Accounting Policies of Micro Technologies (India) Ltd. Company

Sep 30, 2013

(a)Basis of Preparation of Financial Statements:

The financial statements are prepared and presented under the historical cost conventions, on accrual basis of accounting to comply in all material respects, with the mandatory Accounting Standards as notified by the Companies (Accounting Standards) Rules, 2006 as amended (''the Rules'') and the relevant provisions of the Companies Act,1956 (''the Act''). The accounting policies have been consistently applied by the Company and the Accounting Policies not referred to otherwise are in conformity with Indian Generally Accepted Accounting Principles (''Indian GAAP'') (b)Use of Estimates:

The preparation of financial statements in conformity with the ''Indian GAAP'' requires management to make estimates and assumptions that may affect the reported amounts of Assets and Liabilities and disclosures relating to Contingent Liabilities as at the date of the financial statements and the reported amounts of incomes and expenses during the reporting period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. Differences between the actual results and estimates are recognized in the year in which the results are known/ materialized.

(c)Fixed Assets

(i) Fixed Assets are stated at cost, less accumulated depreciation and impairment, if any. Cost includes all expenditure necessary to bring the asset to its working condition for its intended use.

(ii) Capital work-in-progress comprises advances paid to acquire fixed assets along with the incidental expenses incurred to acquire such fixed assets (including Land & Building) that are not ready for their intended use at the reporting date. (d)Depreciation:

Depreciation is being provided on all tangible assets on "Straight Line Method" as per the rates and in the manner prescribed in Schedule XIII to the Companies Act, 1956.

(e)Amortization

Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the assets will flow to enterprise and the cost of the assets can be measured reliably. The Intangible assets are recorded at the consideration paid for the acquisition of such assets and are carried at cost less accumulated amortization and impairment loss, if any.

(f)Impairment of Assets:

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to profit & loss account in the year in which an asset identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

(g)Foreign Currency Transactions:

(i)Initial Recognition:

Transactions in foreign currency are recorded at the original rate of exchange in force at the time, transactions are affected.

(ii)Conversion:

Foreign currency monetary items are reported using the closing rates as on the date of financial statements.

(iii)Exchange Difference:

Exchange difference arising on the settlement of transactions of monetary items or on reporting such monetary items 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 expense in the year in which they arise/reported.

(h)Investment:

Investments that are readily realizable and intended to be held for not more than a year are classified as Current Investments. All other investments are classified as long term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis.

Long term investments including investment in subsidiaries are carried at Cost. Cost includes any incidental costs incurred towards acquisition of said investment. However, provision if necessary for diminution in value is made to recognize a decline other than the one temporary in nature.

(i)Revenue Recognition:

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.

i)Sale of Goods:

Revenue is recognized when the significant risks and rewards in respect of ownership of products are transferred by the company.Sales are recorded net of Returns, Sales tax/ Value added tax and applicable trade discounts and allowances.

ii)Software Development and Licensing:

Revenue is primarily derived from sale of developed software and related services and from licensing of the software products. Software sales are recognized only on customer''s acceptance of delivery.

Annual Technical Services revenue and revenue from fixed-price maintenance contracts are recognized proportionately over the period in which services are rendered.

iii)Interest:

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

iv)Dividend:

Dividend income from investment is recognized when the right to receive the payment is established. v)Others:

Other revenue (including in respect of insurance or other claims or refunds, etc.) is accounted for in the year in which the right to receive the payment is established.

(j)Expenditure:

The cost of software / hardware purchased / developed and incidental cost incurred for software development are expensed during the year.

Cost of maintenance services for software developed is not provided for, even since in many of the related services and licensing of software products do stipulate free maintenance as part of the contract. The maintenance obligation are in the opinion of the management, not material in value and based on empirical experience, not expected to crystallize in the near future and hence not provided for.

Cost of warranties is also not provided for in the context of its specific exclusion in terms with the customers.

Provisions are made for all known losses and liabilities.

