1.     Corporate Information:

CMS Info Systems Private Limited (the ‘Company’) is a company domiciled in India and incorporated under the provisions of the Companies Act, 1956 (the ‘Act’). The Company is engaged in the business of trading in computer systems and peripherals, maintenance and facility management services for computer systems and peripherals, computer hardware and network training, print solution services and card personalisation services. The Company is also engaged in providing ATM and Cash Management Business. During the current year, the Company has entered into contract for supply, installation and maintenance of ATM and cash deposit machines.

The Company, CMS IT Services Private Limited and its shareholders have entered into a Scheme of Arrangement (the ‘Scheme’) whereby the IT and the Print Division business of the Company would be demerged and transferred to CMS IT Services Private Limited with effect from January 01, 2015 (Appointed Date). The scheme was approved by the Board of Directors of both the companies in the meetings held on September 22, 2014 and is filed with the Honorable High Court of Bombay for the necessary approvals.

2.     Summary of significant accounting policies

a)     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 Accounting Standards notified under the Companies Act, 1956 (the ‘Act’) read with General Circular 08/2014 dated        April 04, 2014 issue by the Ministry of Corporate Affairs. The financial statements have been brpared on an accrual basis and under the historical cost convention.

                              The accounting policies adopted in the brparation of financial statements are consistent with those of brvious year.

b)    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.

c)     Tangible fixed assets

            Fixed assets are stated at cost less accumulated debrciation / amortisation 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. Any trade discounts and rebates received are deducted in arriving at the purchase price. Capital work-in-progress is stated at cost.

d)    Debrciation on tangible fixed assets  

            Debrciation on fixed assets is provided based on the Straight Line Method (SLM) based on the useful lives of the assets estimated by management which are greater than or equal to the rates as brscribed in Schedule XIV of the Act as under:

Description of the assets	Rates used by the Company	Rates as per Schedule XIV of the Act
Plant and machinery	14.28	4.75
Electrical installations	20.00	4.75
Furniture, fixtures and fittings	14.28	6.33
Vehicles	9.50	9.50
Vehicles (used for ATM and Cash Management Business)	16.21	16.21
Office equipments	14.28	4.75
Computers (owned and leasehold)	16.21	16.21

Fixed assets individually costing up to`5,000 are fully debrciated in the year of acquisition.  Debrciation on assets acquired or disposed off during the year is provided on a pro-rata basis from/up to the month of acquisition/disposal. 

Leasehold Improvements are amortised on a straight line basis over the shorter of the estimated useful life of the asset or the lease term.

e)     Intangible assets

Computer Software purchased is amortised over a period of six years on straight line basis which is based on the useful life as estimated by the management.

Goodwill rebrsents the excess of purchase consideration paid over the value of net assets of CMS Computers Limited taken over by the Company in accordance with the scheme of Arrangement with CMS Computers Limited.

f)      Leases

            Where the Company is the lessee:

            Finance lease:

            Finance leases, which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease term at the lower of the fair value of the leased property and brsent value of minimum lease payments and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are recognised as finance costs in the statement of profit and loss.

            Operating lease:

            Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term.

            Where the Company is the lessor:

            Finance lease:

            Leases in which the Company transfers substantially all the risks and benefits of ownership of the asset are classified as finance leases. Assets given under finance lease are recognised as a receivable at an amount equal to the net investment in the lease. After initial recognition, the lease rentals are apportioned between the principal repayment and interest income on the IRR method. The principal amount received reduces the net investment in the lease and the interest income is recognised in the statement of profit and loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the statement of profit and loss.

            Operating lease:

            Leases in which the Company does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Assets subject to operating leases are included in fixed assets. Lease income on an operating lease is recognized on a straight line basis over the lease term. Costs, including debrciation, are recognised as an expense in the statement of profit and loss.

g)    Impairment of tangible and intangible assets

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. 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 the risks specific to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.

