reported in the manner consistent with the internal reporting to the Chief Operating Decision Maker (CODM) as per Ind AS 108. The Company is reported at an overall level, and hence there is only one reportable segment viz., Software Services. Geographic information is based on business sources from that geographic region. Accordingly the geographical secondary segments are determined as “North America” and “Rest ofthe World”.

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Mar 31, 2023

1 CORPORATE INFORMATION

CG-VAK Software and Exports Limited (“the Company”) is a public limited company incorporated in India and governed by the Companies Act, 2013 (“the Act”). The company’s registered office is situated at 171, Mettupalayam Road, Coimbatore 641 043, Tamilnadu, India. The Company’s main business is providing of software services. The Equity Shares of the Company is listed on the Bombay Stock Exchange.

2 SIGNIFICANT ACCOUNTING POLICIES

(i) Statement of compliance

Standalone Financial Statements have been prepared in accordance with the accounting principles generally accepted in India including Indian Accounting Standards (Ind AS) prescribed under the Section 133 of the Companies Act, 2013 read with rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 as amended and relevant provisions of the Companies Act, 2013.Accordingly, the Company has prepared these Standalone Financial Statements whichcomprise the Balance Sheet as at 31 March 2023, the Statement of Profit and Loss for the year ended 31 March 2023, the Statement of Cash Flows for the year ended 31 March 2023 and the Statement of Changes in Equity for the year ended as on that date, and accounting policies and other explanatory information (together hereinafter referred to as ‘Standalone Financial Statements’ or ‘financial statements’).

(ii) Basis of preparation and presentation

The financial statements have been prepared on accrual basis under the historical cost convention except for certain financial assets and liabilities that are measured at fair values at the end of each reporting period.

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 market participants at the measurement date.

(iii) Use of estimates and judgement

In the application of the Company’s accounting policies, the Company is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, else in the period of the revision and future periods if the revision affects both current and future periods.

The preparation of financial statements in conformity with Ind AS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amount of assets and liabilities, revenues and expenses and disclosure of contingent liabilities. Such estimates and assumptions are based on management’s evaluation of relevant facts and circumstances as on the date of financial statements. The actual outcome may diverge from these estimates.

(iv) Functional and presentation currency

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (i.e. the “functional currency”). The financial statements are presented in Indian Rupee, the national currency of India, which is the functional currency of the Company.

(v) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for rebates, and similar allowances.

a) Service income:

Revenue is recognized when a customer obtains control of promised goods or services and thus has the ability to direct the use and obtain the benefits from goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. For each contract with a customer, the company applies the below five step process before revenue can be recognized.

• Identify the contract with the customer

• Identify the separate performance obligation

• Determine the transaction price of the contract

• Allocate the transaction price to performance obligation and

• Recognize revenue at a point in time as performance obligations are satisfied.

b) Interest income: Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

c) Dividend income: Dividend is recognised when the right to receive payment is established.

(vi) Investment in subsidiary

Investments in subsidiary is accounted at cost less impairment losses, if any.

(vii) Foreign currencies

In preparing the financial statements of the Company, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date.

Exchange differences on monetary items are recognised in the statement of profit and loss in the period in which they arise except for exchange differences on transactions designated as fair value hedge.

(viii) Borrowing costs

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 the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

(ix) Employee benefits

The Company participates in various employee benefit plans. The employment benefits are classified as either defined contribution plans or defined benefit plans. Under a defined contribution plan, the Company’s only obligation is to pay a fixed amount with no obligation to pay further contributions. The expenditure for defined contribution plans is recognized as expense during the period when the employee provides service. Under a defined benefit plan, it is the Company’s obligation to provide agreed benefits to the employees. The related actuarial risks fall on the Company. The present value of the defined benefit obligations is calculated using the projected unit credit method.

Short-term employee benefits

All short-term employee benefits such as salaries, wages, bonus, and other benefits which fall within 12 months of the period in which the employee renders related services which entitles them to avail such benefits and non-accumulating compensated absences are recognised on an undiscounted basis and charged to the statement of profit and loss.

A liability is recognised for benefits accruing to employees in respect of wages and salaries in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.

Defined contribution plan

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 and when services are rendered by the employees.

Defined benefit plan

In accordance with the Payment of Gratuity Act, 1972, the Company provides for a lump sum payment to eligible employees, at retirement or termination of employment based on the last drawn salary and years of employment with the Company. The gratuity benefit is funded. The Company’s obligation in respect of the gratuity, which is a defined benefit plan, is provided for based on actuarial valuation using the projected unit credit method. Actuarial gains or losses are recognized in other comprehensive income.

