Accounting Policies of Fourth Generation Information Systems Ltd. Company

Mar 31, 2024

1.1 General Information

FOURTH GENERATION INFORMATION SYSTEMS LIMITED (“the
Holding company”) and its subsidiaries (together “the group”) are
engaged in the IT and IT enabling services (ITES) provider. The
company has business operations mainly in India. The company is a
public limited company incorporated and domicile in India and has its
registered office at Flat No.301, Saipriya Apartments, Hno.6-3-
663/7/6/301, Jafferalibagh, Somajiguda, Hyderabad- 500082. The
company has its primary listings on the Bombay Stock Exchange and
National Stock Exchange in India. The principle accounting policies
applied in the preparation of financial statements are set out below.
These policies have been consistently applied to all the years
presented, unless otherwise stated.

1.2 Basis of preparation and presentation of Financial Statements

The financial statements of FOURTH GENERATION INFORMATION
SYSTEMS LIMITED (“FGISL” or “the company”) have been prepared
and presented in accordance with the Indian Accounting Standards
(“Ind AS”) notified underthe Companies (Indian Accounting Standards)
Rules 2015, as amended and as per other relevant provisions of the
Act. The presentation of financial statements is based upon Ind AS
Schedule III of Companies Act, 2013.

1.3 Basis of Measurement

These financial statements have been prepared on the historical cost
convention and on an accrual basis, except for the following material
items in the balance sheet:

a. Derivative financial instruments are measured at fair value.

b. Certain financial assets are measured either at fair value or at
amortized cost depending on the classification;

c. Employee defined benefit assets/(liability) are recognized as the net
total of the fair value of plan assets, plus actuarial losses, less actuarial
gains and the present value of the defined benefit obligation, and

d. Long-term borrowings are measured at amortized cost using the
effective interest rate method.

All assets and liabilities are classified into current and non-current
based on the operating cycle of less than twelve months or based on
the criteria of realization/settlement within twelve months period from
the balance sheet date.

1.4 Use of estimates and judgment

The preparation of financial statements in conformity with Ind AS
requires management to make judgments, estimates and assumptions
that affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. These estimates
and associated assumptions are based on historical experiences and
various other factors that are believed to be reasonable under the
circumstances. Actual results may differfrom these estimates.

Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognized in the period
in which the estimates are revised and in any future periods affected. In
particular, the areas involving critical estimates or Judgment are:

a. Depreciation and amortization

Depreciation and amortization is based on management estimates of
the future useful lives of certain class of property, plant and equipment
and intangible assets.

b. Employee Benefits

The present value of the employee benefit obligations depends on a
number of factors that are determined on an actuarial basis using a
number of assumptions. The assumptions used in determining the net
cost (income) includes the discount rate, wage escalation and
employee attrition. The discount rate is based on the prevailing market
yields of Indian Government securities as at the balance sheet date for
the estimated term of the obligations.

c. Provision and contingencies

Provisions and contingencies are based on the Management’s best
estimate of the liabilities based on the facts known at the balance sheet
date.

d. Fairvaluation

Fair value is the market based measurement of observable market
transaction or available market information. All financial instruments
are measured at fair value as at the balance sheet date, as provided in
Ind AS 109 and 113. Being a critical estimate, judgment is exercised to
determine the carrying values. The fair value of financial instruments
that are unlisted and not traded in an active market is determined at fair
values assessed based on recent transactions entered into with third
parties, based on valuation done by external appraisers etc.

e. Functional and presentation currency

These financial statements are presented in Indian rupees, which is
also the functional currency of the Company. All financial information
presented in Indian rupees has been rounded to the nearest lakhs.

1.5 Current and noncurrent classification

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

All the assets and liabilities have been classified as current or
noncurrent as per the Company''s normal operating cycle and other
criteria set out in the Schedule III to the Companies Act, 2013 and Ind
AS 1, presentation of financial statements.

Assets: An asset is classified as current when it satisfies any of the
following criteria:

a. It is expected to be realized in, oris intended for sale or consumption in,
the Company’s normal operating cycle;

b. It is held primarily forthe purpose of being traded;

c. It is expected to be realized within twelve months after the reporting
date; or

d. It is cash or cash equivalent unless it is restricted from being exchanged
or used to settle a liability for at least twelve months after the reporting
date.

