Accounting Policies of City Online Services Ltd. Company

Mar 31, 2024

2. Significant Accounting Policies:

This note provides a list of the significant accounting policies adopted in
the preparation of these separate financial statements. These policies
have been consistently applied to all the years presented, unless
otherwise stated.

a) Basis of preparation:

These separate financial statements are prepared in accordance with
Ind AS under the historical cost convention on accrual basis except for
certain financial instruments which are measured at fair value, the
provisions of the Companies Act, 2013 (to the extent notified). The Ind
AS are prescribed under Section 133 of the Act read with Companies
(Indian Accounting Standards) Rules, 2015.

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, regardless of whether that price is directly
observable or estimated using another valuation technique. In
estimating the fair value of an asset or a liability, the company takes into
account the characteristics of the asset or liability if market participants
would take those characteristics into account when pricing the asset or
liability at the measurement date. Fair value for measurement and / or
disclosure purposes in these financial statements is determined on such
basis, except for measurements that have some similarities to fair value
but are not fair value, such as net realizable value in Ind AS 2.

Accounting policies have been consistently applied except where the
change is required by an Ind AS or change results in the financial
statements providing reliable and more relevant information about the
effects of transactions, other events or condition on the entity''s financial
position, performance or cash flow.

b) Use of estimates and judgements:

The preparation of the 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
amounts of assets, liabilities, income and expenses. Difference between
the actual results and estimates are recognized in the year in which
results are known/materialized.

Although these estimates are based upon management''s best
knowledge of current events and actions, actual results could differ from
these estimates. Any revision to accounting estimates is recognized
prospectively in the current and future periods.

c) Current versus non-current classification:

The company presents assets and liabilities in the balance sheet based
on current/non-current classification.

An asset is treated as current when it is:

- Expected to be realized or intended to be sold or consumed in the
normal operating cycle,

- Held primarily for the purpose of trading,

- Expected to be realized within twelve months after the reporting period
or,

- Cash or cash equivalents unless restricted from being exchanged or
used to settle a liability for at least twelve months after the reporting
period.

All other assets are classified as non-current.

A liability is treated as current when:

- It is expected to be settled in the normal operating cycle,

- It is held primarily for the purpose of trading,

- It is due to be settled within twelve months after the reporting period or,

- There is no unconditional right to defer the settlement of the liability for at
least twelve months after the reporting period.

All other liabilities are classified as non-current.

The operating cycle is the time between the acquisition of assets for
processing and their realization in cash and cash equivalents. The
company has identified twelve months as its operating cycle.

d) Property, plant and equipment:

i. Recognition and initial measurement:

Property, plant and equipment are stated in the balance sheet at their
carrying value being the cost of acquisition less accumulated
depreciation. The cost comprises purchase price, borrowing cost if
capitalization criteria are met and directly attributable cost of bringing the
asset to its working condition for the intended use. Any trade discount
and rebates are deducted in arriving at the purchase price.

Subsequent costs are included in the asset''s carrying amount or
recognized as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the
Company. All other repair and maintenance costs are recognized in
statement of profit or loss as incurred.

ii. Depreciation, estimated useful lives and residual value:

Depreciation on property, plant and equipment is provided on straight
line method, computed on the basis of useful lives as estimated by
management which coincides with rates prescribed in Schedule II to the
Companies Act, 2013.

The residual values, useful lives and method of depreciation are
reviewed at each financial year end and adjusted prospectively, if
appropriate.

iii. De-recognition:

An item of property, plant and equipment and any significant part initially
recognized is de-recognized upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss arising on
de-recognition of the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset) is included in
the income statement when the asset is de-recognized.

e) Intangible Assets:

i. Recognition and initial measurement:

Intangible assets (software) are stated in the balance sheet at their
carrying value being the cost of acquisition less accumulated
depreciation. The cost comprises purchase price, borrowing cost if
capitalization criteria are met and directly attributable cost of bringing the
asset to its working condition for the intended use. Any trade discount
and rebates are deducted in arriving at the purchase price.

ii. Amortization and estimated useful lives:

Amortization of intangible assets is provided on straight line method,
computed on the basis of useful lives as estimated by management
which coincides with rates prescribed in Schedule II to the Companies
Act, 2013.

