4) Summary of material accounting policies

This note provides a list of the material accounting
policies adopted in the preparation of these financial
statements. These policies have been consistently
applied to all the years presented, unless otherwise
stated.

a) Functional and presentation currency

Items included in the financial statements of the
Company are measured using the currency of the
primary economic environment in which these
entities operate (i.e. the "functional currency").
The financial statements are presented in Indian
Rupee, the national currency of India, which is the
functional currency of the Company.

b) Foreign currency transactions and balances

i) Initial Recognition

Foreign currency transactions are recorded at
the rates prevailing date of transactions.

ii) Exchange Differences

Exchange differences arising on settlement of
transaction and translation of monetary items
are recognized as income or expense.

iii) Conversion

Foreign currency monetary items are
reported using the exchange rate prevailing
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.

iv) T ranslation Gain / Loss

Any exchange gain/loss consequent to trans¬
lating financial statements from functional
currency to presentation currency the resul¬
tant exchange difference is recognized in OCI
and part of foreign currency translation re¬
serve until eventual disposal of investment.

c) Investments

Long term and unquoted current investments are
stated at cost and quoted current investments
at lower of cost or market value. Provision for
diminution in value of long-term investments is
made only if such a decline is other than temporary
in the opinion of the management.

d) Financial instruments
d.1. Financial Assets

Financial Assets comprise of investments in equity
and debt securities, Trade Receivables, Cash and
Cash Equivalents and Other Financial Assets.

Initial recognition:

All Financial Assets are recognized initially at fair
value. Purchase or sale of Financial Assets that
require delivery of assets within a time frame
established by regulation or convention in the
marketplace (regular way trades) are recognized
on the trade date, i.e., the date that the Company
commits to purchase or sell the asset.

Subsequent Measurement:

i) Financial Assets measured at amortised cost:

Financial Assets held within a business model
whose objective is to hold Financial Assets
in order to collect contractual cash flows,
and the contractual terms of the Financial
Assets give rise on specified dates to cash
flows that are solely payments of principal and
interest on the principal amount outstanding
are measured at amortised cost using
Effective Interest Rate (EIR) method. The EIR
amortization is recognised as finance income
in the Statement of Profit and Loss. The
Company, while applying above criteria, has
classified the following at amortised cost:

• Trade Receivables

• Cash and Cash Equivalents

• Other Financial Assets

ii) Financial Assets at Fair Value Through Other
Comprehensive Income (FVTOCI):

Where Financial Assets are held to collect
contractual cash flows, selling the Financial
Assets and the contractual terms of the
Financial Assets give rise on specified dates
to cash flows that are solely payments
of principal and interest on the principal
amount outstanding and are measured at
FVTOCI. Fair Value movements in Financial
Assets at FVTOCI are recognised in Other
Comprehensive Income. Equity instruments
held for trading are classified at Fair Value
Through Profit or Loss (FVTPL). For other
equity instruments the Company classifies
the same at FVTOCI. The classification is
made on initial recognition and is irrevocable.
Fair Value changes on equity investments at
FVTOCI, excluding dividends, are recognised
in Other Comprehensive Income (OCI).

iii) Financial Assets at Fair Value Through Profit or
Loss (FVTPL):

Financial Assets are measured at Fair Value
through Profit or Loss if it does not meet the

criteria for classification at amortised cost or
at Fair Value through Other Comprehensive
Income. All fair value changes are recognised
in the Statement of Profit and Loss.

e) Inventories

Inventories are valued at lower of cost or net
realizable value whichever is lower on weighted
average basis.

f) Property, plant and equipment

Property, Plant and Equipment are stated at cost,
less accumulated depreciation and accumulated
impairment losses, if any. The cost comprises the
purchase price and directly attributable costs of
bringing the asset to its working condition for its
intended use. Any trade discounts and rebates are
deducted in arriving at the purchase price.

Capital work-in-progress includes cost of Property,
Plant and Equipment that are not ready to be put to
use.

