Accounting Policies of Dhanus Technologies Ltd. Company

Dec 31, 2011

A) Change in accounting policy Presentation and disclosure of financial statements

During the year ended December 31, 2011, the revised Schedule VI notified under the Companies Act, 1956 has become applicable to the Company for preparation and presentation of its financial statements. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.

b) Use of estimates

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management's best knowledge of current events and actions, uncertainly about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

c) Tangible Fixed Assets.

Fixed assets are stated at the cost, net of accumulated depreciation and impairment losses, if any. The cost comprises purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

d) Investments.

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long- term investments.

Current investments are carried in financial statements at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments.

e) Foreign currency transactions and balances. Initial recognition

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

Conversion

Foreign currency monetary items are reported using the exchange rate prevailing on the reporting date. Non- monetary items which are measured in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of transaction.

Exchange differences

Exchange differences arising on the settlement of monetary items or on restatement of monetary items on reporting date at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.

f) Revenue recognition.

Revenue is recognized based on the terms of contracts and passing of title wherever necessary. With respect to Calling Cards & Trading Activities, Sales are recognized on dispatch of goods to customers. FleeTrac and BPO revenues are recognized on completion of services and billed.

g) Retirement and other employee benefits.

The Company has a scheme of provident fund for its employees, registered with the Regional Provident Fund Commissioner, Chennai. The Company also has a scheme of employees' state insurance for its employees, registered with the Employees State Insurance Corporation, Chennai. The Company's contributions to provident fund and employees' state insurance are charged to the Profit and Loss Account. The company had no voluntary retirement scheme during the period and year under report. None of the employees have completed five years, hence gratuity has not been provided. Leave encashment is provided as and when paid for.

h) Expenditure and Provisions.

Expenses are accounted on accrual basis and provisions are made for all known losses and liabilities. Provisions are made for future unforeseeable factors, which may affect the ultimate profit on fixed price. A provision is recognized when the company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

i) Depreciation/Amortization

Depreciation on fixed assets is provided using the written down value method at the rates specified in schedule XIV to the Companies Act, 1956, as amended. Depreciation is charged on a Pro-rata basis for assets purchased / sold during the year. Individual assets costing less than Rs. 5000/- are depreciated in full in the year of purchase.

Fixed Assets, are depreciated pro rata to the period of use on the basis of written down value method based on the estimated useful lives as per the following rates prescribed in the Schedule XIV to the Companies Act, 1956, as amended and rules there under:

j) Research and Development

Research and Development expenditure on the communications & telematic projects is accumulated for writing off in future years. Research and Development expenditure incurred during the year on software development, product development, product testing etc., is charged to revenue.

k) Inventories and Work in Progress

Stocks of Cards are valued at Cost and on FIFO basis and include all applicable overheads in bringing the inventories to their present location and condition. Work in progress in respect of GIS Development, Development of In-Vehicle navigation system, FleeTrac v2-0-Software Development, FleeTrac ERP v.1.0, Supply Chain Management, Mobility solution for logistics, Development of Comprehensive CRM & Integration of V-Tel solution on hand held, etc is valued at Cost.

l) Segment Reporting

The Company's primary segment is identified as business segment based on nature of products, risks, returns and the internal business reporting system and secondary segment is identified based on the geographical location of the customers as per Accounting Standard-17 -''Segment Reporting" issued by the Institute of Chartered Accountants of India. The company is principally engaged in five business segments viz. telecom, telematics, BPO, software services and trading sales.

m) Amortization of deferred expenditure.

Miscellaneous Expenses viz., Research and Development Expenditures are amortised over a period of 5 years, whereas Public Issue Expenses (IPO Exp.) are amortised over a period of 10 years.

n) Taxes on Income.

i. Tax expenses are accounted in the same period to which the revenue and expenses relate. Provision for current income tax is made for the tax liability payable on taxable income after considering tax allowances, deductions and exemptions determined in accordance with the prevailing tax laws. The differences between the taxable income and the net profit or loss before tax for the year as per the financial statements are identified and the tax effect of timing differences is recognized as a deferred tax asset or deferred tax liability. The tax effect is calculated on accumulated timing differences at the end of the accounting year, based on effective tax rates substantively enacted by the Balance Sheet date.