Impairment losses of continuing operations, including impairment on inventories, are recognised in the statement of profit and loss, except for brviously revalued tangible fixed assets, where the revaluation was taken to revaluation reserve. In this case, the impairment is also recognised in the revaluation reserve up to the amount of any brvious revaluation.

After impairment, debrciation is provided on the revised carrying amount of the asset over its remaining useful life.

h)    Investments

            Investments, which are readily realisable 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.

            Long-term investments are carried at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments.

On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.

i)      Inventories

            Inventories are valued as under:

            Raw materials and stores and spares are valued at lower of cost and net realisable value.  However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw material and stores and spares consumed is determined on a weighted average basis.

Work-in-progress and finished goods are valued at lower of cost and net realisable value. Cost includes direct materials and labor and a proportion of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty. Cost is determined on a weighted average basis.

Trading goods are valued at lower of cost and net realisable value. Cost includes cost of purchase and other costs incurred in bringing the inventories to their brsent location and condition. Cost is determined on a weighted average basis.

            Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

j)      Revenue recognition

            Revenue is recognised 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 recognised:

            Sale of goods:

Revenue from sale of goods is recognised when all the significant risks and rewards of ownership ofthe goods have been passed to the buyer usually on delivery of the goods. The Company collects sales tax and value added taxes on behalf of the government and therefore,these are not economic benefits flowing to the Company. Hence, they are excluded from revenue.Excise duty deducted from revenue (gross) is the amount that is included in the revenue (gross) and not the entire amount of liability arising during the year.

            Sale of ATM Sites:

            Revenue from sale of ATM sites is recognised based on customer acceptance received on completion of the ATM sites as per the terms of agreement with the customers. The Company collects sales tax and value added taxes on behalf of the government and therefore, these are not economic benefits flowing to the Company. Hence, they are excluded from revenue.

            Sale of services:

Revenue from rendering of services is recognised as and when the services are rendered as per the terms of agreement with the customers. Revenue from annual maintenance contracts is recognised, over the period of the maintenance contract. Sale of services is accounted exclusive of service tax, VAT and works contract tax.

Revenue from ATM and cash management services and allied operations is recognised when the required services are rendered in accordance with the contracts / agreements entered into with the customer and is disclosed net off deductions for shortages, etc. charged by the customers as per the terms of the agreement and is accounted net of service tax.

Revenue recognised in excess of billings is classified as unbilled revenue while billing in excess of revenue is classified as unearned revenue.

Other operating revenues:

Other operating revenues include income from lease rentals which is recognised on a straight line basis over the lease term.

Interest:

Income is recognised on a time proportion basis taking into account the amount outstanding and the applicable interest rate.

Dividends:

Income is recognised when the shareholders’ right to receive payment is established by the balance sheet date.

k)     Foreign currency transactions

            Initial recognition

            Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

            Conversion

            Foreign currency monetary items are retranslated using the exchange rate brvailing at the reporting date. Non-monetary items which are measured in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

Exchange difference

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 recognised as income or as expenses in the statement of profit and loss for the year in which they arise.

l)      Retirement and other employee benefits

Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognises contribution payable to the provident fund scheme as expenditure, when an employee renders the related service.

                  Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation done as per projected unit credit method, carried out by an independent actuary at the end of the year. Actuarial gains/losses are recognised in full in the year in which they occur in the statement of profit and loss. The Company makes contributions to a trust administered and managed by the insurance Company to fund the gratuity liability. Under this scheme, the obligation to pay gratuity remains with the Company, although the Insurance Company administers the scheme.

                  Short term compensated absences are provided for based on estimates. Long term compensated absences are provided for based on actuarial valuation at the yearend made by an independent valuer as per projected unit credit method. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred.

m)   Income taxes

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 Income Tax Act, 1961 enacted in India. Deferred income tax 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 and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and deferred tax liabilities relate to taxes on income levied by same governing tax laws. Deferred tax liabilities are recognised for all taxable timing differences. Deferred tax assets are recognised 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 realised. In situations where the Company has unabsorbed debrciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.