Remeasurement, comprising actuarial gains and losses is reflected immediately in the balance sheet with charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected in retained earnings and is not reclassified to the statement of profit and loss.

(x) Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

a) Current tax: 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.

b) Minimum Alternate Tax (MAT): The company has shifted to new regime of taxation(since 2019-20)mentioned under section 115BAA.Under section 115BAA tax rate is 22% plus surcharge and education cess.MAT Provisions are not applicable if tax is charged at a rate mentioned in section 115BAA.No MAT credit of earlier years has been carried forward to current year.

c) Deferred tax: Deferred tax is recognized using the balance sheet approach. Deferred tax assets and liabilities are recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences.

Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be utilised.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

(xi) Property, plant and equipment

Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Freehold land is not depreciated.

Property, plant and equipment are carried at cost less accumulated depreciation and impairment losses, if any. The cost of property, plant and equipment comprises its purchase price/ acquisition cost, net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying property, plant and equipment up to the date the asset is ready for its intended use. Machinery spares which can be used only in connection with an item of Property, plant and equipment and whose use is expected to be irregular are capitalised and depreciated over the useful life of the principal item of the relevant assets. Subsequent expenditure on property, plant and equipment after its purchase / completion is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

Depreciation on Property, plant and equipment (other than freehold land) has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013.

The estimated useful life of the tangible assets are reviewed at the end of the each financial year and the depreciation period is revised to reflect the changed pattern, if any.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the statement of profit and loss.

For transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as of April 1, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.

(xii) Intangible assets

Intangible assets include cost of software and designs. Intangible assets are initially measured at acquisition cost including any directly attributable costs of preparing the asset for its intended use.Intangible assets with finite lives are amortized over their estimated useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. Intangible Assets with indefinite useful lives are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

(xiii) Impairment of tangible and intangible assets

At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

If the recoverable amount ofthe assets are estimated to be less than their carrying amounts, the carrying amounts of those assets are reduced to their recoverable amounts. Impairment losses are recognised immediately in the Statement of Profit and Loss. When impairment losses are subsequently reversed, the carrying amount of those assets are increased to their revised estimates of their recoverable amounts, so that the increased carrying amounts do not exceed the carrying amounts that would have been determined had no impairment losses recognised for those assets in prior years. The reversal of impairment losses are recognised immediately in the Statement of Profit and Loss.

(xiv) Provisions and contingencies

Provisions: 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.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

Contingent liabilities: Contingent liabilities are not recognised but are disclosed in notes to accounts.

(xv) Financial instruments

Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.

Financial assets and liabilities are initially recognised at fair value. Transaction costs that are directly attributable to financial

assets and liabilities [other than financial assets and liabilities measured at Fair Value Through Profit and Loss (FVTPL)] are added to or deducted from the fair value of the financial assets or liabilities, as appropriate on initial recognition. Transaction costs directly attributable to acquisition of financial assets o liabilities measured at FVTPL are recognised immediately in the statement of profit and loss.

Equity instruments at FVTOCI

All equity instruments are measured at fair value. Equity instruments held for trading is classified as FVTPL. For all other equity instruments, the Company may make an irrevocable election to present subsequent changes in the fair value in OCI. The Company makes such election on an instrument-by-instrument basis.

If the Company decides to classify an equity instrument as FVTOCI, then all fair value changes on the instrument, excluding dividend are recognised in OCI. There is no recycling of the amount from OCI to statement of profit and loss, even on sale of the instrument. However, the Company may transfer the cumulative gain or loss within the equity.

a) Non-derivative Financial assets: All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market place.

All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.

Financial assets at amortised cost

A financial asset is measured at amortised cost if both of the following conditions are met:

a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

b) the contractual terms of the financial asset give rise on specified dates to cash flows that are Solely Payments of Principal and Interest (SPPI) on the principal amount outstanding.

Effective interest method:

The rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial asset or financial liability to the gross carrying amount of a financial asset or to the amortised cost of a financial liability.

b) Derecognition of financial assets: A financial asset is derecognised only when the: - Company has transferred the rights to receive cash flows from the financial asset; or- retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.

When the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised. Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. When the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.

c) Foreign exchange gains and losses: The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.

