Accounting Policies of SQL Star International Ltd. Company

Mar 31, 2010

1. Basis of Preparation

The financial statements are prepared under the historical cost convention in accordance with generally accepted accounting principles and applicable accounting standards.

Use of estimates

The preparation of financial statements requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of financial statements and reported amounts of income and expenses during the year. Example of such estimates include provision for doubtful debts, employee benefits, provision for income taxes, accounting for contract costs expected to be incurred to complete software development and the useful lives of fixed assets.

2. Fixed Assets

Fixed Assets are stated at cost less depreciation/amortization. Cost of acquisition includes freight, duties and installation expenses net of taxes and duties eligible for credit

Capital Work-in-Progress

Advances paid for acquisition of fixed assets and cost of assets (net of taxes and duties eligible for credit) not put to use before the year-end are disclosed under Capital Work-in-Progress

Assets are capitalised when they are ready for use / put to use.

3. Intangible Assets

intellectual Property Rights (IPR) is stated at cost less amortization. All costs incurred for development are carried forward till development is complete.

The Intangible assets are tested for impairment for both value and availability for use at the end of year and impairment loss is provided and deducted from the carrying amounts.

4. Investments

Long-term investments are stated at cost. Diminution is provided for decline in the carrying cost of long-term investments, if the decline is other than temporary.

5. Inventories

Stock of Courseware is valued on FIFO basis at lower of cost and net realizable value.

6. Revenue and Expenditure recognition

Revenue is recognized and expenditure is accounted for on their accrual, where there is no uncertainty as to measurement or collectibles other than the following

7. Employee Benefits

Short term employee benefits are charged at the undiscounted amount to Profit and Loss Account in the year in which the related service is rendered.

Defined contributions towards retirement benefits in the form of Provident Fund and Employees State Insurance Scheme for the year are charged to Profit and Loss Account.

Defined benefit plan - Gratuity and Long term compensated absence

Liability in respect of defined benefit plan in the form of gratuity is determined based on ""ctuarial valuation made by an independent actuary using Projected Unit Credit Method as at the balance sheet date and arc unfunded. Liabilities for long term compensated absences are recognised in the same manner.

8. Foreign Currency Transactions

Transactions in foreign exchange are initially recognised at the rates prevailing on the dates of transactions. Exchange difference arising out of restatement of foreign currency liabilities inc urred for acquisition of fixed assets are translated prevailing on the last working day of the accounting year is adjusted to the cost of fixed assets.

Premium or discount arising at the inception of forward contract is amortized as income or expense over the life of the contract. Exchange difference on such contracts is recognised in the reporting period in which exchange rates change.

All monetary assets and liabilities are restated at each Balance Sheet date using the closing rate. Resultant exchange difference is recognized as income or expense in that period.

10. Segment Reporting

The company has identified business segments as primary reporting segments and geographical segments as its secondary segment.

The company has identified three business segments;-

a) Software Development & Services

b) Education & Training

c) E-Covernance.

Revenue and expenses have been identified to respective segments on the basis of operating activities of the Enterprise. Revenue and expenses which relate to the enterprise as a whole and are not allocable to a segment on a reasonable basis has been disclosed as un-allocable revenue and expenses.

There are no inter-segmental transfers.

Segment assets and liabilities represent assets and liabilities in respective segments. Other assets and liabilities that cannot be allocated to a segment on a reasonable basis have been disclosed as un-allocable assets and liabilities.

Geographical segments have been identified by treating sales in India and Rest of the world as reportable geographical segments

11. Lease

Finance Leases are accounted in accordance with AS 19

12. Taxes on Income

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of Income Tax Act 1961. Deferred tax is recognised, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognised if there is virtual certainty that there will be sufficient future taxable income available to realise such losses.

13. Impairment of Assets

Impairment loss, if any, is provided to the extent, the carrying amount of assets exceeds their recoverable amount. Impairment loss is aggregated with depreciation

14. Provisions

A provision is recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimate can be made. Provision is not discounted to its present value and is determined based on the best estimate required to settle the obligation at the year-end date. These are reviewed at each year-end date and adjusted to reflect the best current estimate.

Contingent Liabilities are disclosed by way of notes in the Financial Statements.

Contingent Assets are neither recognised nor disclosed.