Liabilities: A liability is classified as current when it satisfies any of the
following criteria:

a. It is expected to be settled in the Company’s normal operating cycle;

b. It is held primarily forthe purpose of being traded;

c. It is due to be settled within twelve months afterthe reporting date; or

d. The Company does not have an unconditional right to defer settlement
of the liability for at least twelve months after the reporting date. Terms
of a liability that could, at the option of the counter party, result in its
settlement by the issue of equity instruments do not affect its
classification

Current assets/ liabilities include the current portion of noncurrent
assets/ liabilities respectively. All other assets/ liabilities are classified
as noncurrent. Deferred tax assets and liabilities are always disclosed
as non-current.

1.6 Foreign Currency Transaction

Transactions in foreign currencies are translated to the respective
functional currencies of entities within the Company at exchange rates
at the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies at the reporting date are translated
into the functional currency at the exchange rate at that date.

Exchange differences arising on the settlement of monetary items or on
translating monetary items at rates different from those at which they
were translated on initial recognition during the period or in previous
financial statements are recognized in the statement of profit and loss
in the period in which they arise.

1.7 Property Plant & Equipment
Recognition and measurement

Property, Plant and Equipment are stated at cost of acquisition or
construction less accumulated depreciation and impairment loss, if
any. Cost includes expenditures that are directly attributable to the
acquisition of the asset i.e., freight, duties and taxes applicable and
other expenses related to acquisition and installation. The cost of
self-constructed assets includes the cost of materials and other costs
directly attributable to bringing the asset to a working condition for its
intended use. Borrowing costs that are directly attributable to the
construction or production of a qualifying asset are capitalized as part
of the cost of that asset.

Directly attributable costs include:

a. Cost of Employee Benefits.

b. Cost of Software Preparation.

c. Initial Delivery & Handling costs.

d. Professional Fees and

e. Costs of testing whether the asset is functioning properly, after
deducting the net proceeds from selling any item produced while
bringing the asset to that location and condition (such as samples
produced when testing equipment).

When parts of an item of property, plant and equipment have different useful
lives, they are accounted for as separate items (major components) of
property, plant and equipment.

Gains and losses upon disposal of an item of property, plant and equipment
are determined by comparing the proceeds from disposal with the carrying
amount of property, plant and equipment and are recognized net within the
statement of profit and loss.

The cost of replacing part of an item of property, plant and equipment is
recognized in the carrying amount of the item if it is probable that the future
economic benefits embodied within the part will flow to the Company and its
cost can be measured reliably. The carrying amount of the replaced part will
be derecognized. The costs of repairs and maintenance are recognized in the
statement of profit and loss as incurred.

Items of property, plant and equipment acquired through exchange of non¬
monetary assets are measured at fair value, unless the exchange transaction
lacks commercial substance or the fair value of either the asset received or
asset given up is not reliably measurable, in which case the asset exchanged
is recorded at the carrying amount of the asset given up.

Depreciation

Depreciation is recognized in the statement of profit and loss on a straight line
basis over the estimated useful lives of property, plant and equipment based
on the Companies Act, 2013 (“Schedule II”), which prescribes the useful lives
for various classes of tangible assets. For assets acquired or disposed off
during the year, depreciation is provided on pro rata basis. Land is not
depreciated.

Depreciation methods, useful lives and residual values are reviewed at each
reporting date and adjusted prospectively, if appropriate.

Advances paid towards the acquisition of property, plant and equipment
outstanding at each reporting date is disclosed as capital advances under
other noncurrent assets. The cost of property, plant and equipment not ready
to use before such date are disclosed under capital work-in-progress. Assets
not ready for use are not depreciated.

The Company assesses at each balance sheet date, whether there is
objective evidence that an asset or a group of assets is impaired. An asset’s
carrying amount is written down immediately to its recoverable amount if the
asset’s carrying amount is greater than its estimated recoverable amount.
Recoverable amount is higher of the value in use orfair value less cost to sell.

1.8 Intangible assets

Acquired computer software is capitalized on the basis of the costs
incurred to acquire and bring to use the specific software. The
Intangible assets that are acquired by the Company and that have finite
useful lives are measured at cost less accumulated amortization and
accumulated impairment losses.

Amortization

Amortization is recognized in the statement of profit and loss on a
straight-line basis over the estimated useful lives of intangible assets or
on any other basis that reflects the pattern in which the asset’s future
economic benefit are expected to be consumed by the entity. Intangible
assets that are not available for use are amortized from the date they
are available for use. The estimated useful lives are as follows:

The amortization period and the amortization method for intangible assets
with a finite useful life are reviewed at each reporting date.