Subsequent expenditure related to an item of
Property, Plant and Equipment is added to its book
value only if it is probable that future economic
benefits associated with the item will flow to the
Company. All other expenses on existing Property,
Plant and Equipment, including day-to-day repair
and maintenance expenditure and cost of replacing
parts, are charged to the statement of profit and
loss for the year during which such expenses are
incurred.

Gains or losses arising from disposal of Property,
Plant and Equipment are measured as the difference
between the net disposal proceeds and the carrying
amount of the asset and are recognized in the
statement of profit and loss.

g) Intangible Assets

The Intangible assets are recognized when it is
probable that the future economic benefit that are
attributable to the assets will flow to the enterprise
and the cost of the assets can be measured reliably.

Software licenses of enduring nature and
contractual rights acquired separately are
measured on initial recognition at cost. Following
initial recognition intangible assets are carried at
cost less accumulated amortization.

Gains or losses arising from disposal of intangible
assets are measured as the difference between the
net disposal proceeds and the carrying amount of
the asset and are recognized in the statement of
profit and loss.

Goodwill is subject to impairment testing on an
annual basis. However, if indicators of impairment
are present, the company will review goodwill
for impairment when such indicators arise. The
company performs an annual review and no
impairment was recorded. Key assumptions used

by management to determine the fair value of
the goodwill include industry earnings multiples
and earnings multiples from previous company
acquisitions.

h) Depreciation and Amortization

Depreciation on Tangible assets and amortization
of Intangible assets is provided on Straight line
method on pro -rata basis at the rates prescribed in
Schedule II of the Companies Act, 2013 as amended
from time to time.

i) Impairment of Assets:

The carrying amounts of assets are reviewed at
each balance sheet date if there is any indication of
impairment based on internal/external factors.

j) Borrowing Cost

Borrowing costs that are attributable to the
acquisition or construction of qualifying assets
are capitalized as part of the cost of such assets.
A qualifying asset is one that necessarily takes
substantial period of time to get ready for its
intended use. All other borrowing costs are charged
in statement of profit and loss.

k) Leases

Company evaluates if an arrangement qualifies
to be a lease as per the requirements of Ind AS
116. Identification of a lease requires significant
judgment. Company uses significant judgement
in assessing the lease term and the applicable
discount rate.

Company determines the lease term as the non¬
cancellable period of a lease, together with both
periods covered by an option to extend the lease
if the company is reasonably certain to exercise
that option; and periods covered by an option to
terminate the lease if the Company is reasonably
certain not to exercise that option. In assessing
whether the Company is reasonably certain to
exercise an option to extend a lease, or not to
exercise an option to terminate a lease, it considers
all relevant facts and circumstances that create an
economic incentive for the company to exercise the
option to extend the lease, or not to exercise the
option to terminate the lease. Company revises the
lease term if there is a change in the non-cancellable
period of a lease.

The discount rate is generally based on the
incremental borrowing rate specific to the lease
being evaluated or for a portfolio of leases with
similar characteristics.

l) Revenue Recognition

i) Revenue from time and material engagements

is recognized on time proportion basis
as and when the services are rendered in
accordance with the terms of the contracts
with customers.

ii) Revenue from fixed-price contracts, where
the performance obligations are satisfied
over time and where there is no uncertainty
as to measurement or collectability of
consideration, is recognized as per the
percentage-of-completion method.

iii) Revenue from maintenance contracts and
subscription is recognized on a pro-rata basis
over the period of the contract.

iv) Unbilled revenue represents revenue
recognized in relation to work done on time
and material projects and fixed price projects
until the balance sheet date for which billing
has not taken place.

v) Interest income is recognized on a time
proportion basis taking into account the
carrying amount and the effective interest
rate. Interest income is included under the
head 'Other income' in the statement of profit
and loss.

m) Employee Benefits

The Company has the following employee benefit

plans:

i) Provident fund

Provident fund is a defined contribution plan
covering eligible employees. The Company
and the eligible employees make a monthly
contribution to the provident fund maintained
by the Regional Provident Fund Commissioner
equal to the specified percentage of the basic
salary. The contributions to the provident fund
are charged to the statement of profit and
loss for the year when the contributions are
due. The Company has no obligation, other
than the contribution payable to the provident
fund.

ii) Gratuity

The Company has a scheme for payment of
gratuity to all its employees as per provisions
of the Payment of Gratuity Act 1972. The
Company provides for period end liability
using the projected unit credit method as
per the actuarial valuation carried out by the
independent actuary. The cost of providing
benefit under gratuity plan are charged to
the statement of profit and loss, except for
the remeasurements, comprising of actuarial
gains and losses which are recognized in full
in the statement of other comprehensive
income in the reporting period in which they
occur.

iii) Leave encashment.