The residual values, useful lives and method of depreciation of are
reviewed at each financial year end and adjusted prospectively, if
appropriate.

g) Impairment of assets:

At each reporting date, the Company assesses whether there is any
indication that an asset may be impaired, based on internal or external
factors. If any such indication exists, the Company estimates the
recoverable amount of the asset or the cash generating unit. If such
recoverable amount of the asset or cash generating unit to which the
asset belongs is less than its carrying amount, the carrying amount is
reduced to its recoverable amount. The reduction is treated as an
impairment loss and is recognized in the statement of profit and loss. If,
at the reporting date there is an indication that a previously assessed
impairment loss no longer exists, the recoverable amount is
reassessed, and the asset is reflected at the recoverable amount.

Impairment losses previously recognized are accordingly reversed in
the statement of profit and loss.

h) Foreign Currency:

Functional and presentation currency

The financial statements are presented in Indian Rupee (‘INR'') which is
also the functional and presentation currency of the Company.

Transactions and balances

Foreign currency transactions are recorded in the functional currency,
by applying to the exchange rate between the functional currency and
the foreign currency at the date of the transaction.

Foreign currency monetary items are converted to functional currency
using the closing rate. Non-monetary items denominated in a foreign
currency which are carried at historical cost are reported using the
exchange rate at the date of the transaction; and non-monetary items
which are carried at fair value or any other similar valuation denominated
in a foreign currency are reported using the exchange rates that existed
when the values were determined.

Exchange differences arising on monetary items on settlement, or
restatement as at reporting date, at rates different from those at which
they were initially recorded, are recognized in the statement of profit and
loss in the year in which they arise.

i) Revenue Recognition:

Effective from 1st April, 2018, the Company has adopted Ind AS 115,
“Revenue from Contracts with Customers”.Revenue is recognized to
the extent that it is probable that the economic benefits will flow to the
Company and the revenue can be reliably measured, regardless of
when the payment is being made. Revenue is measured at the fair value
of the consideration received or receivable, taking into account
contractually defined terms of payment and excluding taxes or duties
collected on behalf of the government.

Income from the services is recognized when the services are rendered
in accordance with the terms agreed.

Interest income is recognized using the effective interest rate method.
The effective interest rate is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to the
gross carrying amount of a financial asset. While calculating the
effective interest rate, the company estimates the expected cash flows
by considering all the contractual terms of the financial instruments but
does not consider the expected credit losses.

j) Leases

The Company as a lessee

As per Ind AS-116,the Company has recognized lease liabilities and
corresponding equivalent right-of-use assets. The Company''s lease
asset classes primarily consist of leases for Land, Buildings, Plant &
Machinery and Vehicles. The Company assesses whether a contract
contains a lease, at inception of a contract. A contract is, or contains, a
lease if the contract conveys the right to control the use of an identified
asset for a period of time in exchange for consideration. To assess
whether a contract conveys the right to control the use of an identified
asset, the Company assesses whether:

(i) The contract involves the use of an identified asset.

(ii) The Company has substantially all the economic benefits from use of the
asset through the period of the lease and

(iii) The Company has the right to direct the use of the asset.

At the date of commencement of the lease, the Company recognizes a
right-of-use (ROU) asset and a corresponding lease liability for all lease
arrangements in which it is a lessee, except for leases with a term of 12
months or less (short-term leases) and low value leases. For these
short-term and low-value leases, the Company recognizes the lease
payments as an operating expense.

Certain lease arrangements include the options to extend or terminate
the lease before the end of the lease term. ROU assets and lease
liabilities includes these options when it is reasonably certain that they
will be exercised.

The lease liability is initially measured at amortized cost at the present
value of the future lease payments. The lease payments are discounted
using the interest rate implicit in the lease or, if not readily determinable,
using the incremental borrowing rates in the country of domicile of these
leases.

ROU assets are depreciated from the commencement date on a
straight-line basis over the shorter of the lease term and useful life of the
underlying asset. ROU assets are evaluated for recoverability whenever
events or changes in circumstances indicate that their carrying amounts
may not be recoverable. For the purpose of impairment testing, the
recoverable amount (i.e. the higher of the fair value less cost to sell and
the value-in-use) is determined on an individual asset basis unless the
asset does not generate cash flows that are largely independent of those
from other assets. In such cases, the recoverable amount is determined
for the Cash Generating Unit (CGU) to which the asset belongs.