1.9 Financial Instruments

Afina ncial instrument is any contract that gives rise to a financial asset of one
entity and a financial liability or equity instrument of another entity.

a. Financial assets

Initial recognition and measurement

All financial assets are recognized initially at fair value plus, in the case of
financial assets not recorded at fair value through profit or loss, transaction
costs that are attributable to the acquisition of the financial asset. Purchases
or sales of financial assets that require delivery of assets within a time frame
established by regulation or convention in the market place (regular way
trades) are recognized on the trade date, i.e., the date that the Company
commits to purchase or sell the asset.

Subsequent measurement

Debt instrument at FGISL

Debt instruments included within the FGISL category are measured at fair
value with all changes recognized in the statement of profit and loss. The
Company has not designated any debt instrument as at FGISL.

Investment in Preference Shares and Unquoted trade Investments

Investment in Preference Shares and Unquoted trade Investments are
measured at amortized cost using Effective Rate of Return (El R).

Investment in equity instruments

All equity investments in scope of Ind AS 109 are measured at fair value.
Equity instruments which are held for trading and contingent consideration
recognized by an acquirer in a business combination to which Ind AS103
applies are classified as at FGISL. For all other equity instruments, the
Company may make an irrevocable election to present in other
comprehensive income subsequent changes in the fair value. The Company
makes such election on an instrument-by-instrument basis. The classification
is made on initial recognition and is irrevocable.

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

Investments in subsidiaries

Investments in subsidiaries are carried at cost less accumulated impairment
losses, if any. Where an indication of impairment exists, the carrying amount
of the investment is assessed and written down immediately to its
recoverable amount. On disposal of investments in subsidiaries and joint
venture, the difference between net disposal proceeds and the carrying
amounts are recognized in the statement of profit and loss.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a
group of similar financial assets) is primarily derecognized (i.e., removed
from the Company’s balance sheet) when:

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

b. The Company has transferred its rights to receive cash flows from the
asset or has assumed an obligation to pay the received cash flows in full
without material delay to a third party under a ‘pass-through’ arrangement;
and either (a) the Company has transferred substantially all the risks and
rewards of the asset, or(b) the Company has neither transferred nor retained
substantially all the risks and rewards of the asset, but has transferred control
of the asset.

When the Company has transferred its rights to receive cash flows from an
asset or has entered into a pass- through arrangement, it evaluates if and to
what extent it has retained the risks and rewards of ownership. When it has
neither transferred nor retained substantially all of the risks and rewards of
the asset, nor transferred control of the asset, the Company continues to
recognize the transferred asset to the extent of the Company’s continuing
involvement. In that case, the Company also recognizes an associated
liability. The transferred asset and the associated liability are measured on a
basis that reflects the rights and obligations that the Company has retained.

Impairment of trade receivables

In accordance with Ind AS 109, the Company applies expected credit loss
(ECL) model for measurement and recognition of impairment loss on the
trade receivables or any contractual right to receive cash or another financial
asset that result from transactions that are within the scope of Ind AS 18.As
company trade receivables are realized within normal credit period adopted
by the company, hence the company trade receivables are not impaired
except for certain customers for which adequate provision has been made on
the same.

b. Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at
fair value i.e., loans and borrowings, payables, or as derivatives designated
as hedging instruments in an effective hedge, as appropriate. All financial
liabilities are recognized initially at fair value and, in the case of loans and
borrowings and payables, net of directly attributable transaction costs.

The Company''s financial liabilities include trade and other payables, loans
and borrowings including bank overdrafts, financial guarantee contracts.

Subsequent measurement

The measurement of financial liabilities depends on their classification, as
described below:

Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are
subsequently measured at amortized cost using the El R method. Gains and
losses are recognized in the statement of profit and loss when the liabilities
are derecognized as well as through the El R 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.

1.9 Impairment of non-financial assets

The carrying amounts of the Company’s non-financial assets, other than
inventories and deferred tax assets are reviewed at each reporting date to
determine whether there is any indication of impairment. If any such
indication exists, then the asset''s recoverable amount is estimated. For
goodwill and intangible assets that have indefinite lives or that are not yet
available for use, an impairment test is performed each yearat March 31.

The recoverable amount of an asset or cash-generating unit (as defined
below) is the greater of its value in use and its fair value less costs to sell. In
assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset or
the cash-generating unit. For the purpose of impairment testing, assets are
grouped together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the cash inflow of
other assets or groups of assets (the “cash-generating unit”).

An impairment loss is recognized in the statement of profit and loss if the
estimated recoverable amount of an asset or its cash-generating unit is lower
than its carrying amount. Impairment losses recognized in respect of cash¬
generating units are allocated first to reduce the carrying amount of any
goodwill allocated to the units and then to reduce the carrying amount of the
other assets in the unit on a pro-rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other
assets, impairment losses recognized in prior periods are assessed at each
reporting date for any indications that the loss has decreased or no longer
exists. An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss is
reversed only to the extent that the asset’s carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation or
amortization, if no impairment loss had been recognized.