(k)Inventories:

Raw Materials, works-in-progress and finished/ traded goods are valued at lower of cost or net realizable value. Self-developed software is valued at cost of development or at net realizable value, whichever is lower.

(l)Research & Development:

Revenue expenditure on Research & Development is expensed as and when incurred and Capital expenditure incurred on Research & Development is added to the Cost of respective fixed assets.

(m)Employees Benefits:

(i)Provident Fund:

The eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan, in which both employees and the Company makes monthly contribution at a specified percentage of the covered employee''s salary. The Company has no further obligation under the provident fund plan beyond its monthly contribution.

(ii)Gratuity:

Gratuity liability is a defined benefit obligation and is provided for on actuarial valuation made as at the balance sheet date.

(n)Borrowing Cost :

Borrowing Costs that are attributable to the Acquisition, Construction or Production of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

(o)Income Tax:

Tax expense for a year comprises of Current tax and Deferred tax.

Current tax is measured at the amount expected to be paid to the tax authorities, after taking into consideration, the applicable deductions and exemptions admissible under the provisions of the Income Tax Act, 1961.

Deferred tax reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. If there is unabsorbed depreciation or carry forward of losses under tax laws, deferred tax assets are recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised.

Deferred tax resulting from timing differences which originate during the tax holiday period but are expected to reverse after such tax holiday period is recognised in the year in which the timing differences originate using the tax rates and laws enacted or substantively enacted at the balance sheet date. At each balance sheet date, the company reassesses unrecognised deferred tax assets. It recognises unrealised deferred tax assets to the extent it has become reasonably certain or virtually certain, as the case may be, that sufficient taxable income will be available against which the deferred tax can be realised.

Minimum Alternative Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay income tax higher than that computed under MAT, during the period that MAT is permitted to be set off under the Income Tax Act, 1961 (specified period). In the year, in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in the guidance note issued by the Institute of Chartered Accountants of India (ICAI), the said asset is created by way of a credit to the profit and loss account and shown as MAT credit entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay income tax higher than MAT during the specified period.

(p)Segment Reporting

Segment Reporting as per Accounting Standard 17: The Company operates solely in the Information Technology Solutions Segment. The analysis of geographical segments is based on the areas in which the products of the Company are sold.

(q)Provisions, Contingent Liabilities and Contingent assets:

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the notes to accounts. Contingent assets are neither recognised nor disclosed in the financial statements.

(r)Cash Flow Statement:

The Cash Flow Statement is prepared by the "Indirect Method" set out in Accounting Standard 3 on "Cash Flow Statement" and presents the cash flows by Operating, Investing and Financing activities of the Company.

(s)Leases:

Lease under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Such assets acquired are capitalized at fair value of the asset or present value of the minimum lease payments at the inception of the leases, whichever is lower. Lease payments under operating leases are recognised as an expense on a straight line basis in the statement of profit and loss over the lease term.

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Mar 31, 2012

(a) Basis of Preparation of Financial Statements:

The financial statements are prepared and presented under the historical cost conventions, on accrual basis of accounting to comply in all material respects, with the mandatory Accounting Standards as notified by the Companies (Accounting Standards) Rules, 2006 as amended ('the Rules') and the relevant provisions of the Companies Act,1956 ('the Act'). The accounting policies have been consistently applied by the Company and the Accounting Policies not referred to otherwise are in conformity with Indian Generally Accepted Accounting Principles ('Indian GAAP')

(b) Use of Estimates:

The preparation of financial statements in conformity with the 'Indian GAAP' requires management to make estimates and assumptions that may affect the reported amounts of Assets and Liabilities and disclosures relating to Contingent Liabilities as at the date of the financial statements and the reported amounts of incomes and expenses during the reporting period. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates. Differences between the actual results and estimates are recognized in the year in which the results are known/ materialized.

(c) Fixed Assets

(I) Fixed Assets are stated at cost, less accumulated depreciation and impairment, if any. Cost includes all expenditure necessary to bring the asset to its working condition for its intended use.