Lease liability and ROU assets have been separately presented in the
Balance Sheet and lease payments have been classified as financing
cash flows.

k) Financial Instruments:

a. Financial Assets

Initial recognition and measurement

The company recognizes financial assets when it becomes a party to the
contractual provisions of the instrument. All financial assets are
recognized at fair value on initial recognition. Transaction costs that are
directly attributable to the acquisition of financial assets that are not at
fair value through profit or loss, are added to the fair value on initial
recognition. Transaction costs of financial assets carried at fair value
through profit and loss are expensed in the statement of profit and loss.
Regular way purchase and sale of financial assets are accounted for at
trade date.

Subsequent measurement

Debt instruments at amortized cost - A ‘debt instrument'' is measured at
the amortized cost if both the following conditions are met:

• The asset is held within a business model whose objective is to hold
assets for collecting contractual cash flows, and

• Contractual terms of the asset give rise on specified dates to cash flows
that are solely payments of principal and interest (SPPI) on the principal
amount outstanding.

After initial measurement, such financial assets are subsequently
measured at amortized cost using the effective interest rate (EIR)
method.

Investments in subsidiaries, associates and joint ventures

Investment in subsidiaries, associates and joint ventures is carried at
cost in the separate financials statements.

De-recognition of financials assets

A financial asset (or, where applicable, a part of a financial asset or part
of a group of a similar financial asset) is primarily de-recognized (i.e.,
removed from the company''s separate balance sheet) when:

• The rights to receive cash flows from the asset have expired, or

• The company has transferred its rights to receive cash flows from the
asset.

b. Financial Liabilities

Initial recognition and measurement

The company recognizes financial liabilities when it becomes a party to
the contractual provisions of the instrument. All financial liabilities are
recognized at fair value on initial recognition. Transaction costs that are
directly attributable to the issue of financial liabilities, that are not at fair
value through profit or loss, are reduced from the fair value on initial
recognition. Transaction costs that are directly attributable to the issue of
financial liabilities at fair value through profit and loss are expensed in
the statement of profit and loss.

Subsequent measurement

These liabilities include borrowings and deposits. After initial
recognition, interest-bearing loans and borrowings are subsequently
measured at amortized cost using the effective interest rate (EIR)
method. Gains and losses are recognized in the statement of profit and
loss when the liabilities are de-recognized as well as through the EIR
amortization process.

Amortized cost is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an integral part of the
EIR. The EIR amortization is included as finance costs in the statement
of profit and loss.

De-recognition of financial liabilities

A financial liability is de-recognized when the obligation under the
liability is discharged or cancelled or expires. When an existing financial
liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as the de¬
recognition of the original liability and the recognition of a new liability.
The difference in the respective carrying amounts is recognized in the
statement of profit or loss.

c. Offsetting financials instruments

Financial assets and liabilities are offset and the net amount is reported
in the balance sheet where there is a legally enforceable right to offset
the recognized amounts and there is an intention to settle on a net basis
or realize the asset and settle the liability simultaneously. The legally
enforceable right must not be contingent on future events and must be
enforceable in the normal course of business and in the event of default,
insolvency or bankruptcy of the group or the counterparty.

l) Borrowing costs:

General and specific borrowing costs that are directly attributable to the
acquisition, construction or production of a qualifying asset are
capitalized during the period of time that is required to complete and
prepare the asset for its intended use or sale. Qualifying asset are
assets that necessarily take a substantial period of time to get ready for
their intended use or sale.

