SIGNIFICANT ACCOUNTING POLICIES TO STANDALONE FINANCIALS

Company Overview:

Lycos Internet Limited (Formerly known as Ybrant Digital limited), offers digital marketing solutions to businesses, agencies and online publishers worldwide. Lycos Internet Limited connects Advertisers with their Audience across any form of Digital Media, using its massive local brsence to deliver appropriate messages to the right audience, through the most relevant Digital channels. Lycos Internet Limited has a global brsence, with offices in over 24 countries.

Lycos Internet Limited is also a Global Information Technology Implementation and Outsourcing Services Provider with an exceptional track record of providing high quality, on-budget, and on-time solutions to demanding clients. Our business knowledge in key verticals helps us provide solutions that are customized to address the specific needs while focusing on maximizing value of Information Technology investments such that clients can achieve their business objectives. We believe in fostering long-term relationships, and partner with our clients in their success. Lycos Provides End-to-end Enterprise Solution Offerings and Specializing in ERP Solutions, Microsoft and Open Source Systems development.

Basis of Preparation:

The financial statements of the company have been brpared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting standards specified under section 133of the Companies Act,2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act"), as applicable. The financial statements have been brpared as a going concern on accrual basis under the historical cost convention. The Accounting policies adopted in the brparation of the financial statements are consistent with those followed in the brvious year except for change in the accounting policy for debrciation

Use of Estimates:

The brparation of financial statements is in conformity with generally accepted accounting principles require the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the result of operations 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. Significant estimates used by the management in the brparation of these financial statements include estimates of the economic useful lives of fixed assets and provisions for bad and doubtful debts. Any revision to accounting estimates is recognized prospectively.

1. Revenue Recognition :

a) Digital Marketing Services:

I) The Contracts between the Company and its Customers are either time or material contracts or fixed price contracts.

ii) Revenue from fixed price contracts is recognized according to the milestones achieved as specified in the contracts on the proportionate-completion method based on the work completed. Any anticipated losses expected upon the contract completion are recognized immediately. Changes in job performance, conditions and estimated profitability may result in revisions and corresponding revenues and costs are recognized in the period in which such changes are identified. Deferred revenue rebrsents amounts billed in excess of revenue earned for which related services are expected to be performed in the next operating cycle.

iii) In respect of time and material contract, revenue is recognized in the period in which the services are provided.

iv) Revenue from product sale and licensing arrangements are recognized on delivery and installation.

b) Software Development:

i) Income from software development is accounted for on the basis of Software developed and billed to clients on acceptance and/or on the basis of man days/man hours as per the terms of contract.

ii) Revenue from professional services consist primarily of revenue earned from services performed on a 'time and material' basis. The related revenue is recognized as and when the services are performed.

iii) Revenue from software development services includes revenue from time and material and fixed price contracts are recognized as related services are performed.

iv) Revenue on fixed price contracts is recognized in accordance with percentage of completion and method of account.

v) Revenue is not recognized on the grounds of prudence, until realized in respect of liquidated damages, delayed payments as recovery of the amounts are not certain.

2. Foreign Exchange Transaction :

Realized gains & loss in foreign exchange transactions are recognized in Profit & Loss Account.

Transactions in foreign currency will be recorded at the rates of exchange brvailing on the date of the transaction. Monetary assets and liabilities denominated in foreign currency will be translated at the rate of exchange as at Balance Sheet date and resultant gain or loss is recognized in the profit and loss account. Non-Monetaryassets and liabilities are translated at the rate brvailing on the date of transaction and foreign exchange fluctuation gain or loss arised on account of translation of non-Monetaryitems like long term loans and advances are accumulated in a reserve account.

Revenue, expense and cash flow items denominated in foreign currency are translated into the relevant functional currencies using the exchange rate in effect on the date of transaction.

3. Investments :

Investments are either classified as current or long term, based on the management's intention at the time of purchase. Current investments are carried at the lower of cost and fair value. Cost for overseas investments comprises the Indian Rupee value of the consideration paid for the investment translated at the exchange rate brvalent at the date of investment. Long term investments are carried at cost and provisions recorded to recognize any decline, other than temporary, in the value of each investment.

4. Fixed Assets :

Tangible assets

Tangible assets are stated at actual cost less accumulated debrciation and accumulated impairment losses. The actual cost capitalized includes material cost, freight, installation cost, duties and taxes, finance charges and other incidental expenses incurred during the construction/installation stage.

