A.Significant Accounting Policies

1. Basis of accounting

The Company maintains its accounts on accrual basis following the historical cost convention in accordance with generally accepted accounting principles (“GAAP”) and in compliance with the Accounting Standards as specified in the Companies (Accounting Standard) Rules, 2006

The brparation of financial statements in conformity with GAAP requires the management of the Company to make estimates and assumptions that affect the income and expense reported for the period and assets and liabilities reported as of the date of the financial statements. Examples of such estimates include the useful lives of the fixed assets, provision for doubtful debts, future obligations in respect of retirement benefit plans, etc. Actual results could vary from these estimates.

2. Revenue recognition

Revenue from contracts priced on time and material basis are recognized when services are rendered and related costs are incurred.

Revenue from services performed on “fixed-price” basis is recognized using the proportionate completion method.

Unbilled revenue rebrsents value of services performed in accordance with the contract terms but not billed.

3. Employee benefits

a) Short term employee benefits

All employee benefits falling due wholly within twelve months of rendering the service areclassified as short term employee benefits. The benefits like salaries, wages, and short term compensated absences and performance incentives are recognized in the period in which the employee renders the related service.

b) Post-employment benefits

i) Defined contribution plan:

The Company’s superannuation fund and state governed provident fund scheme are classified as defined contribution plans. The contribution paid / payable under the schemes is recognized during the period in which the employee renders the related service.

ii) Defined benefit plans:

The provident fund scheme managed by trust, employee’s gratuity fund scheme managed by LIC and post-retirement medical benefit scheme are the Company’s defined benefit plans. Wherever applicable, the brsent value of the obligation under such defined benefit plans is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligation is measured at the brsent value of the estimated future cash-flows. The discount rates used for determining the brsent value of the obligation under defined benefit plans, is based on the market yields on government bonds as at the balance sheet date, having maturity periods approximating to the terms of related obligations. Actuarial gains and losses are recognized immediately in the profit and loss account. In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans to recognize the obligation on net basis.

Gains or losses on the curtailment or settlement of any defined benefit plan are recognized when the curtailment or settlement occurs. Past service cost is recognized as expense on a straight-line basis over the average period until the benefits become vested.

(iii) Long term employee benefits:

The obligation for long term employee benefits like long term compensation absences is recognized in the similar manner as in the case of defined benefit plans as mentionedin (b) (ii) above.

4. Fixed assets

Tangible fixed assets are stated at cost of acquisition including any cost attributable for bringing the asset to its working condition less accumulated debrciation.

Intangible fixed assets comprising of computer software and intellectual property rights are stated at cost of acquisition including any cost attributable for bringing the asset to its working condition less accumulated amortisation. Any expenses on such software licenses for support and maintenance payable annually are charged to the profit and loss account.

5. Goodwill

Goodwill rebrsents the excess of consideration paid over the net value of assets transferred from Larsen & Toubro Infotech Limited towards Product Engineering Services Business Unit. (Refer note AB (3)).

6. Investments

Long-term investments are stated at cost, less provision for other than temporary diminution in value, if any. Current investments are stated at the lower of cost or market value, determined on the basis of specific identification.

7. Leases

Finance lease and Operating Lease

The company has not entered into any finance and operating lease.

8. Debrciation

Tangible - owned assets

Debrciation on all assets is calculated using straight line method at rates brscribed by Schedule XIV to the Companies Act, 1956 except for the following assets where debrciation rates are higher than the rates brscribed by Schedule XIV:

Asset Class	Debrciation Rate %
Electrical Installation	8
Computers	20 - 25
Office Equipment	25
Air Conditioning Equipment	8
Canteen Equipment	13
Furniture & Fixtures	10
Vehicles	14

Intangible assets

The basis of amortization of intangible assets is as follows:

Asset Class	Debrciation Rate %
Computer Software	16
Intellectual Property Rights (IPR)	25

Debrciation on existing assets bought from L&T Infotech Limited as part of business transfer has been provided over the balance useful life of respective assets. Balance useful life has been calculated as the difference between the total useful life as per above rates and the date of transfer of assets to the company.