For foreign currency denominated financial assets measured at amortised cost and FVTPL, the exchange differences are recognised in Statement of Profit and Loss.

d) Financial liabilities:

Initial recognition and measurement

Financial liabilities are recognised when, and only when, the Company becomes a party to the contractual provisions of the financial instrument. The Company determines the classification of its financial liabilities at initial recognition.All financial liabilities are recognised initially at fair value and in the case of financial liabilities not at fair value through the Statement of Profit and Loss as directly attributable transaction costs.

Subsequent measurement

After initial recognition, financial liabilities that are not carried at fair value through profit or loss are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in the Statement of Profit and Loss when the liabilities are derecognised and through the amortisation process.

Derecognition of financial liabilities

The Company derecognises financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or have expired.An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability.

(xvi) Segment reporting

Operating segments are reported in the manner consistent with the internal reporting to the Chief Operating Decision Maker (CODM) as per Ind AS 108. The Company is reported at an overall level, and hence there is only one reportable segment viz., Software Services. Geographic information is based on business sources from that geographic region. Accordingly the geographical secondary segments are determined as “North America” and “Rest of the World”.

(xvii) 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) and highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

For the purposes of the cash flow statement, cash and cash equivalents include cash on hand, in banks and demand deposits (with an original maturity of three months or less from the date of acquisition) with banks.

(xviii) Leases

The Company’s lease asset classes primarily consist of leases for buildings. The Company, at the inception of a contract, assesses whether the contract is a lease or not lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a time in exchange for a consideration. This policy hasbeen applied to contracts existing and entered into on or after April 1,2019.

The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the Company’s incremental borrowing rate. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

In the comparative period, Lease payments under operating leases are recognised as an expense on a straight line basis in the statement of profit and loss over the lease term except where the lease payments are structured to increase in line with expected general inflation.

(xix) Operating Cycle

Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

(xx) Disclosures for recent Amendment in Schedule III

On March 24, 2021, the Ministry of Corporate Affairs (MCA) through a notification, amended Schedule III of the Companies Act, 2013. The amendments revise Division I, II and III of Schedule III and are applicable from April 1, 2021. The Company has evaluated the effect of the amendments on its financial statements and the following are disclosed

a) There is no proceeding initiated against the Company for holding any Benami Properties under the Benami tranaction (Prohibition) Act 1988

b) The Company not dealing with any struck off Companies

c) The Company not dealing with any Crypto Currencies

d) The Title deeds of all immovable properties shown as Fixed Assets are held in the name of the Company

e) The Company has not been sanctioned any Working Capital Limit in excess of five crores against the security of Current Assets

f) No transactions not recorded in the books of accounts have been surrendered as Income in any tax assessment during the year

g) The Company has not been declared as wilful defaulters by any Bank, Financial Institution or any other lenders

h) No funds have been advanced or loaned or invested (either from the borrowed funds or share premium or any other sources or kind of funds) by the company to any person or entities, including foreign entities (“intermediaries”) with the understanding whether recorded in writing or otherwise, the intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or behalf of the company (“ultimate beneficiaries”), or provide any guarantee, or security or the like, on behalf of the ultimate beneficiaries.

i) No funds have been received from any person or entities, including foreign entities(Funding party) with the understanding whether recorded in writing or otherwise, the company shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the funding party (“ultimate beneficiaries”) or provide any guarantee or security or the like on behalf of the ultimate beneficiaries

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Mar 31, 2015

Foreign Currency Transaction: monetary assets are translated at the exchange rates prevailing on the date of Revenu

Revenue fom contracts priced on time are recognised when the services are rendered and related costs are b Intees ed. receipts are recognised on time proportion basis taking into account the amount outstanding and c DMapp nd icab recognised when the right to receive payment is established.

a Other short term employee benefits

The amount of short term employee benefits expected to be paid in exchange of services rendered by the employee is recognised during the period in which the service is rendered. The benefits include performance incentive.

b Segment Reporting

The Company's main business is providing of software services. There are no separate reportable segments as per Accounting Standard 17 (AS 17). Secondary segmental reporting is based on geographical location of customer and assets.

c Derivative Instruments and hedge accounting

Forwarding Exchange Contracts enterend int hedging foreign currency risk of an existing asset or liability. The premium or discount arising at the inception of forward exchange contract is amortized and recognized as an expense/ income over the life of the contract. Exchange difference on such contract, except the contracts which are long term foreign currency monetary item, are recognized in the statement of profit & loss in the period in which the exchange rate change. Any Profit or Loss arising on cancellation or renewal of such forward exchange contract is also recognised as income or as expense for the period.

d The Managing Director & Executive Chairman have given their personal guarantee for the Term loan and cash credit facilities availed from State Bank of India.