(ii) Capital work-in-progress comprises advances paid to acquire fixed assets along with incidental expenses incurred to acquire such fixed assets that are not ready for their intended use at the reporting date.

(d) Depreciation:

Depreciation is being provided on all tangible assets on "Straight Line Method" as per the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

(e) Amortization

Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the assets will flow to enterprise and the cost of the assets can be measured reliably. The Intangible assets are recorded at the consideration paid for the acquisition of such assets and are carried at cost less accumulated amortization and impairment loss, if any.

(f) Impairment of Assets:

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to profit & loss account in the year in which an asset identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

(g) Foreign Currency Transactions:

(i) Initial Recognition:

Transactions in foreign currency are recorded at the original rate of exchange in force at the time, transactions are affected.

(ii) Conversion:

Foreign currency monetary items are reported using the closing rates as on the date of financial statements.

(iii) Exchange Difference:

Exchange difference arising on the settlement of transactions of monetary items or on reporting such monetary items 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 expense in the year in which they arise/reported.

(h) Investment:

Investments that are readily realizable and intended to be held for not more than a year are classified as Current Investments. All other investments are classified as long term investments.

Current investments are carried at lower of cost and fair value determined on an individual investment basis.

Long term investments including investment in subsidiaries are carried at Cost. Cost includes any incidental costs incurred towards acquisition of said investment. However, provision if necessary for diminution in value is made to recognize a decline other than the one temporary in nature.

(i) Revenue Recognition:

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.

I) Sale of Goods:

Revenue is recognized when the significant risks and rewards in respect of ownership of products are transferred by the company. Sales are recorded net of Returns, Sales tax/Value added tax and applicable trade discounts and allowances.

ii) Software Development and Licensing:

Revenue is primarily derived from sale of developed software and related services and from licensing of the software products. Software sales are recognized only on customers' acceptance of delivery.

Annual Technical Services revenue and revenue from fixed-price maintenance contracts are recognized proportionately over the period in which services are rendered.

iii) Interest:

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

iv) Dividend:

Dividend income from investment is recognized when the right to receive the payment is established.

v) Others:

Other revenue (including in respect of insurance or other claims or refunds, etc.) is accounted for in the year in which the right to receive the payment is established.

(j) Expenditure:

The cost of software / hardware purchased / developed and incidental cost incurred for software development are expensed during the year.

Cost of maintenance services for software developed is not provided for, even since in many of the related services and licensing of software products do stipulate free maintenance as part of the contract. The maintenance obligation are in the opinion of the management, not material in value and based on empirical experience, not expected to crystallize in the near future and hence not provided for.

Cost of warranties is also not provided for in the context of its specific exclusion in terms with the customers. Provisions are made for all known losses and liabilities.

(k) Inventories:

Raw Materials, works-in-progress and finished/traded goods are valued at lower of cost or net realizable value.

Self-developed software is valued at cost of development or at net realizable value, whichever is lower.

(l) Research & Development:

Revenue expenditure on Research & Development is expensed as and when incurred and Capital expenditure incurred on Research & Development is added to the Cost of respective fixed assets.

(m) Employees Benefits:

(I) Provident Fund:

The eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan, in which both employees and the Company makes monthly contribution at a specified percentage of the covered employee's salary. The Company has no further obligation under the provident fund plan beyond its monthly contribution.

(ii) Gratuity:

Gratuity liability is a defined benefit obligation and is provided for on actuarial valuation made as at the balance sheet date.

(n) Borrowing Cost:

Borrowing Costs that are attributable to the Acquisition, Construction or Production of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

(o) Income Tax:

Tax expense for a year comprises of Current tax and Deferred tax.

Current tax is measured at the amount expected to be paid to the tax authorities, after taking into consideration, the applicable deductions and exemptions admissible under the provisions of the Income Tax Act, 1961.