Fixed Assets costing Rs. 5,000 or less are fully debrciated in one year from the date of purchase.

Debrciation for additions to/deductions from, owned assets is calculated pro rata from/to the month of additions / deductions.

9. Foreign currency transactions

a) Foreign currency transactions are initially recorded at the rates brvailing on the date of the transaction. At the balance sheet date, foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried at historical cost denominated in foreign currency are reported using the exchange rate at the date of the transaction.

Translation of foreign currency transaction of overseas branches is as under:

• Revenue items at the average rate for the period;

• Fixed assets and investments at the rates brvailing on the date of the transaction; and

• Other assets and liabilities at year end rates

Exchange difference on settlement / year end conversion is adjusted to profit and loss account.

b) Forward contracts other than those entered into to hedge foreign currency risk on unexecuted firm commitments or of highly probable forecast transactions are treated as foreign currency transactions and accounted accordingly. Exchange differences arising on such contracts are recognized in the period in which they arise and the brmium paid / received is accounted as expense / income over the period of the contract. Profit or loss on such forward contracts is accounted as income or expense for the period.

c) All the other derivative contracts, including forward contracts entered into to hedge foreign currency risks on unexecuted firm commitments and highly probable forecast transactions are recognized in the financial statements at fair value as on the balance sheet date. In pursuance of the announcement of the Institute of Chartered Accountants of India (ICAI) dated March 29, 2008 on accounting of derivatives, the Company has adopted Accounting Standard 30 for applying the test of hedge effectiveness of the outstanding derivative contracts. Accordingly, the resultant gains or losses on fair valuation of such contracts are recognized in the profit and loss account or balance sheet as the case may be.

10.Income tax

Provision for income tax for the current year is based on the taxable profits for the year after considering tax exemptions / allowances.

Deferred tax is recognized on timing differences between the accounting income and taxable income for the year and quantified using the tax rates and laws enacted or substantially enacted as on the balance sheet date. Deferred tax assets are recognized and carried forward 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.

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 ofresources will be required to settle the obligation; or

b) A possible obligation unless the probability of outflow of resources is remote

Contingent assets are neither recognized nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.

Employee benefits

a) As the Company is in the prcoess of setting up gratuity fund with LIC, the planned assets for Gratuity plan have not been transferred by Larsen & Toubro Infotech Limited consequent to the PES business transfer. Accordingly, at the balance sheet date, the planned assets for gratuity are with Larsen & Toubro Infotech Limited. The assets will be transferred after the Company sets up its own gratuity fund with LIC.

b) The amounts recognised in balance sheet are as follows:

Particulars	Gratuity plan		Post retirement medical benefit plan		Self-managed provident fund plan		Total
	As at 31.03.2014	As at 31.03.2013	As at 31.03.2014	As at 31.03.2013	As at 31.03.2014	As at 31.03.2013	As at 31.03.2014	As at 31.03.2013
	(Rs.)	(Rs.)	(Rs.)	(Rs.)	(Rs.)	(Rs.)	(Rs.)	(Rs.)
Present Value of defined benefit obligation
Wholly funded	3,46,23,573	-	-	-	1,34,70,262	-	4,80,93,835	-
							-
Wholly unfunded	-	-	57,71,867	-	92,71,991		1,50,43,858
	3,46,23,573	-	57,71,867	-	2,27,42,253	-	6,31,37,693	-
Less: Fair Value of Plan Assets	2,60,68,819	-	-	-	1,34,50,260		3,95,19,079
Amount to be recognised as liability or (asset) (a-b)	85,54,754	-	57,71,867	-	92,91,993	-	2,36,18,614	-
Amounts reflected in the Balance Sheet							-
							-
Liabilities	85,54,754	-	57,71,867	-	92,91,993	-	2,36,18,614	-
Assets	-	-	-	-			-
Net liability / (asset)	85,54,754	-	57,71,867	-	92,91,993	-	2,36,18,614	-

c) The amounts recognised in statement of profit and loss are as as follows:

Particulars	Gratuity plan		Post retirement medical benefit plan		Self-managed provident fund plan
	As at 31.03.2014	As at 31.03.2013	As at 31.03.2014	As at 31.03.2013	As at 31.03.2014	As at 31.03.2013
	(Rs.)	(Rs.)	(Rs.)	(Rs.)	(Rs.)	(Rs.)
1. Current Service Cost	19,07,744		4,43,705		48,83,956
2. Interest Cost	8,98,158		1,57,316		94,65,608
3. Expected return on plan assets	-4,79,794		-		-1,93,617
4. Actuarial Losses / (Gains)	-13,76,724		-2,05,066
5. Past Service Cost
Total expense for the year included in staff cost	9,49,384		3,95,955		1,41,55,947

d) The changes in the brsent value of defined benefit obligation rebrsenting reconciliation of opening and closing balances thereof are as follows:

Particulars	Gratuity plan		Post retirement medical benefit plan		Self-managed provident fund plan		Total
	As at 31.03.2014	As at 31.03.2013	As at 31.03.2014	As at 31.03.2013	As at 31.03.2014	As at 31.03.2013	As at 31.03.2014	As at 31.03.2013
	(Rs.)	(Rs.)	(Rs.)	(Rs.)	(Rs.)	(Rs.)	(Rs.)	(Rs.)
Opening balance of the brsent value of defined benefit obligation	-	-	-	-	-	-	-	-
Add: Current Service Cost	19,07,744	-	4,43,705	-	48,83,956	-	72,35,405	-
Add: Interest Cost	8,98,158	-	1,57,316	-	94,65,608	-	1,05,21,082	-
Add: Contribution by plan participants	-	-		-	83,92,689	-	83,92,689	-
Add/ (Less): actuarial (gains) / losses	-13,76,724	-	-2,05,066	-	-	-	-15,81,790	-
Add: Liabilities assumed on acquisition	3,31,94,395	-	53,75,912	-	-	-	3,85,70,307	-
Add: Past service cost	-	-		-	-	-	-	-
Less: Benefits paid	-	-		-	-	-	-	-
Closing balance of the brsent value of defined benefit obligation	3,46,23,573	-	57,71,867	-	2,27,42,253	-	6,31,37,693	-

e) Changes in the fair value of plan assets rebrsenting reconciliation of the opening and closing balances thereof are as follows:

Particulars	Gratuity plan		Self-managed provident fund plan		Total
	As at 31.03.2014	As at 31.03.2013	As at 31.03.2014	As at 31.03.2013	As at 31.3.2014	As at 31.03.2013
	(Rs.)	(Rs.)	(Rs.)	(Rs.)	(Rs.)	(Rs.)
Opening balance of the fair value of the plan assets	-	-	-	-		-
Add : expected return on plan assets	4,79,794	-	1,93,617	-	6,73,411	-
Add/(Less) : actuarial gains/(losses)	-	-	-20,002	-	-20,002	-
Add: Assets acquired on acquisition	2,55,89,025	-			2,55,89,025
Add : Contribution by the employer	-	-	48,83,956	-	48,83,956	-
Add : Contribution by plan participants	-	-	83,92,689	-	83,92,689	-
Less : Benefits paid	-	-	-	-	-	-
Closing balance of the plan assets	2,60,68,819	-	1,34,50,260	-	3,95,19,079	-

The Company expects to contribute Rs. 85,54,754 towards its gratuity plan in FY 2014-15

f) The major categories of plan assets as a percentage of total plan assets are as follows:

Particulars	Gratuity plan		Self-managed provident fund plan
	As at 31.03.2014	As at 31.03.2013	As at 31.03.2014	As at 31.03.2013
		(Rs.)		(Rs.)
Government of India Securities		-	24.35%	-
State Government Securities		-	14.84%	-
Corporate Bonds	Scheme with LIC	-	7.63%	-
Fixed deposits under Special Deposit Scheme framed by		-	11.62%	-
central government for provident funds
Public sector bonds		-	41.48%	-
Mutual Funds			0.08%

g) Principal actuarial assumptions at the balance sheet date (exbrssed as weighted averages):