Leave encashment claims are settled on year-
to-year basis.

n) Share based payments

In accordance with Ind AS 102 - "Share Based
Payments", Employees of the Company receive
remuneration in the form of equity settled
instruments, for rendering services over a defined
vesting period. Equity instruments granted are
measured by reference to the fair value of the
instrument at the date of grant.

The expense is recognized in the statement of
profit and loss with a corresponding increase to
the share-based payment reserve, a component of
equity.

The equity instruments generally vest in a graded
manner over the vesting period. The fair value
determined at the grant date is expensed over
the vesting period of the respective tranches of
such grants (accelerated amortization). The stock
compensation expense is determined based on the
Company's estimate of equity instruments that will
eventually vest.

o) Income Tax

Income tax comprises current and deferred tax.
Income tax expense is recognized in the statement
of profit and loss except to the extent it relates
to items directly recognized in equity or in other
comprehensive income

i) Current Income tax

Current income tax for the current and prior
periods are measured at the amount expected
to be recovered from or paid to the taxation
authorities based on the taxable income for
the period. The tax rates and tax laws used to
compute the current tax amount are those
that are enacted or substantively enacted
by the reporting date and applicable for the
period. The Company offsets current tax
assets and current tax liabilities, where it
has a legally enforceable right to set off the
recognized amounts and where it intends
either to settle on a net basis or to realize the
asset and liability simultaneously.

ii) Deferred Income Tax

Deferred income taxes reflect the impact
of temporary differences between tax base
of assets and liabilities and their carrying
amounts. Deferred tax is measured based
on the tax rates and the tax laws enacted or
substantively enacted at the reporting date.
Deferred income tax asset is recognized to
the extent that it is probable that taxable profit
will be available against which the deductible
temporary differences, and the carry forward
of unused tax credits and unused tax losses
can be utilized.

The carrying amount of deferred income tax
assets is reviewed at each reporting date

and reduced to the extent that it is no longer
probable that sufficient taxable profit will be
available to allow all or part of the deferred
income tax asset to be utilized.

Minimum alternate tax (MAT) paid in a year is
charged to the statement of profit and loss as
current tax. MAT credit available is recognized
as an asset only to the extent that there is
convincing evidence that the Company will
pay normal income tax during the period, i.e.,
the period for which MAT credit is allowed to
be carried forward. In the year in which the
Company recognizes MAT credit as an asset
in accordance with the Guidance Note on
Accounting for Credit Available in respect of
Minimum Alternative Tax under the Income-
tax Act, 1961, the said asset is created by
way of credit to the statement of profit and
loss and shown as "MAT Credit Entitlement."
The Company reviews the "MAT credit
entitlement" asset at each reporting date
and writes down the asset to the extent the
Company does not have convincing evidence
that it will pay normal tax during the specified
period.

p) Segment reporting

In accordance with para 4 of Notified Indian
Accounting Standard 108 (Ind AS-108) "Operating
Segments" the Company has disclosed segment
information in the standalone financial statements.

q) Earnings Per Share

The Company presents basic and diluted earnings
per share ("EPS") data for its equity shares.
Basic EPS is calculated by dividing the profit and
loss attributable to equity shareholders of the
Company by the weighted average number of
equity shares outstanding during the period.
Diluted EPS is determined by adjusting the profit
and loss attributable to equity shareholders and
the weighted average number of equity shares
outstanding for the effects of all dilutive potential
equity shares. The number of equity shares and
potentially dilutive equity shares are adjusted for
bonus shares, as appropriate.