Deferred tax reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. If there is unabsorbed depreciation or carry forward of losses under tax laws, deferred tax assets are recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised.

Deferred tax resulting from timing differences which originate during the tax holiday period but are expected to reverse after such tax holiday period is recognised in the year in which the timing differences originate using the tax rates and laws enacted or substantively enacted at the balance sheet date. At each balance sheet date, the company reassesses unrecognised deferred tax assets. It recognises unrealised deferred tax assets to the extent it has become reasonably certain or virtually certain, as the case may be, that sufficient taxable income will be available against which the deferred tax can be realised.

Minimum Alternative Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay income tax higher than that computed under MAT, during the period that MAT is permitted to be set off under the income Tax Act, 1961 (specified period). In the year, in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in the guidance note issued by the Institute of Chartered Accountants of India (ICAI), the said asset is created byway of a credit to the profit and loss account and shown as MAT credit entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay income tax higher than MAT during the specified period.

(p) Segment Reporting

Segment Reporting as per Accounting Standard 17: The Company operates solely in the Information Technology Solutions Segment. The analysis of geographical segments is based on the areas in which the products of the Company are sold.

(q) Provisions, Contingent Liabilities and Contingent assets:

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the notes to accounts. Contingent assets are neither recognised nor disclosed in the financial statements.

(r) Cash Flow Statement:

The Cash Flow Statement is prepared by the "Indirect Method" set out in Accounting Standard 3 on "Cash Flow Statement" and presents the cash flows by Operating, Investing and Financing activities of the Company.

(s) Leases:

Lease under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Such assets acquired are capitalized at fair value of the asset or present value of the minimum lease payments at the inception of the leases, whichever is lower. Lease payments under operating leases are recognised as an expense on a straight line basis in the statement of profit and loss over the lease term.

The Company has only one class of share referred to as equity shares having a par value of Rs 10/- Each holder of equity shares is entitled to one vote per share.

The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holder of equity shares will be entitled to receive any of the remaining assets of the company, after distribution of all preferential amounts . However , no such preferential amount exist currently . The distribution will be in proportion to number of equity shares held by the shareholders.

* Cash CreditOverdraft borrowings are secured against Current Assets, entire Fixed Asset and property situated at Mahape belonging to Micro Cloud Computing Pvt.Ltd and Corporate Guarantee of Micro Cloud Computing Pvt Ltd and personal Guarantee of Directors Dr. P Sekhar and Ms Jayanthi S.

* As per Technical evaluation done by the Company certain Software were un economical to use due to change in Technology and hence Were not Supposed to give future economic benefit and accordingly these asset was charged to Statement of Profit & loss during last Financial Year.

** The Company has provided for the exchange rate fluctuation on FCCB Outstanding on the Financial Statement date that are yet to be converted/ redeemed

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Mar 31, 2011

(a) Basis of Preparation of Financial Statements:

The financial statements are prepared and presented under the historical cost conventions, on accrual basis of accounting to comply in alLmaterial respects, with the mandatory Accounting Standards as notified by the Companies (Accounting Standards) Rules, 2006 as amended (the Rules) and the relevant provisions of the Companies Act, 1956 (the Act). The accounting policies have been consistently applied by the Company and the accounting policies not referred to otherwise are in conformity with Indian Generally Accepted Accounting Principles (Indian GAAP)

(b)Use of Estimates:

The preparation of financial statements in conformity with the Indian GAAP requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statements and the reported amounts of incomes and expenses during the reporting period. Although these estimates are based upon managements best knowledge of current events and actions, actual results could differ from these estimates. Differences between the actual results and estimates are recognized in the year in which the results are known/ materialized.

(c) Fixed Assets

(I) Fixed Assets are stated at cost, less accumulated depreciation and impairment, if any. Cost includes all expenditure necessary to bring the asset to its working condition for its intended use.

(ii) Capital work-in-progress comprises advances paid to acquire fixed assets along with incidental expenses incurred toacquire such fixed assets that are not ready for their intended use at the reporting date.