1.10 Cash & Cash Equivalents

Cash and bank balances comprise of cash balance in hand, in current
accounts with banks, demand deposit, short-term deposits, Margin Money
deposits and unclaimed dividend accounts. For this purpose, “short-term”
means investments having maturity of three months or less from the date of
investment. Bank overdrafts that are repayable on demand and form an
integral part of our cash management are included as a component of cash
and cash equivalents for the purpose of the statement of cash flows. The
Margin money deposits, balance in dividend accounts which are not due and
unclaimed dividend balances shall be disclosed as restricted cash balances.

1.11 Employee Benefits

a. Short term employee benefits

Short-term employee benefits are expensed as the related service is
provided. A liability is recognized for the amount expected to be paid if the
Company has a present legal or constructive obligation to pay this amount as
a result of past service provided by the employee and the obligation can be
estimated reliably.

b. Defined Contribution Plan

The Company''s contributions to defined contribution plans are charged to the
statement of profit and loss as and when the services are received from the
employees.

c. Defined Benefit Plans

The liability in respect of defined benefit plans and other post-employment
benefits is calculated using the projected unit credit method consistent with
the advice of qualified actuaries. The present value of the defined benefit
obligation is determined by discounting the estimated future cash outflows
using interest rates based on prevailing market yields of Indian Government
Bonds and that have terms to maturity approximating to the terms of the
related defined benefit obligation. The current service cost of the defined
benefit plan, recognized in the statement of profit and loss in employee
benefit expense, reflects the increase in the defined benefit obligation
resulting from employee service in the current year, benefit changes,
curtailments and settlements. Past service costs are recognized immediately
in income. The net interest cost is calculated by applying the discount rate to
the net balance of the defined benefit obligation and the fair value of plan
assets. This cost is included in employee benefit expense in the statement of
profit and loss. Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions are charged orcredited to
equity in other comprehensive income in the period in which they arise.

d. Termination benefits

Termination benefits are recognized as an expense when the Company is
demonstrably committed, without realistic possibility of withdrawal, to a
formal detailed plan to either terminate employment before the normal
retirement date, or to provide termination benefits as a result of an offer made
to encourage voluntary redundancy. Termination benefits for voluntary
redundancies are recognized as an expense if the Company has made an
offer encouraging voluntary redundancy, it is probable that the offer will be
accepted, and the number of acceptances can be estimated reliably.

e. Other long-term employee benefits

The Company''s net obligation in respect of other long term employee benefits
is the amount of future benefit that employees have earned in return for their
service in the current and previous periods. That benefit is discounted to
determine its present value. Re-measurements are recognized in the
statement of profit and loss in the period in which they arise.

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Mar 31, 2012

1. Basis of Accounting:

a) The financial statements have been prepared on the basis of going concern under historical cost convention in accordance with generally accepted principles and provisions of the Companies Act, 1956 with revenue recognized and expenses accounted on accrual basis unless otherwise stated.

b) Accounting policies not specifically referred to otherwise are in consonance with prudent accounting principles.

c) All Income and Expenditure items, having material bearing on the financial statements are recognized on accrual basis.

2. Fixed Assets: Fixed assets are stated at cost less accumulated depreciation. All costs, directly attributable to bringing the asset to the present condition for the intended use, are capitalized. Advances paid to capital creditors continuously shown under capital work in progress. The position of the advances given and their acknowledgements is yet to be confirmed.

3. Depreciation: Depreciation on fixed assets has been provided on straight-line method.

4. Foreign Currency Transactions: The company follow the foreign currency transactions as per applicable accounting standards.

6. Retirement Benefits: a) No provision has been made for retirement benefits, as they are not applicable to the company

7. Related Party Transactions:

a) Associate enterprises and amounts due from them: Nil

b) Key Management Personnel and relatives: Nil

c) Transactions with associate companies/firms/individuals: Nil

8. In accordance with the provisions of Accounting Standard 17, the company has only one reportable primary segment consisting of information technology services. Hence segment reporting not applicable.

9. Cash flow statement Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from regular revenue generating, investing and financing activities of the company are segregated.

10. Earnings per share In determining earnings per share, the company considers the net profit after tax expense. The number of shares used in computing basic earnings per is the weighted average shares used in outstanding during the period.