ii. Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is legally enforceable right to set off assets against liabilities representing current tax and where the deferred tax assets and the deferred tax liabilities relate to taxes on income levied by the same governing taxation laws.

iii. Deferred tax assets, other than on unabsorbed depreciation and carried forward losses, are recognized only if there is reasonable certainty that they will be realized in the future and are reviewed for the appropriateness of their respective carrying valued at each Balance Sheet. In situations where the Company has unabsorbed depreciation and carried forward losses, deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that the same can be realized against future taxable profits. Deferred tax assets are reviewed at each Balance Sheet date for their realisability.

iv. Minimum Alternative Tax ("MAT") credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at each balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.

o) Earning Per Share.

Profit after Tax of a particular reporting period is used as the earnings figure for the purpose of calculating Earning per Share. Basic Earning per Share has been computed by dividing Profit after Tax by the weighted average number of shares outstanding for the year. Using the weighted average number of Shares and dilutive potential equity shares outstanding the year the diluted earning per share is arrived at as per AS-20 "Earning per Share "issued by the Institute of Chartered Accountants of India.

p) Impairment of Assets.

The carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment of assets. If any indication of such impairment exists, the recoverable amount of such assets is estimated and impairment is recognized, if the carrying amount on these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and value in use. Value in use is arrived at by discounting the future cash flow to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognized for an asset in prior accounting periods no longer exists or may have decreased such reversal of impairment loss is recognized.

q) Borrowing costs.

Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

r) Cash and cash equivalents.

Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

s) Accounting for Provisions, Contingent Liabilities and Contingent Assets.

Provisions are recognized in terms of Accounting Standard 29 - 'Provisions, contingent Liabilities and Contingent Assets' (AS-29), notified by the Companies (Accounting Standards) Rules, 2006 (as amended), when there is a present legal obligation as a result of past events, where it is probable that there will be outflow of resources to settle the obligation and when a reliable estimate of the amount of the obligation can be made. Contingent Liabilities are recognized only when there is a possible obligation arising from past events, due to occurrence or non-occurrence of one or more uncertain future events, not wholly within the control of the company, or where any present obligation cannot be measured in terms of future outflow of resources, or where a reliable estimate of the obligation cannot be made. Obligations are assessed on an ongoing basis and only those having a largely probable outflow of resources are provided for. Contingent Assets are not recognized in the financial statements.

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Dec 31, 2010

1.1 Basis of preparation of financial statements

The financial statements are prepared under the historical cost convention, in accordance with Indian Generally Accepted Accounting principles ("GAAP"), the accounting standards issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956, as adopted consistently by the company. Ail income and expenditure having a material bearing on the Financial Statements are recognized on accrual basis.

The preparation of the financial statements in conformity with Indian GAAP requires that the management make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.

1.2 Fixed Assets

Fixed assets are stated at the cost of acquisition, less accumulated depreciation. Direct costs are capitalized till the assets are ready to be put to use. These costs include financing costs relating to specific borrowing (s) attributable to fixed assets as per AS-16 "Borrowing Costs" issued by the Institute of Chartered Accountants of India.

1.3 Investments

Long-term investments are carried at cost. No provision is being made for diminution in the value of investments, as they are long-term investments. Investments are accounted as per Accounting Standard 13 "Accounting for Investment", issued by the Institute of Chartered Accountants of India.

1.4 Foreign Currency Translations

Foreign currency transactions are recorded in the books by applying the exchange rate as on the date of transaction. Fluctuations in the exchange rate transactions are charged to Profit & Loss Account, wherever necessary. In respect of foreign currency transactions in fixed assets, the exchange gain or loss is adjusted in the carrying amount of fixed assets and accordingly depreciation is charged.

1.5 Revenue recognition

Revenue is recognized based on the terms of contracts and passing of title wherever necessary. With respect to Calling Cards and Trading Activities, Sales are recognized on despatch of goods to customers. FleeTrac and BPO revenues are recognized on completion of services and billed.

1.6 Retirement Benefits

The Company has a scheme of provident fund for its employees, registered with the Regional Provident Fund Commissioner, Chennai. The Company also has a scheme of employees state insurance for its employees, registered with the Employees State Insurance Corporation, Chennai. The Companys contributions to provident fund and employees state insurance are charged to the Profit and Loss Account.