Other borrowing costs are expensed in the period in which they are
incurred.

m) Inventories:

Inventories are valued at the lower of cost and net realizable value. Cost
includes purchase price excluding taxes those are subsequently
recoverable by the company from the concerned authorities, freight
inwards and other expenditure incurred in bringing such inventories to
their present location and condition. Cost of inventories is determined
using the weighted average cost method.

n) Employee Benefits:

a. Short-term benefit plans

Liabilities for wages and 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 recognized
and 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.

b. Defined contribution plans

The company pays provident fund contributions to publicly administered
provident funds as per local regulations. 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 recognized as employee benefit expense when they
are due. Prepaid contributions, if any, are recognized as an asset to the
extent that a cash refund or a reduction in the future payments is
available.

c. Defined benefit plans

The company''s gratuity plan is a defined benefit plan. The present value
of gratuity obligation under such defined benefit plans is determined
based on actuarial valuations carried out by an independent actuary
using the Projected Unit Credit Method [PUCM], which recognizes each
period of service as giving rise to additional unit of employee benefit
entitlement and measure each unit separately to build up the final
obligation. The obligation is measured at the present value of estimated
future cash flows. The discount rates used for determining the present
value of obligation under defined benefit plans, is based on the market
yields on government securities as at the balance sheet date, having
maturity periods approximately to the terms of related obligations.
Actuarial gains and losses are recognized immediately in the balance
sheet with a corresponding debit or credit to retained earnings through
OCI in the period in which they occur.

o) Income Taxes:

Tax expense recognized in statement of profit or loss comprises the sum
of deferred tax and current tax except the ones recognized in other
comprehensive income or directly in equity.

Calculation of current tax is based on tax rates and tax laws that have
been enacted for the reporting period. Current income tax relating to
items recognized outside profit or loss is recognized outside profit or loss
(either in other comprehensive income or in equity). Current tax items
are recognized in correlation to the underlying transaction either in other
comprehensive income or directly in equity.

Deferred tax is provided using the liability method on temporary
differences between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes at the reporting date.
Deferred tax assets are recognized to the extent that it is probable that
the underlying tax loss or deductible temporary difference will be utilized
against future taxable income. This is assessed based on the
Company''s forecast of future operating results, adjusted for significant
non-taxable income and expenses and specific limits on the use of any
unused tax loss or credit. The carrying amount of deferred tax assets is
reviewed at each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all
or part of the deferred tax asset to be utilized. Un-recognized deferred
tax assets are re-assessed at each reporting date and are recognized to
the extent that it has become probable that future taxable profits will
allow the deferred tax asset to be recovered. Deferred tax assets and
liabilities are measured at the tax rates that are expected to apply in the
year when the asset is realized, or the liability is settled, based on tax
rates (and tax laws) that have been enacted or substantively enacted at
the reporting date. Deferred tax relating to items recognized outside
profit or loss is recognized outside profit or loss (either in other
comprehensive income or in equity).

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Mar 31, 2014

A) Basis of preparation of financial statements

The financial statements of the Company have been prepared on accrual basis under the historical cost convention in accordance with the Indian Generally Accepted Accounting Principles (GAAP) to comply in all material aspects with the Accounting Standards notified under Section 211(3C) (which continues to be applicable in terms of General circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013) and other relevant provisions of the Companies Act, 1956 .The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

b) Use of estimates

The preparation of financial statements in conformity with Generally Accepted Accounting principles (Indian GAAP) requires management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statements and the reported amounts of revenue and expenses during the reported year. Examples of such estimates include future obligations under employee retirement benefit plans, provision for doubtful receivables, employee benefits, provision for income taxes, useful life of depreciable fixed assets and provision for impairment. Future results could differ due to changes in these estimates and the difference between the actual result and the estimates are recognized in the period in which the results are known/materialize.

c) Revenue Recognition

Revenue is recognized on accrual basis to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

Income from the services is recognized when the services are rendered in accordance with the terms agreed.

Interest income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

d) Fixed Assets:

Tangible Assets:

Tangible fixed assets are stated at cost less accumulated depreciation. Cost includes any directly attributable costs incurred to bring the assets for its intended use.

Subsequent expenditure related to an item of fixed assets is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance.

e) Depreciation

Depreciation is provided on assets which are put to use during the year using Straight Line Method over the useful lives of assets estimated by the Management. Depreciation for assets purchased/sold during a period is proportionately charged.

