1. Significant accounting Policies
1.1 Revenue recognition
The Company offers a complete range of network solutions like
Internet, Network Management Services, Data Centre and Co¬
Location Services and Enterprise Mailing Solutions etc and derives
revenues primarily from business IT services comprising of
software development and related services, consulting and
package implementation.
Revenue is recognized upon transfer of control of promised
products or services to customers in an amount that reflects the
consideration we expect to receive in exchange for those products
or services.
Revenue from Online information and database access or retrieval
recognized as the service is performed on the basis of actual usage
of the company network in accordance with contractual obligation
and is recorded net of Goods &service tax.
Company provided specialised features to the subscribers which
entitle them to access the network of the company, in such case the
revenue is recognised when such features are activated and used
by the subscriber.
Products and platforms:
The Company offers a complete range of network solutions like
Internet, Network Management Services, Data Centre and Co¬
location Services and Enterprise Mailing Solutions etc and derives
revenues in the way of sale of products, sale of VOIP Telephones
and Bandwidth Services, Web Solutions & ITES (Exports).
Revenue includes only the gross inflows of economic benefits
received a receivable by the entity on its own account. Amounts
collected on behalf of third parties such as sales taxes, goods and
services taxes and value added taxes are not economic benefits
which flow to the entity and do not result in increases in equity. The
company presents revenues net of taxes in its statement of Profit
and Loss.
Other Income
Other income is comprised primarily of interest income, Rental
income and exchange gain / loss on translation of other assets and
liabilities. Interest income is recognized using the effective interest
method.
1.2 Leases
Effective 1 April 2019, the Company adopted Ind AS 116 “Leases”
and applied the standard to all lease contracts existing on 1 April
2019 using the modified retrospective method. Comparatives as at
and for the year ended 31 March 2019 have not been
retrospectively adjusted and therefore will continue to be reported
under the accounting policies applicable for previous year, The
determination of whether an arrangement is (or contains) a lease is
based on the substance of the arrangement at the inception of the
lease. The arrangement is, or contains, a lease if fulfilment of the
arrangement is dependent on the use of a specific asset or assets
and the arrangement conveys a right to use the asset or assets,
even if that right is not explicitly specified in an arrangement.
Lessee Policy effective 1 April 2019 the Company's lease asset
classes primarily consist of leases for Land, buildings and
colocations spaces. The Company assesses whether a contract
contains a lease, at inception of a contract. A contract is, or
contains, a lease if the contract conveys the right to control the use
of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to
control the use of an identified asset, the Company assesses
whether: (i) the contract involves the use of an identified asset (ii)
the Company has substantially all of the economic benefits from
use of the asset through the period of the lease and (iii) the
Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company
recognizes a right-of-use asset (“ROU”) and a corresponding
lease liability for all lease arrangements in which it is a lessee,
except for leases with a term of twelve months or less (short-term
leases) and low value leases. For these short-term and low value
leases, the Company recognizes the lease payments as an
operating expense on a straight-line basis over the term of the
lease.
Company recognized Right use Asset and Lease Liability value of
Rs.88.62 Lakhs in the year 2020-2021
1.3 Foreign currency Transactions.
Functional currency
The functional currency of the Company is the Indian rupee. These
financial statements are presented in Indian rupees (rounded off
wherever required)
Transactions and translations
Transactions denominated in foreign currencies are recorded at
the exchange rates prevailing at the time of the transaction.
Foreign-currency denominated monetary assets and liabilities are
translated into the relevant functional currency at exchange rates
in effect at the Balance Sheet date. The gains or losses resulting
from such translations are included in net profit in the Statement of
Profit and Loss. Non-monetary assets and non-monetary liabilities
denominated in a foreign currency and measured at fair value are
translated at the exchange rate prevalent at the date when the fair
value was determined. Non-monetary assets and non-monetary
liabilities denominated in a foreign currency and measured at
historical cost are translated at the exchange rate prevalent at the
date of the transaction.
Exchange difference on monetary items is recognised in the
Statement of Profit and Loss in the period in which it arises except
for;
(a) Exchange difference on foreign currency borrowings
relating to depreciable capital asset is included in cost
of assets.
(b) Exchange difference on foreign currency transactions,
on which receipt and/ or payments is not planned,
initially recognised in Other Comprehensive Income
and reclassified from Equity to profit and loss on
repayment of the monetary items.
The results and financial position of foreign operations with
functional currency different from the presentation currency, are
translated into the presentation currency as follows:
(a) Assets and liabilities for each consolidated statement of
financial position presented are translated at the
closing rate at the date of that consolidated statement
of financial position;
(b) income and expenses for each consolidated statement
of comprehensive income are translated at average
exchange rates (unless average rate is not a
reasonable approximation of the cumulative effect of
the rates prevailing on the transaction dates, in which
case income and expenses are translated at the rate
on the dates of the transactions); and
(c) All resulting exchange differences are recognised in
other comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of a
foreign entity are treated as assets and liabilities of the foreign
entity and translated into rupee, the functional currency of the
company, at the exchange rates at the reporting date. Exchange
difference arising is recognised in other comprehensive income
and accumulated in equity, except to the extent that the exchange
differences is allocated to the non-controlling interests.
1.4 Borrowing costs
Borrowing costs attributable to the acquisition or construction of
qualifying assets are capitalised as part of the cost of such assets
up to the commencement of commercial operations. A qualifying
asset is one that necessarily takes substantial period of time to get
ready for intended use. Other borrowing costs are recognised as
an expense in the year in which they are incurred.
Borrowing cost includes interest incurred in connection with the
arrangement of borrowings to the extent they are regarded as an
adjustment to the interest cost.