(d) Depreciation:

Depreciation is being provided on all tangible assets on "Straight Line Method" as per the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

(e) Amortization

Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the assets will flow to enterprise and the cost of the assets can be measured reliably. The Intangible assets are recorded at the consideration paid for the acquisition of such assets and are carried at cost less accumulated amortization and impairment loss, if any.

(f) Impairment of Assets:

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to profit & loss account in the year in which an asset is identified as impaired. The impairment loss if any is recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

(g) Foreign Currency Transactions:

(I) initial Recognition:

Transactions in foreign currency are recorded at the original rate of exchange in force at the time, transactions are affected.

(ii) Conversion:

Foreign currency monetary items are reported using the closing rates as on the date of transaction.

(iii) Exchange Difference:

Exchange difference arising on the settlement or transactions of monetary items or on reporting date such monetary items at rates differs from those at which they were initially recorded during the year or reported in previous financial statements, are recognized as income or expense in the year in which they arise.

(h) Investment:

Investments that are readily realizable and intended to be held for not more than a year are classified as Current Investments. All other investments are classified as long term investments.

Current investments are carried at lower of cost and fair value determined on an individual investment basis.

Long term investments including investment in subsidiaries are carried at Cost. Cost includes any incidental costs incurred towards acquisition of said investment. However, provision if necessary for diminution in value is made to recognize a decline other than the one temporary in nature.

(i) Revenue Recognition:

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.

I) Sale of Goods:

Revenue is recognized when the significant risks and rewards in respect of ownership of products are transferred by the company. Sales are recorded net of Returns, Sales tax/ Value added tax and applicable trade discounts and allowances.

ii) Software Development and Licensing:

Revenue is primarily derived from sale of developed software and related services and from licensing of the software products. Software sales are recognized only on customers acceptance of delivery.

Annual Technical Services revenue and revenue from fixed-price maintenance contracts are recognized proportionately over the period in which services are rendered.

iii) Interest:

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

iv) Dividend:

Dividend income from investment is recognized when the right to receive the payment is established. Dividend from subsidiary company declared after the year end till the adoption of account by board of directors, is accounted during the year as required by Schedule VI of the Companies Act, 1956.

v) Others:

Other revenue (including in respect of insurance or other claims or refunds, etc.) is accounted for in the year in which the right to receive the payment is established.

(J) Expenditure:

The cost of software / hardware purchased / developed and incidental cost incurred for software development are expensed during the year.

Cost of maintenance services for software developed is not provided for, even since in many of the related services and licensing of software products do stipulate free maintenance as part of the contract. The maintenance obligation are in the opinion of the management, not material in value and based on empirical experience, not expected to crystallize in the near future and hence not provided for.

Cost of warranties is also not provided for in the context of its specific exclusion in terms with the customers.

Provisions are made for all known losses and liabilities.

(k) Inventories:

Raw Materials, works-in-progress and finished/ traded goods are valued at lower of cost or net realizable value.

Self-developed software is valued at cost of development or at net realizable value, whichever is lower.

(I) Research & Development:

Revenue expenditure on Research & Development is expensed as and when incurred and Capital expenditure incurred on Research & Development is added to the Cost of respective fixed assets.

(m) Employees Benefits:

(i) Provident Fund:

The eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan, in which both employees and the Company makes monthly contribution at a specified percentage of the covered employees salary. The Company has no further obligation under the provident fund plan beyond its monthly contribution.

(ii) Gratuity:

Gratuity liability is a defined benefit obligation and is provided for on actuarial valuation and the required provision is made as at the balance sheet date.

(n) Borrowing Cost:

Borrowing Costs that are attributable to the Acquisition, Construction or Production of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

(o) Income Tax:

Tax expense for a year comprises of Current tax and Deferred tax.

Current tax is measured at the amount expected to be paid to the tax authorities, after taking into consideration, the applicable deductions and exemptions admissible under the provisions of the Income Tax Act, 1961.