Individual Fixed Assets costing Rs.5,000 and below are fully depreciated in the year of purchase.

f) Leases

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vests with the less or, are recognized as operating lease. Lease rentals under operating lease are recognized in the statement of profit and loss on a straight-line basis over the lease term.

g) Inventories

Inventories are valued at the lower of cost or net realizable value. Cost includes all expenses incurred to bring the inventory to its present location and condition. Cost is determined on a weighted average basis.

h) Foreign currency Transactions

Transactions in foreign currencies are translated at the exchange rates prevailing on the dates of transactions and the exchange gains/losses on settlements during the year, are charged to Statement of Profit and Loss. Monetary assets and liabilities denominated in foreign currencies are translated at the rates prevailing on the date of Balance sheet. Exchange gains/losses including those relating to fixed assets are dealt with in the Statement of Profit and Loss.

i) Investments

Investments are classified into Current and Long Term Investments based on the Management's intention at the time of purchase. Long Term investments are carried at cost less provision for diminution in value, if any which is other than temporary in the value of such investments. Any reduction in carrying amount and any reversals of such reductions are charged or credited to the Statement of profit and loss.

j) Employee Benefits

The estimated liability for employee benefits, both short and long term, for present and past services which are due as per the terms of employment are recorded in accordance with Accounting Standard (AS) 15 "Employee Benefits". A brief description of the employee benefits are as follows:

Gratuity:

In accordance with the Payment of Gratuity Act, 1972, The Company has an obligation towards gratuity, a defined retirement benefit plan ('the Gratuity Plan') covering all eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary and the tenure of employment with the Company.

Vesting occurs on completion of five years of service. The liabilities with regard to the Gratuity Plan are determined by an independent actuarial valuation at each Balance Sheet date. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the Statement of Profit and Loss in the period in which they arise.

Provident Fund:

All eligible employees of the Company are entitled to receive benefits under the Provident Fund, a defined contribution plan to which both the employee and employer make monthly contributions at a determined percentage of the covered employee's salary. The Company has no further obligations under the provident fund plan beyond its monthly contributions.

k) Earnings Per Share

The Company reports basic and diluted earnings per share in accordance with Accounting Standard (AS) 20, Earnings Per Share. Basic earnings per equity share is computed by dividing the net profit for the year attributable to the Equity Shareholders by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share is computed by dividing net profits for the year, adjusted for the effects of dilutive potential equity shares, attributable to the Equity Shareholders by the weighted average number of the equity shares and dilutive potential equity shares outstanding during the year except where the results are anti dilutive. Dilutive potential equity shares are deemed converted as of the beginning of the period / year, unless issued at a later date.

1) Taxation

Current Tax is the amount of tax payable on taxable income for the period determined in accordance with the provisions of Income Tax Act, 1961.

Deferred tax expense or benefit is recognized on timing differences being the difference between taxable income and accounting income that originate in one period and is likely to reverse in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted as on the balance sheet date.

In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognized only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available to realize such assets. In other situations, deferred tax assets are recognized only to the extent that there is reasonable certainly that sufficient future taxable income will be available to realize these assets.

Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Balance Sheet date for their realisability.

m) Impairment of Assets

The management assesses the carrying amount of assets at each balance sheet date to determine whether there is any indication of impairment, if any such indication exists; the recoverable amount of the assets is estimated. An impairment loss is recognized whenever the carrying value of an asset or its cash generating unit exceeds the recoverable amount.

The recoverable amount is the greater of the asset's net selling price and value in use, which is determined, based on the estimated future cash flow discounted to their present values. An impairment loss of an asset is reversed if, and only if, the reversal can be related objectively to an event occurring after such loss was recognized. The carrying amount of an asset will be increased to its revised recoverable amount, provided such amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years.

n) Provisions, Contingent Liabilities and Contingent assets

A provision is recognized if, as a result of past event, the Company has a present legal obligation that can be estimated reliably, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the reporting date.

A disclosure for Contingent liabilities is made when there is a possible obligation or a present obligation where it is not probable that an outflow of resources embodying economic benefits will be required or a reliable estimate cannot be made. Contingent assets are neither recognized nor disclosed in the financial statements.

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Mar 31, 2013

1. Corporate Information:

City Online Services Limited ('the Company') is domiciled in India and incorporated under the provisions of The Companies Act, 1956. The company is engaged in the business of providing internet and intranet; data centre solutions, custom Wi-Fi solutions and managed services.