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Mar 31, 2014

I Basis of Preparation of financial Statements

The financial statements have been prepared to comply with Accounting Principles generally accepted in India, the Accounting Standards notified under the Companies (Accounting Standard Rules) 2006 and the relevant provisions of the Companies Act, 1956.

ii Fixed Assets:

a Tangible Assets

Fixed assets are stated at cost less accumulated depreciation and impairment loss, if any. The carrying amount of assets are reviewed at each balance sheet date if there is an indication of impairment based on internal/external factors. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. The reduction is treated as impairment loss and recognised in the statement of Profit & Loss account. b Intangible Assets

Intangible assets are stated at cost less accumulated depreciation. The costs consists of purchase cost and any other cost directly attributable to bringing the assets to its working condition for its intended use. Subsequent expenditure incurred in relation to an item of intangible asset are added to its book value only if they increase the future benefits from the existing asset beyond the previously assessed standard of performance.

iii Investments:

Investments held are all long term based on Management''s intention at the time of purchase.

Cost of overseas investments comprise of Indian rupee value of consideration paid for the investment translated at the exchange rate prevailing at the date of investment.

iv Foreign Currency Transaction:

a Foreign currency denominated monetary assets are translated at the exchange rates prevailing on the date of the balance sheet.

b Monetary items denominated in foreign currency at the year end are restated at year end rates.

c Non Monetary item foreign currency items are stated at cost.

d Items of revenue and expenditure are translated at the rates prevailing on the date ofthe transaction.

The resultant differences are recognised in the Statement of Profit & Loss account.

v Revenue recognition:

a Revenue from contracts priced on time are recognised when the services are rendered and related costs are incurred.

b Interest receipts are recognised on time proportion basis taking into account the amount outstanding and rate applicable.

c Dividend is recognised when the right to receive payment is established.

vi Depreciation

Depreciation is charged on Straight Line method as per the rates prescribed. Pro rata depreciation is charged on additions during the year

vii Taxation

a Current Tax expense comprise of tax on income from Indian and overseas operations. Income tax payable is determined as per the provisions of the Indian Income tax Act, 1961. Minimum Alternative Tax (MAT) paid which gives rise to future economic benefits in the form of adjustment of future tax liability is considered as an asset.

b Deferred Tax expense is recognised on timing difference being the difference between taxable and accounting income that originate in one period to be reversed in one or more subsequent periods. Deferred tax liability or asset are determined at the rates prevailing at the balance sheet date.

viii Employee benefits

a Provident fund

Provident fund contributions are as per the rates prescribed by the Employees Provident fund act and the same is charged to the profit & loss account

b Gratuity

The expenditure is recognised based on present value of obligation as determined in accordance with AS 15 on Employee benefits c Other short term employee benefits

The amount of short term employee benefits expected to be paid in exchange of services rendered by the employee is recognised during the period in which the service is rendered. The benefits include performance incentive. ix Derivative Instruments and hedge accounting

Forwarding exchange Contracts enterend int hedging foreign currency risk of an existing asset or liability. The premium or discount arising at the inception of forward exchange contract is amortized and recognised as an expense/ income over the life of the contract. Exchange difference on such contract, except the contracts which are long term foreign currency monetary item, are recognized in the statement of profit & loss in the period in which the exchange rate change. Any Profit or Loss arising on cancellation or renewal of such forward exchange contract is also recognised as income or as expense for the period.

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Mar 31, 2013

A Fixed Assets:

Fixed assets are stated at cost less accumulated depreciation. The carrying amount of assets are reviewed at each balance sheet date if there is an indication of impairment based on internal/external factors. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. The reduction is treated as impairment loss and recognised in the statement of profit & loss account.

b Investments:

Investments held are all long term based on Management''s intention at the time of purchase. Cost of overseas investments comprise of Indian rupee value of consideration paid for the investment translated at the exchange rate prevailing at the date of investment.

c Current Assets:

Trade Receivables are stated at net realisable value

d Income recognition:

Revenue from software development services, products are recognised when services are recognised on completion of contract or stage of completion as per applicable terms and conditions agreed with customers. Revenue from contacts priced on time are recognised when services are rendered and related costs incurred.

e Foreign Currency Transaction:

Foreign currency denominated monetary assets are translated at the exchange rates prevailing on the date of the balance sheet. Items of revenue and expenditure are translated at the rates prevailing on the date of the transaction. The resultant differences are recognised in the Statement of Profit & Loss account.

f Retirement Benefits

Company provides for gratuity for eligible employees determined by actuarial valuation.

g Forward Contracts in foreign currencies

The company uses forward contracts to hedge its exposure to movements in foreign exchange rates. The use of these forward contracts reduce the risk or cost of the company and not used for speculative or trading purposes.