Deferred tax reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. If there is unabsorbed depreciation or carry forward of losses under tax laws, deferred tax assets are recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised.

Deferred tax resulting from timing differences which originate during the tax holiday period but are expected to reverse after such tax holiday period is recognised in the year in which the timing differences originate using the tax rates and laws enacted or substantively enacted at the balance sheet date. At eachbalance sheet date, the company reassesses unrecognised deferred tax assets. It recognises unrealised deferred tax assets to the extent it has become reasonably certain or virtually certain, as the case may be, that sufficient taxable income will be available against which the deferred tax can be realised.

Minimum Alternative Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay income tax higher than that computed under MAT, during the period that MAT is permitted to be set off under the Income Tax Act, 1961 (specified period). In the year, in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in the guidance note issued by the Institute of Chartered Accountants of India (ICAI), the said asset is created by way of a credit to the profit and loss account and shown as MAT credit entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay income tax higher than MAT during the specified period.

(p) Segment Reporting

Segment Reporting as per Accounting Standard 17: The Company operates solely in the Information Technology Solutions Segment. The analysis of geographical segments is based on the areas in which the products of the Company are sold.

(q) Provisions, Contingent Liabilities and Contingent assets:

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the notes to accounts. Contingent assets are neither recognised nor disclosed in the financial statements.

(r) Cash Flow Statement:

The Cash Flow Statement is prepared by the "Indirect Method" set out in Accounting Standard 3 on "Cash Flow Statement" and presents the cash flows by Operating, Investing and Financing activities of the Company.

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Mar 31, 2010

A. Basis of Preparation of Financial Statements:

The Financial statements are prepared and presented under the historical cost conventions, on accrual basis of accounting to comply in all material respects, with the mandatory accounting standards as notified by the Companies (Accounting Standards) Rules, 2006 as amended (the Ruies!) and the relevant provisions of the Companies Act, 1956 (the Act). The accounting policies have been consistently applied by the Company and the accounting policies not referred to otherwise are in conformity with Indian Generally Acceptea Accounting Principles (Indian GAAP)

b. Use of Estimates:

The preparation of financial statements in conformity with the Indian GAAP requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statements and the reported amounts of incomes and expenses during the reporting period. Although these estimates are based upon managements best knowledge of current events and actions, actual results could differ from these estimates.

c. Fixed Assets & Depreciation:

i) Fixed assets are stated at cost, less accumulated depreciation and impairment ioses, if any. Cost includes aii expenditure necessary to bring the asset to its working condition for its intended use.

ii) Depreciation is being provided on ail tangible assets on Straight Line Method" as per the rates and in the manner prescribed in Scheduie XIV to the Companies Act 1956.

iii) Capital Work-in-Progress comprises advances paid to acquire fixed assets along with the incidental expenses incurred to acquire such fixed assets that are not ready for their intended use at the reporting date.

iv) Intangible assets are recognized when it is probable that the future economic benefits that are attributable t o the assets will flow to enterprise and the cost of the assets can be measured reliably. The Intangible assets are recorded at the consideration paid for the acquisition of such assets and are carried at cost less accumulate amortization and accumulate impairment loss, if any.

d. Foreign Currency Transactions:

i) Initial Recognition:

Transactions in foreign currency are recorded at the original rate of exchange in force at the time transactions are affected.

ii) Conversion:

Foreign currency monetary items are reported using the closing rates.

iii) Exchange Difference:

Exchange difference arising on the settlement or transactions of monetary items or on reporting such monetary items 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.

e. Investment:

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments.

Current investments are carried at lower of cost and fair value determined on an individual investment basis.

Long term investments including investment in subsidiaries are carried at cost. Cost includes any incidental costs incurred towards acquisition. However, provision if necessary for diminution in value is made to recognize a decline other than temporary in the value of investment.

f. Revenue Recognition:

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.