At each balance sheet date, unrecognised deferred tax assets are recognised to the extent that it has become reasonably or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realised. The carrying amount of deferred tax assets is reviewed at each balance sheet date. The Company writes down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably or virtually certain, as the case may be, that sufficient future taxable income will be available.

n)    Employee Stock Compensation Cost

Measurement and disclosure of the employee share-based payment plans is done in accordance with the Guidance Note on Accounting for Employee share-based Payments, issued by Institute of Chartered Accountants of India. The Company measures compensation cost relating to employee stock options using the intrinsic value method. Compensation expense is amortised over the vesting period of the options on straight lines basis.

o)    Segment reporting

           Identification of segments:

           The Company’s operating businesses are organised and managed separately according to the nature of products and services provided, with each segment rebrsenting a strategic business unit that offers different products and serves different markets.The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate.

Inter segment Transfers:

The Company generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties at current market prices.

            Allocation of common costs:

            Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs.

            Unallocated Items:

            Unallocated items include general corporate income and expense items which are not allocated to any business segment.

           Segment Accounting Policies:

           The Company brpares its segment information in conformity with accounting policies adopted for brparing and brsenting the financial statements of the Company as a whole.

p)   Earnings per share

            Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting brference dividends and attributable taxes) 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), if any.

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

q)   Provisions

            A provision is recognised when the Company has a brsent obligation as a result of past event; it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. Provisions are not discounted to its brsent value and are determined based on best estimate required to settle the obligation at the reporting date. The estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

            Provisions for warranty-related costs are recognised when the related product is sold or service provided. Provision is made based on historical experience and estimates of costs to be incurred in providing the warranty related services. The estimate of such warranty-related costs is reviewed and revised annually.

r)    Contingent liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a brsent obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. The Company does not recognise a contingent liability but discloses its existence in the financial statements.

s)    Claims for cash lost

Cash lost in transit i.e. due to theft, loot, etc. is assessed by the Company for recoverability from insurance company based on facts available from investigation carried out by Company and external agencies / authorities in respect of specific incidence. The Company further evaluates past trends for the extent and timing of claims approved by the insurance company. In case there is no reasonable certainty of recoverability, cash loss is charged off to the statement of profit and loss.

t)     Cash and cash equivalents

            Cash and cash equivalents for the purpose of cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

u)   Measurement of EBITDA

 As permitted by the Guidance Note on the Revised Schedule VI to the Act issued by the Institute of Chartered Accountants of India, the Company has elected to brsent earnings before interest, tax, debrciation and amortisation (EBITDA) as a separate line item on the face of the statement of profit and loss. The Company measures EBITDA on the basis of profit from continuing operations. In its measurement, the Company does not include debrciation and amortisation expense, interest income, finance costs and tax expense.

c)     Retirement and other employee benefits

Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognises contribution payable to the provident fund scheme as expenditure, when an employee renders the related service.

                  Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation done as per projected unit credit method, carried out by an independent actuary at the end of the year. Actuarial gains/losses are recognised in full in the year in which they occur in the statement of profit and loss. The Company makes contributions to a trust administered and managed by the insurance Company to fund the gratuity liability. Under this scheme, the obligation to pay gratuity remains with the Company, although the Insurance Company administers the scheme.

                         Short term compensated absences are provided for based on estimates. Long term compensated absences are provided for based on actuarial valuation at the yearend made by an independent valuer as per projected unit credit method. Actuarial gains/losses are immediately taken to the statement

c)     Segment reporting

           Identification of segments:

           The Company’s operating businesses are organised and managed separately according to the nature of products and services provided, with each segment rebrsenting a strategic business unit that offers different products and serves different markets.The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate.

Inter segment Transfers:

The Company generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties at current market prices.

            Allocation of common costs:

            Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs.

            Unallocated Items:

            Unallocated items include general corporate income and expense items which are not allocated to any business segment.

           Segment Accounting Policies:

           The Company brpares its segment information in conformity with accounting policies adopted for brparing and brsenting the financial statements of the Company as a whole.