Statements 1. Corporate information CSS TECHNERGY LIMITED was incorporated in April, 1994 for carrying out the activities of offering a full range of software outsourcing services from end to end development of new software and web solutions, Enterprise Application Services, re-engineering and enhancement of legacy applications, application integration and maintenance, BPO / ITES services for Utilities, E-Governance, BFSI, Retail and DMS. The Company is carrying its activities from its registered office situated at # 6-1-85/10, Opp Telephone Bhavan, Saifabad, Hyderabad - 500 004. 2.Significant Accounting Policies 2.1 Basis of brparation The financial statements of the company have been brpared in accordance with Generally Accepted Accounting Principles in India (Indian GAAP). The company has brpared these financial statements to comply in all material respects with the applicable accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been brpared on an accrual basis and under the historical cost convention. 2.2 Use of Estimates The brparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. 2.3 Cash and Cash Equivalents Cash comprises cash on hand and fixed deposits with banks. Cash equivalents are short term, highly liquid investments that are readily convertible into known amount of cash and which are subject to insignificant risk of changes in value. 2.4 Cash Flow Statement Cash Flows are reported using the indirect method, where by profit /(loss) before extraordinary items and 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 operating, investing and financing activities of the Company are segregated based on the available information. 2.5 Tangible Fixed Assets and Debrciation Fixed assets are stated at cost, less accumulated debrciation and impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Debrciation is provided using Straight Line Method at the rates estimated by the Management which coincides with the rates brscribed under Schedule XIV of the Companies Act, 1956. 2.6 Impairment The carrying amounts of assets are reviewed at each balance sheet date to see if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their brsent value using a br-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. 2.7 Borrowing Costs Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. 2.8 Investments Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments. Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments. 2.9 Revenue Recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized: (i) Revenue from Sale of Goods Sales are recognized net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. (ii) Revenue from Sale of Services Revenue from software related services are accounted for on the basis of services rendered as per terms of contract. Revenue from BPO services are based on the performance of specific criteria at contracted rates. (iii) Interest Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head "Other Income" in the statement of profit and loss. (iv) Dividends Dividend income is recognized when the company's right to receive dividend is established by the reporting date. 2.10 Inventory Valuation a) Stocks of consumables are valued at cost. b) Project work in progress is valued with reference to the actual cost incurred for the work performed up to the reporting date bear estimated total project cost of each project. 2.11 Foreign Currency Translation (i) Initial Recognition Foreign currency transactions are recorded in the reporting currency, by applying the exchange rate between the reporting currency and the foreign currency at the date of the transaction. (ii) Conversion Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined. (iii) Exchange Differences Exchange differences arising on the settlement of monetary items or on reporting Company's monetary items at rates different from those at which they were initially recorded during the year, or reported in brvious financial statements, are recognized as income or as expenses in the year in which they arise 2.12 Retirement and Other Employee Benefits (i) Defined Contribution Plans: Contributions in respect of Employees Provident Fund and Family Pension Fund are charged to the Profit and Loss account as incurred. (ii) Defined Benefit Plans: The Company also provides for other employee benefits in the form of gratuity. The Company's Contributions to Gratuity scheme is provided based on Valuations, as at the balance sheet date made by independent actuaries. The gratuity fund is managed by the Life Insurance Corporation of India (LIC). (iii) Long-Term Employee Benefits The Company has a policy to encash all unavailed leaves over and above 60 days after every calendar year compulsorily. Also, the employee is entitled to encash leaves as and when required by them. (iv) Short-term Employee Benefits The undiscounted amount of short-term employee benefits i.e. performance incentive expected to be paid in exchange for the services rendered by employee are recognized during the year when employees render the service. 2.13 Income Tax Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act, 1961. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only 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. 2.14 Earnings Per Share Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus issue; bonus element in a rights issue to existing shareholders; share split; and reverse share split (consolidation of shares). For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares. 2.15 Provisions A provision is recognized when the company has a brsent obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their brsent value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. 1 Adjustment of Debrciation Debrciation on transition to Schedule II of the Companies Act, 2013 on tangible Fixed Assets with NIL remaining useful life. 2.Share Warrants Money During the financial year 2012-13, 10,23,460 Share Warrants were allotted on brferential basis to promoters of the company, vide resolution dated 22.12.2012. Each holder of the said share warrant is entitled to subscribe equivalent number of equity share of Rs 10/-each at a brmium of Rs 11.50 each. Out of above Share Warrants of 9,45,000 Share Warrants of Rs 10/- each were converted in to equal no.of equity shares of Rs 10/- each during the earlier years. During the current year balance 78,460 Share Warrants were converted in to equal no.of equity share of Rs 10/-each 2 - Long Term Borrowings During the financial year 2013-14, State Bank of India, Balanagar branch has sanctioned Term Loan for Rs 80 Lakhs. Out of the Sanctioned loan of Rs 80 Lakhs, Company utilised an amount of Rs. 44.67 Lakhs during the year. During the year, Company utilised Term Loan from State Bank of India, Balanagar Branch, Hyderabad. The said loan is repayable in 20 monthly equal installment of Rs 1,87,790/-. The said loan is secured by equitable mortgage of land belongs to the Directors and Others situated at Krithika Layout at Madhapur, Hyderabad. The said loans are further secured by Personal guarantee of Ravi Vishnu and A.Bhopal Reddy, Directors of the company. 3. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure. Figures rounded off to the nearest rupee. 4. Pursuant to the transition provisions brscribed in Schedule II to the Companies Act, 2013, the company has fully debrciated the carrying value of assets, net of residual value, where the remaining useful life of the asset was determined to be NIL as on April,1 2014 and has adjusted an amount of Rs 1,60,16,739/- against the opening surplus balance in the statement of Profit and Loss under Reserves and Surplus. The debrciation expenses in the statement of profit and loss for the year higher by Rs 57,10,627/- consequent to the change in the useful life of the Asset. For and on behalf of the Board -Sd-Ravi Vishnu Managing Director -Sd- A.Bhopal Reddy Whole Time Director -SdK. Raghupathi Rao CFO -Sd- A. Aravind Company Secretary Place: Hyderabad Date : 27.05.2015 |