Accounting Policies of Nexxoft Infotel Ltd. Company

Mar 31, 2011

I. System of Accounting:

The accounts have been prepared on the basis of Going Concern concept and under the historical cost convention. The Company adopts accrual basis in preparation of its accounts to comply in all material aspects with applicable accounting principles in India, the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.

II. Use of Estimates:

The preparation of financial statements in conformity with the generally accepted accounting principles requires Revenue from the Software development/services on the time and material basis is recognized based on software developed /services rendered and billed to clients as per the terms of the contracts. In the case of fixed price contracts, revenue is recognized on periodical basis / based on the milestones achieved depending on the execution and delivery of the jobs to the clients. Revenue/Income from sale of traded goods is recognized on dispatch of goods. Unbilled man hours for completed contracts are treated as work in progress.

estimates and assumptions to be made that affect the reported amounts of the assets and liabilities on the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between actual results and estimates are recognized in the period in which the results are known /materialized.

III. Revenue Recognition:

IV. Valuation of Fixed Assets:

Fixed Assets are valued at cost, after reducing accumulated depreciation until the date of the Balance Sheet. Direct Costs are capitalized until the assets are ready to use and include financing costs relating to any specific borrowing attributable to the acquisition of fixed assets.

V. Depreciation:

Depreciation on fixed assets is provided on straight-line basis at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956. Individual assets cost of which doesn't exceed Rs 5,000/- each are depreciated in full in the year of purchase.

During the Year the company has decided to change the Depreciation rates for the Block Computers and Software.

VI. Foreign Currency Transactions:

Transactions in foreign currency are recorded at the rates of exchange prevailing at the date of the transactions. Monetary items denominated in foreign currencies at the Balance Sheet date are translated at the Balance Sheet date rates.

Any income or expense on account of exchange difference either on settlement or on translation at the Balance Sheet date is recognized in Profit & Loss Account in the period in which it arises.

VII. Export Benefits:

Export Benefits are accounted for on realization basis.

VIII. Lease Rent Transactions:

Lease Rentals are accounted for on accrual basis as per the terms of the agreement.

IX. Provision for Current and Deferred Tax:

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961 Deferred tax assets or liabilities are established at the enacted tax rates. Changes in the enacted rates are recognized in the period of enactment. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the assets will be realized in future.

XI. Earnings per share:

In determining earnings per share, the Company considers the net profit after tax and includes the post- tax effect of any extra-ordinary items. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period. The number of shares used in computing diluted earnings per share comprises the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares.

XII. Contingent Liabilities

Contingent liabilities are not provided in the books of accounts and are disclosed separately by way of note.

XII. Retirement Benefits

Gratuity and leave encashment will be charged to profit and loss account in the year of payment and no provision has been made for the same.

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Mar 31, 2009

I. System of Accounting:

The accounts have been prepared on the basis of Going Concern concept and under the historical cost convention. The Company adopts accrual basis in preparation of its accounts to comply in all material aspects with applicable accounting principles in India, the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.

II. Use of Estimates:

The preparation of financial statements in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of the assets and liabilities on the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between actual results and estimates are recognized in the period in which the results are known /materialized.

III. Revenue Recognition:

Revenue from the Software development/services on the time and material basis is recognized based on software developed /services rendered and billed to clients as per the terms of the contracts. In the case of fixed price contracts, revenue is recognized on periodical basis / based on the milestones achieved depending on the execution and delivery of the jobs to the clients. Revenue/Income from sale of traded goods is recognized on dispatch of goods. Unbilled man hours for completed contracts are treated as work in progress.

IV. Valuation of Fixed Assets:

Fixed Assets are valued at cost, after reducing accumulated depreciation until the date of the Balance Sheet. Direct Costs are capitalized until the assets are ready to use and include financing costs relating to any specific borrowing attributable to the acquisition of fixed assets.

V. Depreciation:

Depreciation on fixed assets is provided on straight-line basis at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956. Individual assets cost of which doesn't exceed Rs 5,000/- each are depreciated in full in the year of purchase.

During the Year the company has decided to change the Depreciation rates for the Block Computers and Software.

VI. Foreign Currency Transactions:

Transactions in foreign currency are recorded at the rates of exchange prevailing at the date of the transactions. Monetary items denominated in foreign currencies at the Balance Sheet date are translated at the Balance Sheet date rates.

Any income or expense on account of exchange difference either on settlement or on translation at the Balance Sheet date is recognized in Profit & Loss Account in the period in which it arises.

VII. Export Benefits:

Export Benefits are accounted for on realization basis.

VIII. Lease Rent Transactions:

Lease Rentals are accounted for on accrual basis as per the terms of the agreement.

IX. Provision for Current and Deferred Tax:

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961 Deferred tax assets or liabilities are established at the enacted tax rates. Changes in the enacted rates are recognized in the period of enactment. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the assets will be realized in future.

XI. Earnings per share:

In determining earnings per share, the Company considers the net profit after tax and includes the post-tax effect of any extra-ordinary items. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period. The number of shares used in computing diluted earnings per share comprises the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares.

XII. Contingent Liabilities

Contingent liabilities are not provided in the books of accounts and are disclosed separately by way of note.

XII. Retirement Benefits

Gratuity and leave encashment will be charged to profit and loss account in the year of payment and no provision has been made for the same.

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Mar 31, 2003

1. Basis of Accounting: The Company maintains its accounts on accrual basis following the historical cost convention in accordance with generally accepted accounting principles (GAAP) and in compliance with the Accounting Standards referred to in Section 211 (3C) and other requirements of the companies Act, 1956

2. Fixed Assets: Fixed Assets are stated at cost inclusive of freight, installation cost, duties and taxes and other incidental expenses.

3. Depreciation: Depreciation has been provided at the rates and the manner specified in the schedule XIV to the Companies Act, 1956.

4. Foreign Currency transactions: Current Assets and Current Liabilities are accounted at the rate prevailing on the date of Balance sheet. Exchange differences arising on foreign currency transaction are recognized in the profit & Loss account as income or expenses in the year in which they arise.

5. Taxes on Income: Tax on Income for the Current period is determined on the basis of Taxable Income and tax credits computed in accordance with the Provisions of the Income Tax, 1961 and based on expected outcome of assessments/appeals.

Deferred tax is recognized on timing differences between the accounting income and taxable income for the year and quantified using the tax rates and laws enacted or substantially enacted as on the Balance Sheet date.

Deferred Tax assets are recognized and carried forward to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

6. All contingent liabilities are indicated by way of not and will be provided/ paid on crystalisation.

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Mar 31, 2002

1. ACCOUNTING ASSUMPTIONS: The financial statements have been prepared under the historical cost convention in accordance with applicable accounting standard relevant presentational requirements of the Companies Act, 1956.

2. FIXED ASSETS: All Fixed Assets are stated at cost inclusive of freight, installation cost, duties and taxes and other incidental expenses.

3. DEPRECIATION: Depreciation on the assets of the Company is provided as per the Schedule XIV to the Companies Act, 1956.

4. Foreign Currency Transactions: Current Assets and Current Liabilities are accounted at the rate prevailing on the date of the Balance Sheet.

Exchange differences arising on foreign currency transactions are recognized in the Profit & Loss Account as Income or Expenses in the year in which they arise.

5. All contingent liabilities are indicated by way of a note and will be provided / paid on crystallization.