Use of estimates

The preparation of financial statements in conformity with Indian GAAP requires management to make estimates and assumptions that affect the balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statements and the reported amounts of revenue and expenses during the reported year. Actual results could differ from those estimates.

a) Basis of preparation of financial statements

The financial statements of the Company have been prepared on accrual basis under the historical cost convention in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of The Companies Act, 1956.The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

b) Revenue Recognition

Revenue is recognized on accrual basis to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Income from the services is recognized when the services are rendered in accordance with the terms agreed.

c) Depreciation

Depreciation is provided on assets which are put to use during the year using Straight Line Method on pro-rata basis in accordance with the schedule XIV of the Companies Act, 1956. Individual Fixed Assets costing Rs.5,000 and below are fully depreciated in the year of purchase.

d) Inventories

Inventories are (valued at the lower of cost or net realizable value. Cost includes all expenses incurred to bring the inventory to its present location and condition. Cost is determined on a weighted average basis.

e) Valuation of Fixed Assets:

Tangible Assets:

Tangible fixed assets are stated at cost less accumulated depreciation. Cost includes any directly attributable costs incurred to bring the assets for its intended use.

Subsequent expenditure related to an item of fixed assets is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance.

f) Foreign currency Transactions

Transactions in foreign currencies are translated at the exchange rates prevailing on the dates of transactions and the exchange gains/losses on settlements during the year, are charged to Statement of Profit and Loss. Monetary assets and liabilities denominated in foreign currencies are translated at the rates prevailing on the date of Balance sheet. Exchange gains/losses including those relating to fixed assets are dealt with in the Statement of Profit and Loss.

g) Investments

Investments are classified as Long Term and Current Investments. Long Term investments are carried at cost less provision for diminution in value, if any which is other than temporary in the value of such investments. Any reduction in carrying amount and any reversals of such reductions are charged or credited to the Statement of profit and loss. '¦ '' '

h) Employee Benefits

The estimated liability for employee benefits, both short and long term, for present and past services which are due as per the terms of employment are recorded in accordance with Accounting Standard (AS) 15 "Employee Benefits". A brief description of the employee benefits are as follows:

Gratuity:

The Company has an obligation towards gratuity, a defined retirement benefit plan covering all eligible employees. The plan provides for lump sum payment in accordance with the Payment of Gratuity Act, 1972 to vested employees on retirement, death while in employment or on separation. Vesting occurs on completion of five years of service. The Company accounts for the liability for future Gratuity benefits on the basis of an independent actuarial valuation.

Provident Fund:

All eligible employees of the Company are entitled to receive benefits under the Provident Fund, a defined contribution plan to which both the employee and employer contribute monthly at a determined rate and the Company has no further obligation.

i) Earnings Per Share

The Company reports basic and diluted earnings per share in accordance with Accounting Standard (AS) 20, Earnings Per Share. Basic earnings per equity share are computed by dividing the net profit for the year attributable to the Equity Shareholders by the weighted average number of equity shares outstanding during the year.

j) Taxation

Current Tax is the amount of tax payable on taxable income for the period determined in accordance with the provisions of Income Tax Act, 1961.

Deferred Tax - Deferred tax resulting from "timing differences" between book profit and taxable profit is accounted for using the tax rates and laws that have been enacted or substantially enacted as on the balance sheet date. Deferred tax assets are recognized only to the extent that there is a virtual certainty that such assets will be realized in future. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Balance Sheet date for their realisability.

k) Impairment of Assets

The carrying amount of assets is reviewed at each balance sheet date to determine whether there is any indication of impairment, if any such indication exists; the recoverable amount of the assets is estimated. The recoverable amount is the greater of the asset's net selling price and value in use, which is determined, based on the estimated future cash flow discounted to their present values An impairment loss is recognized whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.

1) Provisions, Contingent Liabilities and Contingent assets

The company recognizes provisions when there is present obligation as a result of past event and it is probable that there will be an outflow of resources embodying economic benefits and reliable estimate can be made of the amount of the obligation. A disclosure for Contingent liabilities is made in the notes on accounts when there is a possible obligation or a present obligation where it is not probable that an outflow of resources embodying economic benefits will be required or a reliable estimate cannot be made. Contingent assets are neither recognized nor disclosed in the financial statements.