SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS 1. SIGNIFICANT ACCOUNTING POLICIES A. Method of Accounting These financial statements are brpared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values. GAAP comprises mandatory accounting standards as brscribed under Section 133 of the Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules,2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. a. The company generally recognizes income and expenditure on an accrual basis except those with significant uncertainties. b. The brparation of financial statements requires the management of the company to make estimates and assumptions considered in the reported amount of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in the brparation of the financial statements are prudent and reasonable. Future results could differ from these estimates. c. The brparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statements and reported amounts of income and expenses during the period. Examples of such estimates include computation of percentage of completion which requires the Company to estimate the efforts or costs expended to date as a proportion of the total efforts or costs to be expended, provisions for doubtful debts, future obligations under employee retirement benefit plans, income taxes, post-sales customer support and the useful lives of fixed tangible assets and intangible assets. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as the Management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements. B. Tangible Assets and Intangible Assets: a. Tangible Assets are stated at original cost including taxes, freight and other incidental expenses related to acquisition/installation and after adjustment of CENVAT benefits less accumulated debrciation and impairment in accordance with Accounting Standards 10 and 26 issued by ICAI. Interest/financing costs on borrowed funds attributable to assets are treated in accordance with Accounting Standard 16 issued by ICAI. b. Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment. c. Expenditure not specifically identified to any asset and incurred in respect of Fixed Assets not commissioned is carried forward as expenditure pending allocation and forms part of Capital work in progress. d. Lease Hold improvement are stated at original cost including taxes, freight and other incidental expenses related to acquisition/ installation and after adjustment of CENVAT benefits less accumulated debrciation as per management in accordance with Lease hold period. C. Debrciation Debrciation on tangible assets is provided on the straight-line method over the useful lives of assets Debrciation for assets purchased / sold during a period is proportionately charged. Intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis, commencing from the date the asset is available to the Company for its use. As brscribed under Part C of Schedule II of the Companies Act 2013. Residual values of assets debrciated on straight line basis to the extent of assets not in use, and/or discarded having outlived their utility are charged off during the year. D. Impairment of Assets The Management periodically assesses using, external and internal sources, whether there is an indication that an asset may be impaired. An impairment loss is recognized wherever the carrying value of an asset exceeds its recoverable amount. The recoverable amount is higher of the asset's net selling price and value in use, which means the brsent value of future cash flows expected to arise from the continuing use of the asset and its eventual disposal. An impairment loss for an asset is reversed if, and only if, the reversal can be related objectively to an event occurring after the impairment loss was recognized. The carrying amount of an asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or debrciation) had no impairment loss been recognized for the asset in prior years. E. Investments Investments are carried in accounts at cost of acquisition or declined value. Decline in value of the investments are considered in accordance with Accounting Standard 13. Decline in carrying value of investment considered to be permanent in nature, is provided for/adjusted in accordance with the said standard. Decline in value of investment charged to Statement of Profit and Loss in earlier accounting periods is reversed if the change of value is permanent in nature. F. Inventory The company recognizes the cost of work in progress based on the extent of completion of works commenced and unbilled as on the date of financial statements, as value of work in progress. G. Interest and Financial Charges a. Documentation, Commitment and Service Charges are sbrad over the tenure of the finance facility. b. Interest on Hire Purchase finance is charged to Statement of Profit and Loss on diminishing balance method as per the guidance note of The Institute of Chartered Accountants of India (ICAI). H. Loans under Deferred Credit / Hire Purchase The hypothecation rights of assets financed by hire purchase vest with the financing companies and on expiry of agreements will be transferred in favor of the Company. The cash price of assets thus financed is capitalized and the principal amount along with future interest is reflected in unsecured loans. The corresponding amount of future interest is reflected as deferred interest under Loans & Advances. I. Revenue Recognition The Company brsents revenues net of indirect taxes in its statement of profit and loss. Income from services is recognized when the same are fully rendered and billable. The company adopts the percentage of completion basis for certain customers, and for certain customers on monthly fixed billing basis. Work-in-process on incomplete service assignments and works are estimated based on extent of completion as at the end of the year. J. Employee Benefits a. Gratuity & Provident fund The Company provides for gratuity, a defined benefit retirement plan ('the Gratuity Plan') covering eligible employees. The Gratuity Plan provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary and the tenure of employment with the Company. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation, performed by an independent actuary, at each Balance Sheet date using the projected unit credit method. The Company recognizes the net obligation of the gratuity plan in the Balance Sheet as an asset or liability, respectively in accordance with Accounting Standard (AS) 15, 'Employee Benefits. The Company's overall expected long-term rate-of-return on assets has been determined based on consideration of available market information, current provisions of Indian law specifying the instruments in which investments can be made, and historical returns. The discount rate is based on the Government securities yield. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the statement of profit and loss in the period in which they arise. b. Liability for Leave Encashment The employee of the company are entitled to leave encashment which are both accumulating and non-accumulating in nature in accordance with the policy of the company. The expected cost of accumulating leave encashment is determined by actuarial valuation using projected unit credit method on the additional amount expected to be paid / availed as a result of the unused entitlement that has accumulated at the Balance sheet date. Expenses on non-accumulating leaves is recognized in the period in which the absences occur. c. Employee share based payments The company accounts for equity settled stock options as per the accounting treatment brscribed by Securities and Exchange Board of India ( share based employee benefits) Regulations, 2014 and the Guidance Note on Employee Share-based Payments issued by the Institute of Chartered Accountants of India using the intrinsic value method. K. Foreign Currency Transactions Transactions denominated in foreign currencies are recorded at the exchange rate brvailing on the date of the transaction. Exchange gains or losses on conclusion of transaction within the accounting year relating to fixed assets are capitalized while in respect of others, the impact is recognized in the Statement of Profit and Loss. Outstanding monetary transactions denominated in foreign currencies at the yearend are restated at year end rates. L. Foreign Exchange Derivatives and Hedging Transactions Company uses foreign exchange forward to hedge its risk associated with foreign currency fluctuation. In respect of derivative and hedging transactions gains/Losses arising on settlement are recognized in Statement of Profit and Loss account on settlement. M. Taxes on Income Provision for current tax is made in accordance with the provisions of the Income-tax Act, 1961. Deferred tax provisioning on account of timing difference between taxable & accounting income, is made in accordance with Accounting Standard 22 issued by the Institute of Chartered Accountants of India. Deferred tax asset is neither disclosed nor recognized in the books. N. Miscellaneous Expenditure Preliminary and deferred expenses are amortized over a period of 5 years. O. Leases Assets taken on lease where the Company acquires substantially the entire risks and rewards incidental to ownership are classified as finance leases. The amount recorded is the lesser of the brsent value of the cumulative minimum lease rentals along with other incidental expenses during the lease term or the asset's fair value. The rental obligations, net of interest charges, are reflected in loans and advances. Leases that do not transfer substantially all of the risks and rewards of ownership are classified as operating leases and recorded as expenses as and when payments are made over the lease term. P. Earnings per Share The Basic earnings per share ("BEPS") is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year. The diluted Earnings per share ("DEPS") is calculated after adjusting the weighted average number of Equity shares to give effect to the potential equity shares on the fully convertible warrants outstanding. Q. Contingent Liabilities & Assets Provisions involving substantial degree of estimation in measurement are recognized when there is a brsent obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements. NOTES TO THE BALANCE SHEET & STATEMENT OF PROFIT AND LOSS 1. The brvious year's figures have been reworked, regrouped, rearranged and reclassified wherever necessary. However the brvious year financials are true and fair and are free from material misstatements. Accordingly, amounts and other disclosures for the brceding year are included as an integral part of the current year financial statements and are to be read in relation to the amounts and other disclosures relating to the current year. 2. Deferred Tax Deferred Tax liability at the beginning of the year was Rs. 126.17 Lakhs and resulted into Deferred Tax Asset ` 66.34 Lakhs for the current year, leaving a net liability of Rs. 59.83 Lakhs. 3. INVENTORY AND WORK IN PROGRESS Pertains to cost of contracted partial work completion values as at March 31, 2015 amounting to Rs. 1.86 Crores (March 31, 2014: Rs. 1.22 Crores) which are as certified by the management. 4. Prior Period Items Prior period adjustments of `76.12 Lakhs which includes `59.05 Lakhs towards Gratuity payable to Directors and Rs.17.12 Lakhs towards Leave encashment. Per our report of even date Praturi & Sriram Chartered Accountants Firm Registration No. 002739S Sri Raghuram Praturi Partner Membership No. 221770 for and on behalf of the Board of Directors A.SUBRAHMANYAM Director DIN: 00654046 J. LAKSHMANA RAO Chaiman & Managing Director DIN. 00649702 S. DURGAPRASAD Chief Financial Officer J. SUDHA RANI Whole Time Director DIN: 02348322 POOJA JAIN Company Secretary Mem No.: A38224 Hyderabad. 19th May 2015 |