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Mar 31, 2010

1. Basis of Accounting:

a) The financial statements have been prepared on the basis of going concern under historical cost convention in accordance with generally accepted principles and provisions of the Companies Act, 1956 with revenue recognized and expenses accounted on accrual basis unless otherwise stated.

b) Accounting policies not specifically referred to otherwise are in consonance with prudent accounting principles.

c) All Income and Expenditure items, having material bearing on the financial statements are recognized on accrual basis.

2. Fixed Assets:

Fixed assets are stated at cost less accumulated depreciation. All costs, directly attributable to bringing the asset to the present condition for the intended use, are capitalized. Advances paid to capital creditors continuously shown under capital work in progress. The position of the advances given and their acknowledgements is yet to be confirmed.

3. Depreciation:

Depreciation on fixed assets has been provided on straight-line method.

4. Foreign Currency Transactions:

There are no transactions involving foreign exchange took place during the year under consideration.

5. Investments:

During the year 2003-04, Company has invested in the shares of M/s Net soft Technologies Inc., USA as a joint venture to the extent of 50% of the total share capital in equivalent to Rs. 9,99,49,237/- as a long-term investment. During the year under consideration, there is no dividend declared by this company. This investment is stated at cost and diminution in value if other than temporary is not recognized and provided due to lack of information. Confirmation of the status of investments has not been provided by the management.

6. Retirement Benefits:

a) Provident Fund: Contribution to Provident Fund is not made during the year under review.

b) Provision for gratuity and superannuation has not been made during the year under review.

7. Related Party Transactions:

a) Associate enterprises and amounts due from them: Nil

b) Key Management Personnel and relatives: Nil

c) Transactions with associate companies/firms/individuals: Nil

8. In respect of some of the Sundry Debtors, Loans and Advances, Other Receivables and Sundry Creditors confirmation of balances is still to be received and revalued.

9. Contingent Liabilities: Nil

10. In accordance with the provisions of Accounting Standard 17, the company has only one reportable primary segment consisting of information technology services. Hence segment reporting as defined is not submitted.

11. Unclaimed dividend pertaining to the year 2000-01 to the extent of Rs. 15,765 has not been transferred to Central Govt. account for unclaimed dividends.

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Mar 31, 2009

1. Basis of Accounting:

a) The financial statements have been prepared on the basis of going concern under historical cost convention in accordance with generally accepted principles and provisions of the Companies Act, 1956 with revenue recognized and expenses accounted on accrual basis unless otherwise stated.

b) Accounting policies not specifically referred to otherwise are in consonance with prudent accounting principles.

c) All Income and Expenditure items, having material bearing on the financial statements are recognized on accrual basis.

2. Fixed Assets:

Fixed assets are stated at cost less accumulated depreciation. All costs, directly attributable to bringing the asset to the present condition for the intended use, are capitalized. Advances paid to capital creditors continuously shown under capital work in progress. The position of the advances given and their acknowledgements is yet to be confirmed.

3. Depreciation:

Depreciation on fixed assets has been provided on straight-line method.

4, Foreign Currency Transactions:

There are no transactions involving foreign exchange took place during the year under consideration.

5. Investments:

During the year 2003-04, Company has invested in the shares of M/s Net soft Technologies Inc., USA as a joint venture to the extent of 50% of the total share capital in equivalent to Rs, 9,99,49,237/- as a long term investment, During the year under consideration, there is no dividend declared by this company. This investment is stated at cost and diminution in value if other than temporary is not recognized and provided due to lack of information. Confirmation of the status of investments has not been provided by the management.

6. Retirement Benefits:

a) Provident Fund: Contribution to Provident Fund is not made during the year under review.

b) Provision for gratuity and superannuation has not been made during the year under review.

7. Related Party Transactions:

a) Associate enterprises and amounts due from them: Nil

b) Key Management Personnel and relatives: Nil

c) Transactions with associate companies/firms/individuals-. Nil

8. In respect of some of the Sundry Debtors, Loans and Advances, Other Receivables and Sundry Creditors confirmation of balances is still to be received and revalued.

9. Contingent Liabilities

During the year 2004-05, CIT (Appeals) of the concerned jurisdiction has served a demand notice for Rs.3,65,33,266/- towards assessment year 2001-02, the orders of which is appealed before Income Tax Appellate Tribunal and appeal proceedings are in progress. Therefore, provision is not made for the above said amount during the year.

10. In accordance with the provisions of Accounting Standard 17, the company has only one reportable primary segment consisting of information technology services. Hence segment reporting as defined is not submitted.

11. Unclaimed dividend pertaining to the year 2000-01 to the extent of Rs. 15,765 has not been transferred to Central Govt, account for unclaimed dividends.