Notes forming part of the financial statements A Corporate information Tanla Solutions Limited (hereinafter referred to as "Tanla") was incorporated on July 28th, 1995 in Hyderabad, Andhra Pradesh. Tanla has its head quarters and development facilities in Hyderabad, India and serves a global customer base through its subsidiaries. Tanla's range of services include product development and implementation in wireless telephony industry, aggregator services and offshore development services. 1 Significant Accounting Policies 1.1 Basis of brparation of financial statements The financial statements have been brpared on the basis of going concern, under the historic cost convention on accrual basis, to comply in all material aspects with applicable generally accepted accounting principles in India ( Indian GAAP), the Accounting Standards (AS) specified under section 133 of 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)/ the Companies Act, 1956 (the 1956 Act) as applicable. Management evaluates all recently issued or revised accounting standards on an ongoing basis. 1.2 Use of Accounting Estimates The brparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of financial Statements, the reported amount of revenues and expenses during the reported period and disclosure of contingent liabilites. Management believes that the estimates used in the brparation of financial statements are prudent and reasonable. Actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods. 1.3 Revenue recognition Revenue from messaging services is recognized based on the number of messages delivered on a fixed price , fixed-time frame contracts where there is no uncertainity as to measurement of collectability. Revenue from Telecom Value Added Services, net of credit notes, is recognized on provision of services in terms of revenue sharing arrangements with the telecom operators. Revenue from Other Services including maintenance services is recognized proportionately over the period during which the services are rendered as per the terms of contract. Profit on sale of investments in mutual funds is recorded on transfer of title from the Company and is determined as the difference between the sale price and the carrying value of the investment. Interest Income is recognised on an accrual basis. 1.4 Fixed Assets, intangible assets and capital work-in-progress Fixed Assets are stated at cost, less accumulated debrciation. All direct costs are capitalized until fixed assets are ready for use including taxes, duties, freight and other incidental expenses relating to acquisition and installation. Capital work-in-progress comprises outstanding advances paid to acquire fixed assets, and the cost of fixed assets that are not yet ready for their intended use at the balance sheet date. Intangible assets are carried at cost, net of accumulated amortisation and impariment losses, if any. Cost of an intangible asset comprises of purchase price and attributable expenditure on making the asset ready for its intended use. 1.5 Debrciation Debrciation is provided on the straight-line method as per the useful life brscribed in Schedule II to the Companies Act, 2013 except in respect of the following categories of assets in whose case the life of certain assets has been assessed based on technical advice taking into account the nature of the asset, the estimated usage of the asset, the operating condition of the asset, past history of replacement, maintenance support etc., Asset Useful Life (in years) Computers & Software 03-05 Vehicles 05-07 Offi ce Equipment, Furniture & Fixtures 03-05 The useful lives of assets are periodically reviewed and re-determined and the unamortised debrciable amount is charged over the remaining useful life of such assets.Assets costing X. 5,000/-and below are debrciated over a period of one year 1.6 Employee Benefits Defined Contribution Plans a.Gratuity In accordance with the Payment of Gratuity Act, 1972, Tanla provides for gratuity, a defined retirement plan (the "Gratuity Plan") covering the 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 salary and the tenure of employment. Liability with regard to the Gratuity Plan are determined by actuarial valuation as of the balance sheet date, based upon which, the company contributes the ascertained liabilities to the Tanla Solutions Limited Employees Gratuity Scheme Trust (the "Trust") managed by the Life Insurance Corporation of India. b.Provident fund Eligible employees receive benefits from a provident fund, which is a defined contribution plan. Aggregate contributions along with interest thereon is paid at retirement, death, incapacitation or termination of employment. Both the employee and the company make monthly contributions to the Regional Provident Fund Commissioner equal to a specified percentage of the covered employee's salary. C. Employee State Insurance Fund: Eligible employees (whose gross salary is less than X15,000 per month) are entitled to receive benefits under employee state insurance fund scheme. The employer makes contribution to the scheme at a brdetermined rate (brsently 4.75%) of employee's gross salary. Tanla has no further obligations under the plan beyond its monthly contributions. These contributions are made to the fund administered and managed by the Government of India. Tanla's monthly contributions are charged to income in the year it is incurred. 1.7 Research and development Revenue expenditure incurred on research and development is expensed as incurred. Capital expenditure incurred on research and development is debrciated on straight-line method, pro-rata for the period of usage, in accordance with the rates brscribed under schedule II to the Companies Act, 2013. 1.8 Foreign Currency Transactions The company translates all foreign currency transactions at Exchange Rates brvailing on the date of transactions. Exchange rate differences resulting from foreign exchange transactions settled during the year are recognized as income or expenses in the period in which they arise. Monetary current assets and monetary current liabilities that are denominated in foreign currency are translated at the exchange rate brvalent at the date of the balance sheet. The resulting difference is recorded in the profit and loss account. 1.9 Taxes on Income Income taxes are computed using the tax effect accounting method, in accordance with the Accounting Standard (AS 22) "Accounting for Taxes on Income" which includes current taxes and deferred taxes. Deferred income taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and the relevant timing difference of earlier years. Deferred tax asset and liabilities are measured at the tax rates that are expected to apply to the period when the asset / liability is realized, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Deferred Tax assets are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. MAT credit is recognized as an asset only, and to the extent, there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the Mat credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Profit and Loss 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 company will pay normal income tax during the specified period. 1.10 Segment Reporting The Company identifies primary segments based on the br-dominant sources of risk effects and returns depending on organization and of the management and internal financial reporting system. The operating segments are the segments for which separate financial information are available and operating profit/loss therefrom are evaluated regularly by the management for allocation of resources and assessment of performance. Revenue, expenses, assets and liabilities which relate to the company as a whole which are not allocable to segments on direct and/or reasonable basis have been included under "unallocated revenue/expenses/assets/liabilities". 1.11 Earning Per Share (EPS) In determining earnings per share, the company considers the net profit after tax expense. The number of shares used in computing basic earnings per is the weighted average shares outstanding during the period. 1.12 Investments Long term trade investments are stated at cost & all other investments are carried at lower of cost or fair value. 1.13 Cash flow statement Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from regular revenue generating, investing and financing activities of the company are segregated. 2 Quantitative details The Company is engaged in the business of development & maintenance of Computer Software, offshore development and other related services. The production and sale of such software services cannot be exbrssed in any generic unit and hence it is not possible to give such quantitative details of sales and certain information as required under paragraph 3,4C and 4D of Part II of Schedule VI to the Companies Act, 1956. The details of Conversation of Energy, Technology absorption are given in Directors Report. R&D expenditure is not separately accounted for. 3 Previous year figures have been recast/reclassified wherever necessary to correspond with the current year's classification/disclosures. As per our report of even date attached For Ramasamy Koteswara Rao & Co., Chartered Accountants – Firm Regn. No.010396S C V Koteswara Rao Partner – Membership No.028353 For and on behalf of the Board of Directors D. Uday Kumar Reddy Chairman & Managing Director DIN 00003382 Gautam Sabharwal Director-Global DIN 00003709 Srinivas Kamoji Gunupudi Chief Financial Offi cer Seshanuradha Chava AVP – Legal & Secretarial Place: Hyderabad. Date : May 27, 2015 |