Intangible assets

Intangible assets are recorded at consideration paid for acquisition and other direct costs that can be directly attributed, or allocated on a reasonable and consistent basis, to creating, producing and making the asset ready for its intended use.

5. Debrciation and Amortization :

Debrciation is provided on straight line method on pro-rata basis and at the rates and manner specified in the Schedule II of the Companies Act, 2013 and there is no change in the method of Debrciation during the year.

Preliminary Expenses are amortized over the period of 5 years.

6. Taxation :

The current charge for income tax is calculated in accordance with the relevant tax regulations applicable to the Company. Deferred tax asset and liability is recognized for future tax consequences attributable to the timing differencesthat result between the profit offered for income tax and the profit as per the financial statements. Deferred tax asset & liability are measured as per the tax rates/laws that have been enacted or substantively enacted by the Balance Sheet date.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives rise to future economic benefits in the form of adjustments of future income tax liability, is considered as an asset if there is convincing evidence that the company will pay normal tax after the tax holiday period. Accordingly, it is recognized as an asset in the balance sheet when it is probable that the future economic benefit associated with it will flow to the company and asset can be measured reliably.

7. Earnings Per Share:

The earnings considered in ascertaining the companies earning per share comprise netprofit after taxand includes the post tax effect of any extra-ordinary/exceptional item is considered.The numberof shares used in computing basic earnings per share is the weighted average number of shares outstanding during the year.

The no. of shares used in computing diluted earnings per share comprises the weighted average no. of shares considered for deriving basic earnings per share and also the weighted average no. of equity shares that could have been issued on the conversion of all dilutive potential equity shares.

8. Gratuity and Leave Encashment :

In accordance with the Payment of Gratuity Act,1972, the company provides for gratuity, a defined benefit retirement plan covering eligible employees of the company. The Gratuity provides a lumpsum 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 the employment with the group. The company has a made a provision for gratuity to its employees on the basis of independent actuarial valuation, in accordance with AS-15. The actuarial liability is determined with reference to employees at the end of each financial year.

The provision for Leave Encashment is calculated as per accrual method.

9. Borrowing Cost :

Borrowing cost relating to acquisition/ construction of qualifying assets are capitalized until the time all substantial activities necessary to brpare the qualifying assets for their intended use are complete. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use/sale. Borrowing cost that is attributable to the projects is charged to the respective projects. All other borrowing costs, not eligible for inventorisation/capitalisation, are charged to revenue

10. Cash Flow Statement :

The Company has brpared Cash Flow Statement as per the AS-3. 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, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the group are segregated.

11. Provisions, Contingent Liabilities and Contingent Assets :

Provisions are recognized for liabilities that can be measured only by using a substantial degree of estimation, if

a) The Company has a brsent obligation as a result of a past event;

b) A probable outflow of resources is expected to settle the obligation; and

c) The amount of the obligation can be reliably estimated. Reimbursement expected in respect of expenditure required to settle a provision is recognized only when it is virtually certain that the reimbursement will be received

Contingent Liability is disclosed in the case of:

a) A brsent obligation arising from a past event, when it is not probable that an outflow of resources will be required to settle the obligation;

b) A possible obligation, unless the probability of outflow of resources is remote. Contingent Assets are neither recognized nor disclosed.

12. Impairment of Assets:

Management periodically assesses using external and internal sources whether there is an indication that an asset may be impaired. Impairment occurs where the carrying value exceeds the brsent value of future cash flows expected to arise from the continuing use of the asset and its eventual disposal. The impairment loss to be expensed is determined as the excess of the carrying amount over the higher of the asset's net sale price or brsent value as determined above.

13. Related Party Disclosures :

The Company furnishes the details of Related Party Disclosures as given in Para 23 and 26 as required by AS-18

14. Lease Rentals Operating Lease:

Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. The company charges Lease rentals in respect of assets taken under operating leases to profit and loss account on a straight line basis over the lease term.

Finance Lease:

A Finance lease is a lease that transfers substantially all the risks and rewards incidental to the ownership of an asset.

15. Claims:

Claims made by the company are recognized to the extent the Company deems them recoverable. Claims against the Company, including liquidated damages, are recognized only on acceptance basis. Claims which are contingent in nature are not recognized in the books but are disclosed separately in the Notes to accounts. Contingent assets are neither recognized nor disclosed in the financial statements.