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Mar 31, 2012

A Fixed Assets:

Fixed assets are stated at cost less accumulated depreciation. The carrying amount of assets are reviewed at each balance sheet date if there is an indication of impairment based on internal/external factors. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. The reduction is treated as impairment loss and recognised in the statement of profit & loss account.

b Investments:

Investments held are all long term based on Management's intention at the time of purchase. Cost of overseas investments comprise of Indian rupee value of consideration paid for the investment translated at the exchange rate prevailing at the date of investment.

c Current Assets:

Trade Receivables are stated at net realisable value

d Income recognition:

Revenue from software development services, products are recognised when services are recognised on completion of contract or stage of completion as per applicable terms and conditions agreed with customers. Revenue from contacts priced on time are recognised when services are rendered and related costs incurred.

e Foreign Currency Transaction:

Foreign currency denominated monetary assets are translated at the exchange rates prevailing on the date of the balance sheet. Items of revenue and expenditure are translated at the rates prevailing on the date of the transaction. The resultant differences are recognised in the Statement of Profit & Loss account.

f Retirement Benefits

Company provides for gratuity for eligible employees determined by actuarial valuation.

g Forward Contracts in foreign currencies

The company uses forward contracts to hedge its exposure to movements in foreign exchange rates. The use of these forward contracts reduce the risk or cost of the company and not used for speculative or trading purposes.

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Mar 31, 2011

Fixed Assets:

Fixed assets are stated at cost of acquisition less accumulated depreciation. The carrying amounts of assets are reviewed at each balance sheet date if there is an indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The reduction is treated as impairment loss and is recognised in the profit & loss account.

Investments:

Investments are stated at cost. Investments in shares of fully owned foreign subsidiary are stated at cost and expressed in Indian rupees at the rate of exchange prevailing at the time of actual remittance.

Current Assets:

Debtors: Debtors are stated at net realizable value.

Revenue Recognition:

Items of Income & Expenditure are recognised on accrual basis. Revenue from software development, Services & Products are recognized on completion of contract or stage of completion as per the applicable terms & conditions agreed with customers.

Depreciation:

Depreciation is charged on Straight line method as per rates specified in Schedule XIV of the Companies Act, 1956. Depreciation has been calculated on prorata basis on additions during the year.

Foreign Currency transactions:

Income from Software Development, Services & products and expenses are recorded at rates prevailing on the date of the transaction. Expenses incurred in foreign currency are recorded at rates prevailing when the expenditure was incurred. The foreign exchange difference which have arisen during the year have been recognised in the period in which they arise.

Monetary Current Assets & Current Liabilities that are denominated in foreign currency are translated at the exchange rate prevalent as at the date of the balance sheet. The resultant difference is recognised in the Profit & Loss Account.

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Mar 31, 2010

Fixed Assets:

Fixed assets are stated at cost of acquisition less accumulated depreciation. The carrying amounts of assets are reviewed at each balance sheet date if there is an indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The reduction is treated as impairment loss and is recognised in the profit & loss account.

Investments:

Investments are stated at cost. Investments in shares of fully owned foreign subsidiary are stated at cost and expressed in Indian rupees at the rate of exchange prevailing at the time of actual remittance.

Current Assets:

Debtors: Debtors are stated at net realizable value.

Revenue Recognition:

Items of Income & Expenditure are recognised on accrual basis. Revenue from software development, Services & Products are recognized on completion of contract or stage of completion as per the applicable terms & conditions agreed with customers.

Depreciation:

Depreciation is charged on Straight line method as per rates specified in Schedule XIV of The Companies Act, 1956. Depreciation has been calculated on prorata basis on additions during the year.

Foreign Currency transactions:

Income from Software Development, Services & products and expenses are recorded at rates prevailing on the date of the transaction. Expenses incurred in foreign currency are recorded at rates prevailing when the expenditure was incurred. The foreign exchange difference which have arisen during the year have been recognised in the period in which they arise.

Monetary Current Assets & Current Liabilities that are denominated in foreign currency are translated at the exchange rate prevalent as at the date of the balance sheet. The resultant difference i s recognised in the Profit & Loss Account.