1.7 Expenditure

Expenses are accounted on accrual basis and provisions are made for all known losses and liabilities. Provisions are made for future unforeseeable factors, which may affect the ultimate profit on fixed price.

1.8 Depreciation

Depreciation on fixed assets is provided using the written down value method at the rates specified in schedule XIV to the Companies Act, 1956, as amended. Depreciation is charged on a Pro-rata basis for assets purchased / sold during the year. Individual assets costing less than Rs. 5000/- are depreciated in full in the year of purchase.

1.9 Research and Development

Research and Development expenditure on the communications & telematic projects is accumulated for writing off in future years. Research and Development expenditure incurred during the year on software development, product development, product testing etc., is charged to revenue.

1.10 Stocks and Work in Progress

Stocks of Cards are valued at Cost and on FIFO basis and include all applicable overheads in bringing the inventories to their present location and condition. Work in progress in respect of GIS Development, Development of In-Vehicle navigation system, Flee Trac v2-0-Software Development, FleeTrac ERP v.1.0, Supply Chain Management, Mobility solution for logistics, Development of Comprehensive CRM & Integration of V-Tel solution on hand held , etc is valued at Cost.

1.11 Segment Accounting

The accounting policies adopted for Segment reporting are in line with the Accounting Standard-17 "Segment Reporting" issued by the Institute of Chartered Accountants of India.

a. The generally accepted accounting principles used in the preparation of the financial statements are applied to record revenue and expenditure in individual segments.

b. Segment revenue and segment results include transfers between business segments. Such transfers are accounted for at a competitive market price and such transfers are eliminated in the consolidation of the segments.

c. Expenses that are directly identifiable to segments are considered for determining the segment result. Expenses, which relate to the Company as a whole and are not allocable to segments, are included under unallocated corporate expenses.

d. Segments assets and liabilities include those directly identifiable with the respective segments. Unallocated corporate assets and liabilities represent the assets and liabilities that relate to the company as a whole and not allocable to any segment.

1.12 Miscellaneous Expenditure

Miscellaneous expenses viz., Research and Development Expenditures are amortised over a period of 5 years, whereas Public Issue Expenses are amortised over a period of 10 years.

1.13 Taxes on Income

Provision for income tax is made based on the rates and methods provided under the Income Tax Act 1961, based on the tax liability as computed after taking credit for allowances and exemptions.

Deferred Tax is recognized subject to the consideration of prudence, on timing differences, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

Deferred Tax assets are not recognised on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised as per AS-22 "Accounting for Taxes on income" issued by the Institute of Chartered Accountants of India.

1.14 Earning Per Share

Profit after Tax of a particular reporting period is used as the earnings figure for the purpose of calculating Earning per Share. Basic Earning per Share has been computed by dividing Profit after Tax by the weighted average number of Shares outstanding for the year. Using the weighted average number of Shares and dilutive potential equity shares outstanding the year the diluted earning per share is arrived at as per AS-20 "Earning per Share "issued by the Institute of Chartered Accountants of India.

1.15 Impairment of Assets

Impairment will be provided as and when required based on Management discussion.

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Jun 30, 2009

1.1 Basis of preparation of financial statements

The financial statements are prepared under the historical cost convention, in accordance with Indian Generally Accepted Accounting principles ("GAAP"), the accounting standards issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956, as adopted consistently by the company. Ail income and expenditure having a material bearing on the Financial Statements are recognized on accrual basis.

The preparation of the financial statements in conformity with Indian GAAP requires that the management make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities as of the date of the financial statements, and me reported amounts of revenue and expenses during the reporting period.

1.2 Fixed Assets

Fixed assets are stated at the cost of acquisition, less accumulated depreciation. Direct costs are capitalized till the assets are ready to be put to use. These costs include financing costs relating to specific borrowing (s) attributable to fixed assets as per AS-16 "Borrowing Costs issued by the Institute of Chartered Accountants of India.

1.3 Investments

Long-term investments are carried at cost. No provision is being made for diminution in the value of investments, as they are long-term investments. Investments are accounted as per Accounting Standard 13 "Accounting for Investment", issued by the Institute of Chartered Accountants of India.

