25) Significant accounting policies
A. Corporate Information :
Micropro Software Solutions Limited (“the Company”) is domiciled and incorporated in India under the provisions of the Companies Act, 1956 and its shares are listed on the SME platform of the National Stock Exchange of India Limited i.e. NSE EMERGE. The registered office and the principal place of business of the Company is situated at Plot No. 28, 702, Wing A, 7th Floor, IT Park, Gayatri Nagar, Nagpur - 440022, Maharashtra, India.
The Company is engaged in the business of Software development, Technical Services, IT Solutions, designs, develops, standardizes and customizes software solutions across various industries verticals. The financial statements of the Company for the year ended 31st March, 2024 were approved and adopted by Board of Directors in their meeting dated 30th May, 2024.
B. Summary of Significant Accounting Policies :
i) Basis of preparation and presentation of financial statements
a) Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles & mandatory accounting standards issued by the Institute of Chartered Accountants of India and notified under the Companies (Accounting Standards) Rules, 2006.
b) The financial statements are prepared in accordance with the relevant presentation requirement of the Companies Act, 2013, under the historical convention on the basis of going concern. The company generally follows mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis. However where the amount is immaterial/negligible and/or establishment of accrual/determination of amount is not possible, no entries are made for accruals.
c) The Financial Statements are presented in Indian Rupees rounded to the nearest lakhs with two decimals. The amount below the round off norm adopted by the Company is denoted as Rs.0.00 lakhs.
ii) Use of Estimates
The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and the estimates are recognized in the period in which the results are known / materialized.
iii) Property, Plant & Equipment and Intangible Assets
Property, Plant & Equipment have been stated at actual cost less accumulated depreciation and impairment, if any. Actual cost is including of freight, duties, taxes and other expenses.
Intangible Assets are recorded at the consideration paid for acquisition or development of such assets and are carried at cost less accumulated amortization and impairment, if any.
iv) Depreciation and Amortization
Depreciation on tangible and Amortization on intangible assets has been provided for on straight line basis as per the useful life prescribed in Schedule II to the Companies Act, 2013. Depreciation & amortization on additions during the year is being provided on pro-rata basis from the month of acquisition.
v) Inventories
The stock in trade is valued at lower of cost and net realizable value.
vi) Operating Lease
Lease expenses are recognized as an expense in the profit and loss account.
vii) Foreign Currency Translation
Initial Recognition
A foreign currency transaction is any transaction that is denominated in or needs to settle in any foreign currency. Such foreign currency transactions are recorded, on initial recognition in reporting currency, by applying the exchange rate between the foreign currency and the reporting currency to the foreign currency amount at the date of the transaction. Reporting at Subsequent Balance Sheet Dates
All foreign currency monetary items are reported at the closing rate. Non-monetary items that are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. Nonmonetary items that are carried at the fair value or similar valuation denominated in the foreign currency are reported at the exchange rates prevailing when such values were determined.
Exchange differences arising on settlement or translation of monetary items are recognized in the Statement of Profit and Loss.
viii) Revenue Recognition
Revenue is recognized when the significant risk and rewards of ownership of the goods have passed to the buyer. Service Income is recognized as per contractual terms.
ix) Investments
Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as non-current investments. Non-current investments are carried at cost. However, provision for diminution is made to recognize a decline, if any, other than temporary, in the carrying value of the investment.
x) Retirement Benefits
a) Provident Fund: The Company’s contribution to the recognized provident fund paid / payable during the year is debited to the profit and loss account.
b) Gratuity: The liability recognised in the statement of financial position for defined benefit plans is the present value of the defined benefit obligation (DBO) at the reporting date less the fair value of plan assets. The Company estimates the DBO annually with the assistance of independent actuaries. This is based on standard rates of inflation, salary growth rate and mortality. Discount factors are determined close to each year-end by reference to high quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related gratuity liability.
Service cost on the Company’s defined benefit plan is included in employee benefits expense. Actuarial gains and losses resulting from measurements of the net defined benefit liability are also included in profit and loss statement.
c) Short Term Employee Benefits: Employee benefits of short term nature are recognized as expenses as and when it accrues. The Company does not follow practice of providing leave encashment to its employees.
xi) Taxes on Income:
a) The current tax is determined as per the provisions of the Income Tax Act.
b) Deferred income tax is recognized on timing differences, between taxable income and accounting income which originate in one period and are capable of reversal in one or more subsequent periods. The tax effect is calculated on the accumulated timing differences at the year-end based on tax rates and laws, enacted or substantially enacted as of the balance sheet date.
c) Minimum Alternate Tax (MAT) credit is recognized as an asset only when 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 Profit and Loss Account and shown as MAT Credit entitlement.
xii) Impaired Asset:
Factors giving rise to any indication of any impairment of the carrying amount of the company’s assets are appraised at each balance sheet date to determine and provide / revert an impairment loss following accounting standard AS -28 on “Impairment of Assets” issued by Institute of Chartered Accountants of India.
xiii) Cash flow statement
Cash flow statement are reported using the indirect method, whereby profit / (loss) before extra-ordinary items / exceptional items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The cash flow from operating, investing and financing activities of the Company are segregated based on available information.
xiv) Segment reporting
The company has two reportable business segments: IT related services & Trading of IT hardware and software. The primary and secondary segmental financial information is shown in Note no.48.
xv) Provisions, Contingent liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement are recognized when there is present obligation as a result of past event and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.
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