Sr.	Particulars	As at 31.03.2014	As at 31.03.2013
1	Discount Rate		Not Applicable
	a) Gratuity Plan	9.00%
	b) Post retirement medical benefit plan
2	Expected Return on plan assets	7.50%
3	Annual increase in healthcare costs
4	Salary growth rate	5.00%
5	Attrition rate	2% to 18% for various age groups

The estimates of future salary increases considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

Although the obligation of the Company under the post-retirement medical benefit plan is limited to the overall ceiling limits, assumed healthcare cost trend rates may affect the amounts recognised in the statement of profit and loss. At brsent, healthcare costs, as indicated in the principal actuarial assumption given above, are expected to increase at 5% p.a. A one percentage point change in assumed healthcare cost trend rates would have the following effects on the aggregate of the service cost and interest cost and defined benefit obligation:

Particulars	Effect of 1 % increase		Effect of 1 % decrease
	As at 31.03.2014	As at 31.03.2013	As at 31.03.2014	As at 31.03.2013
	(Rs.)	(Rs.)	(Rs.)	(Rs.)
Effect on the aggregate of the service cost and interest cost	5,39,916	Not Applicable	-4,12,751	Not Applicable
Effect on defined benefit obligation	12,82,096		-9,85,042

h) The amounts pertaining to defined benefit plans for the current year are as follows:

	Particulars	As at 31.03.2014	As at 31.03.2013
		(Rs.)	(Rs.)
	Post retirement medical benefit plan (non funded)
1	Defined benefit obligation	57,71,867	-
2	Experience Adjustments plan liabilities	-	-
3	Experience Adjustments plan assets	-	-
	Gratuity plan
1	Defined benefit obligation	3,46,23,573	-
2	Plan assets	2,60,68,819	-
3	(Surplus) / deficit	85,54,754	-
4	Experience Adjustments plan liabilities	-	-
5	Experience Adjustments plan assets	-	-
	Self - managed provident fund plan
1	Defined benefit obligation	2,27,42,253
2	Plan assets	1,34,50,260
3	(Surplus) / deficit	92,91,993

a. General descriptions of defined benefit plans:

The Company makes contributions to the Employees’ Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India, a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to employees at retirement, death while in employment or termination of employment of an amount equivalent to 15 days salary for every completed year of service or part thereof in excess of six months, provided the employee has completed five years in service.

b. Post-retirement medical benefit plan

The post-retirement medical benefit plan provides for reimbursement of health care costs to certain categories of employees post their retirement. The reimbursement is subject to an overall ceiling limit sanctioned at the time of retirement. The ceiling limits are based on cadre of the employee at the time of retirement.

c. Self-managed provident fund plan

The Company’s provident fund plan is managed by its holding company through a Trust permitted under the Provident Fund Act, 1952. The plan envisages contribution by employer and employees and guarantees interest at the rate notified by the Provident Fund Authority. The contribution by employer and employee together with interest are payable at the time of separation from service or retirement whichever is earlier. The benefit under this plan vests immediately on rendering of service.

Primary Segment (Business Segment): The Company operates mainly in the business segment of providing engineering services in telecom industry. All other activities revolve around the main business. As such, there are no separate reportable segments as per the provisions of AS 17 on ‘Segment Reporting’ issued by the Institute of Chartered Accountants of India.

Secondary Segment (Geographical Segment): The Company operates in both domestic as well as overseas markets. Geographical Segment data is as below:

Particulars	Domestic		Overseas		Total
	As at 31.3.2014	As at 31.3.2013	As at 31.3.2014	As at 31.3.2013	As at 31.3.2014	As at 31.3.2013
	( Rs.)	( Rs.)	( Rs.)	( Rs.)	( Rs.)	( Rs.)
External revenue by location of customers	15,39,40,610	-	1,10,77,63,094	-	1,26,17,03,704	-
Carrying amount of segment assets by location of assets	5,19,22,83,087	5,00,000	1,17,66,26,126	-	6,36,89,09,213	5,00,000
Cost incurred on acquisition of tangible and intangible fixed assets	4,05,79,68,134	-	1,49,367	-	4,05,81,17,501	-