NOTE NO. 2 :

In case of Foreign exchange fluctuation profit / loss as per AS 11 the Branch and head office is having integral transactions and hence profit / loss debited to P & L a/c. The receivables have been considered at the actual rate at which the amount is realized and accordingly Gain from Foreign Exchange fluctuation and Integral transactions of Rs. 9,70,13,182/- (net) has been reflected in Profit and Loss Account for the Year.(Previous year Rs. 3,00,19,651).

NOTE NO. 3 :

Intra branch Transactions

The Intra Branch transactions have been eliminated while brparing the financial statements.

NOTE NO. 4 :

Dues to Micro & Small Enterprises

There are no overdue principle amounts and interest thereon payable to Micro Enterprises and Small Enterprises, as at 31-03-2015.

NOTE NO. 5 :

Confirmation of Closing Balances

Closing Balances of the Debtors, Creditors & Loans and Advances are subject to Confirmations

NOTE NO. 6 :

Segment Reporting:

The Company is mainly engaged in the area of providing Software Development Services and Digital Marketing and related services.

The company publishes standalone financial statements along with the consolidated financial statements in the annual report. In accordance with the AS-17, Segment Reporting, the company has disclosed the Segment information in the consolidated financial statements.

NOTE NO. 7 :

Debrciation on Fixed Assets

(A) In accordance with provisions of Schedule II of Companies Act 2013, in case of fixed assets which have completed the useful life as at 31st march 2014,the carrying value as on 1.04.2014 amounting to Rs.3,31,27,074/- has been recognized in the Retained earnings as a transitional provision.Further in case of assets acquired prior to 1st April, 2014,whose useful life exists, the carrying value of assets is debrciated over the remaining useful life as specified in the companies Act, 2013 effective1st April, 2014

(B) Consequent to the implementation of the provisions of the Schedule II of the Companies Act, 2013, the debrciation and amortization expenses for the year increased by Rs.5,84,41,466.

(C) During the year the company has made adjustments relating to Intangible assets worth Rs.67,68,72,873/- which were totally amortized up to 31st March 2014.The same has been removed from the gross block and accumulated debrciation accordingly in the current financial year 2014-15.

(D) The useful life of the lease hold building is complete and the asset is no longer useful. Hence the value of the same for Rs.31,69,690/-has been transferred is to Retained earnings.

NOTE NO. 8 :

The Term loan from SBI of Rs.400 Lakhs was repaid during the year. However the necessary filings are yet to be made with ROC.

NOTE NO. 9 :

The filing of satisfaction charge with ROC, for the Term Loan taken from ICICI bank amounting to Rs.3000 Lakhs was not done, due to non-receipt of NOC from the Bank. NOTE NO. 40 :

The filing of satisfaction charge with ROC, for the Loan taken from SBI Global Factors Ltd amounting to Rs.1750 Lakhs was not done, due to non-receipt of NOC from the Bank.

NOTE NO. 10 :

During the financial year 2014 - 15 the Company has repaid Rs. 19.21Crores of debt. In the process there were a few delays / defaults in repayments of dues to banks and financial institutions. Such amounts with respect to interest payment were Rs. 15.79 Crores and in respect of principal repayment amounting to Rs10.23 Crores. Interest payments were related to interests on working capital and term loans. Principal repayments were related to term to term loan instalments. The primary cause of such occurrences was due to international group operations and difficulties in moving the cash flows to India.

NOTE NO. 11 :

The figures of pervious year have been regrouped wherever necessary..

NOTE NO. 12 :

The figures have been rounded off to the nearest rupee.

AS PER OUR REPORT OF EVEN DATE

For P.Murali& Co.,

Firm Registration Number: 007257S

Chartered Accountants

P.Murali Mohana Rao

Partner

Membership No. 023412

M.Suresh Kumar Reddy Chairman & Managing Director

Y.Srinivasa Rao Chief Financial Officer

Forand on behalf of the Board

For Lycos Internet Limited

(Formerly Ybrant Digital Limited)

Vijay Kancharla Director

K.Anusha Company Secretary

M.Suresh Kumar Reddy Chairman & Managing Director

Y.Srinivasa Rao Chief Financial Officer

Place : Hyderabad

Date : 25-05-2015