Sale of Goods:

Revenue is recognized when the significant risks and rewards in respect of ownership of products are transferred by the company. Sales are recorded net of returns, Sales tax/Value added tax and applicable trade discounts and allowances.

Software Development and Licensing:

Revenue is primarily derived from software development and related services and from licensing of the software products. Software sales are recognized only on customers acceptance of delivery.

Annual Technical Services revenue and revenue from fixed-price maintenance contracts are recognized proportionately over the period in which services are rendered.

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

Dividend:

Dividend income from investment is recognized when the right to receive the payment is established. Dividend from subsidiary company declared after the year end till the adoption of account by board of directors, is accounted during the year as required by Schedule VI of the Companies Act, 1956.

Others:

Other revenue (including in respect of insurance or other claims or refunds, etc.) is accounted for in the year in which the right to receive the payment is established.

g. Expenditure:

The cost of software / hardware purchased / developed and incidental cost incurred for software development are expensed during the year.

Cost of maintenance services for software development is not provided for, since in many of the related services and licensing of software product do stipulate free maintenance as part of the contracts. In other cases, the maintenance obligation are in the opinion of the management, not material in value and based on empirical experience, not expected to crystallize in the near future and hence not provided for.

Cost of warranties is also not provided for in the context of its specific exclusion in terms with the customers.

Provisions are made for all known losses and liabilities.

h. Inventories:

Raw Materials, works-in-progress and finished/ traded goods are valued at lower of cost or net realizable value. Self-developed software is valued at cost of development or at net realizable value, whichever is lower.

i. Research & Development:

Revenue expenditure on research & development is expensed as incurred and Capital expenditure incurred on research & development is added to respective fixed assets.

j. Retirement benefits:

Provident Fund:

The eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan, in which both employees and the Company makes monthly contribution at a specified percentage of the covered employees salary. The provident fund plan is administered by the government of India. The Company has no further obligation under the provident fund plan beyond its monthly contribution.

Gratuity:

Gratuity liability is a defined benefit obligation and the same is provided on estimation basis as decided by the management.

k. Income Tax:

Tax expense for a year comprises of current tax and deferred tax.

Current tax are measured at the amount expected to be paid to the tax authorities, after taking into consideration, the applicable deductions and exemptions admissible under the provisions of the Income Tax Act, 1961.

Deferred tax reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing difference of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. If there is unabsorbed depreciation or carry forward of losses under tax laws, deferred tax assets are recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised.

Deferred tax resulting from timing differences which originate during the tax holiday period but are expected to reverse after such tax holiday period is recognised in the year in which the timing differences originate using the tax rates and laws enacted or substantively enacted at the balance sheet date. At each balance sheet date, the company reassesses unrecognised deferred tax assets. It recognises unrealised deferred tax assets to the extent it has become reasonably certain or virtually certain, as the case may be, that sufficient taxable income will be available against which the deferred tax can be realised.

Minimum Alternative Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay income tax higher than that computed under MAT, during the period that MAT is permitted to be set off under the Income Tax Act, 1961 (specified period). In the year, in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in the guidance note issued by the Institute of Chartered Accountants of India (ICAI), the said asset is created byway of a credit to the profit and loss account and shown as MAT credit entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay income tax higher than MAT during the specified period.

l. Provisions, Contingent Liabilities and Contingent assets:

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the Notes to Accounts. Contingent Assets are neither recognised nor disclosed in the financial statements.

m. Impairment of Assets:

An Assets is treated as impaired when the carrying cost of the assets exceeds its recoverable value. An impairment loss is charged to profit & loss account in the year in which an asset identified as impaired. The impairment Loss recognized in prior accounting period is reserved if there has been a change in the estimate of recoverable amount.

n. Cash Flow Statement:

The Cash Flow Statement is prepared by the "Indirect Method" set out in Accounting Standard 3 on "Cash Flow Statement" and presents the cash flows by operating investing and financing activities of the Company.