1.4 Foreign Currency Translations

Foreign currency transactions are recorded in the bocks by applying the exchange rate as on the date of transaction. Fluctuations in the exchange rate transactions are charged to Profit &Loss Account, wherever necessary. In respect of foreign currency transactions in fixed assets, the exchange gain or loss is adjusted in the carrying amount of fixed assets and accordingly depreciation is charged.

1.5 Revenue recognition

Revenue is recognized based on the terms of contracts and passing of title wherever necessary. With respect to Calling Cards, Sales are recognized on despatch of goods to customers. FleeTrac and BPO revenues are recognized on completion of services and billed.

1.6 Retirement Benefits

The Company has a scheme of provident fund for its employees, registered with the Regional Provident Fund Commissioner, Chennai. The Company also has a scheme of employees state insurance for its employees, registered with the Employees State Insurance Corporation, Chennai. The Companys contributions to provident fund and employees state insurance are charged to the Profit and Loss Account.

1.7 Expenditure

Expenses are accounted on accrual basis and provisions are made for all known losses and liabilities. Provisions are made for future unforeseeable factors, which may affect the ultimate profit on fixed price. Software development and services are charged to revenue in the same year.

1.8 Depreciation

Depreciation on fixed assets is provided using the written down value method at the rates specified in schedule XIV to the Companies Act, 1956, as amended. Depreciation is charged on a Pro-rata basis for assets purchased / sold during the year. Individual assets costing less than Rs. 5000/- are depreciated in full in the year of purchase.

1.9 Research and Development

Research and Development expenditure on the proposed communications & telematic projects is accumulated for writing off in future years. Research and Development expenditure incurred during the year on software development. product development, product testing etc., is charged to revenue.

1.10 Stocks and Work in Progress

Stocks of Cards are valued at Cost and on FIFO basis and include all applicable overheads in bringing the inventories to their present location and condition. Work in progress in respect of GIS Development, Development of In-Vehicle navigation system, Flee Trac v2-0-Software Development, FleeTrac ERP v. 1.0, Supply Chain Management, Mobility solution for logistics, Development of Comprehensive CRM & Integration of V-Tel solution on hand held , etc is valued at Cost.

1.11 Segment Accounting

The accounting policies adopted for Segment reporting are in line with the Accounting Standard-17 "Segment Reporting" issued by the Institute of Chartered Accountants of India.

a. The generally accepted accounting principles used in the preparation of the financial statements are applied to record revenue and expenditure in individual segments.

b. Segment revenue and segment results include transfers between business segments. Such transfers are accounted for at a competitive market price and such transfers are eliminated in the consolidation of the segments.

c. Expenses that are directly identifiable to segments are considered for determining the segment result. Expenses, which relate to the Company as a whole and are not allocable to segments, are included under unallocated corporate expenses.

d. Segments assets and liabilities include those directly identifiable with the respective segments. Unallocated corporate assets and liabilities represent the assets and liabilities that relate to the company as a whole and not allocable to any segment.

1.12 Miscellaneous Expenditure

Preliminary expenses viz., Research and Development Expenditures are amortised over a period of 5 years, whereas Public Issue Expenses are amortised over a period of 10 years.

1.13 Taxes on Income

Provision for income tax is made based on the rates and methods provided under the Income Tax Act 1961, based en the tax liability as computed after taking credit for allowances and exemptions.

Deferred Tax is recognized subject to the consideration of prudence, on timing differences, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

Deferred Tax assets are not recognised on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised as per AS-22 "Accounting for Taxes on income "issued by the Institute of Chartered Accountants of India

1.14 Earning Per Share

Profit after Tax of a particular reporting period is used as the earnings figure for the purpose of calculating Earning per Share. Basic Earning per Share has been computed by dividing Profit after Tax by the weighted average number of Shares outstanding for the year Using the weighted average number of Shares and dilutive potential equity shares outstanding for the year the diluted earning per share is arrived at as per A3-20 "Earning per Share "issued by the Institute of Chartered Accountants of India.

1.15 Impairment of Assets

Impairment will be provided as and when required based on Management discussion.