1.5 Taxes on Income Tax and Deferred Tax
Income tax expense comprises current and deferred income tax.
Income tax expense is recognized in net profit in the Statement of
Profit and Loss except to the extent that it relates to items
recognized directly in equity, in which case it is recognized in other
comprehensive income. Current income tax for current and prior
periods is recognized at the amount expected to be paid to or
recovered from the tax authorities, using the tax rates and tax laws
that have been enacted or substantively enacted by the Balance
Sheet date. Provision for income tax is made on the basis of
taxable income for the year at the current rates
Deferred tax represents the effect of temporary difference between
carrying amount of assets and liabilities in the consolidated
financial statements and the corresponding tax base used in the
computation of taxable income. Deferred income tax assets and
liabilities are recognized for all temporary differences arising
between the tax bases of assets and liabilities and their carrying
amounts in the financial statements. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that
it is no longer probable that the related tax benefit will be realized.
Deferred tax liabilities are generally accounted for all taxable
temporary differences. Deferred tax asset is recognised for all
deductible temporary differences, carried forward of unused tax
credits and unused tax losses, to the extent that it is probable that
taxable profit will be available against which such deductible
temporary differences can be utilised.
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 settle the liability simultaneously.
Deferred tax assets/ liabilities are not recognised for initial
recognition of Goodwill or on an asset or liability in a transaction
that is not a business combination and at the time of transaction
affects neither the accounting profit nor taxable profit or loss. MAT
credit is recognised as an asset, only if it is probable that the
Company will pay normal income tax during the Specified period.
1.6 Earnings per share
Basic earnings per equity share is computed by dividing the net
profit attributable to the equity holders of the Company and
includes post tax effect of any exceptional item by the weighted
average number of equity shares outstanding during the period
excluding the shares owned by the Trust, outstanding during the
period
Diluted earnings per equity share is computed by dividing the net
profit attributable to the equity holders of the Company by the
weighted average number of equity shares considered for deriving
basic earnings per equity share and also the weighted average
number of equity shares that could have been issued upon
conversion of all dilutive potential equity shares. The dilutive
potential equity shares are adjusted for the proceeds receivable
had the equity shares been actually issued at fair value (i.e. the
average market value of the outstanding equity shares). Dilutive
potential equity shares are deemed converted as at the beginning
of the period, unless issued at a later date. Dilutive potential equity
shares are determined independently for each period presented.
The number of equity shares and potentially dilutive equity shares
are adjusted retrospectively for all periods presented for any share
splits and bonus shares issues including for changes effected prior
to the approval of the financial statements by the Board of
Directors.
1.7 Property, plant and equipment (PPE)
Property, plant and equipment are stated at cost less accumulated
depreciation and impairment losses if any. Cost comprises the
purchase price and directly attributable cost 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. The
Company identifies and determines separate useful lives for each
major component of the property, plant and equipment, if they have
a useful life that is materially different from that of the asset as a
whole.
Cost of an item of PPE comprises of its purchase price including
import duties and non-refundable purchase taxes after deducting
trade discounts and rebates, any directly attributable cost of
bringing the item to its working condition for its intended use and
present value of estimated costs of dismantling and removing the
item and restoring the site on which It is located.
Expenses on existing property, plant and equipment, including
day-to-day repairs, 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 de recognition of 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 when
the asset is derecognized.
Advances paid towards the acquisition of property, plant and
equipment outstanding at each Balance Sheet date is classified as
capital advances under other non-current assets and the cost of
assets not ready to use before such date are disclosed under
‘Capital work-in-progress'. Subsequent expenditures relating to
property, plant and equipment are capitalized only when it is
probable that future economic benefits associated with these will
flow to the Company and the cost of the item can be measured
reliably.
1.8 Depreciation
Depreciation is the systematic allocation of the depreciable
amount of PPE over its useful life as per Ind AS 16 and is provided
on a Reduced Balance Method basis over the useful lives as
prescribed in Schedule II to the Act or as per technical assessment.
Depreciation is charged on a pro-rata basis for assets purchased /
sold during the year.
The useful lives as given above best represent the period over
which the management expects to use these assets, based on
technical assessment. The estimated useful lives for these assets
are therefore different from the useful lives prescribed under Part C
of Schedule II of the Companies Act 2013.
The residual values, useful lives and methods of depreciation of
property, plant and equipment are reviewed at each financial year-
end and adjusted prospectively, if appropriate.
1.9 Intangible assets and amortisation
1. Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less any accumulated amortization and
accumulated impairment losses. Cost includes all direct costs
relating to acquisition of Intangible assets and borrowing cost
relating to qualifying assets.
2. Subsequent expenditure is capitalised only if it is probable that
the future economic benefits associated with the expenditure will
flow to the Company.
4. Intangible assets are amortized over the useful life and
assessed for impairment whenever there is an indication that the
intangible asset may be impaired. The amortization period and the
amortization method for an intangible asset with a finite useful life
are reviewed at least at the end of each reporting year. The
estimated useful life of an identifiable intangible asset is based on a
number of factors including the effects of obsolescence, demand,
competition, and other economic factors (such as the stability of
the industry, and known technological advances), and the level of
maintenance expenditures required to obtain the expected future
cash flows from the asset. Amortization methods and useful lives
are reviewed periodically including at each financial year end.
5. Changes in the expected useful life or the expected pattern of
consumption of future economic benefits embodied in the asset
are considered to modify the amortization period or method, as
appropriate, and are treated as changes in accounting estimates.
The amortization expense on intangible assets with finite lives is
recognized in the statement of profit and loss.
6. Gains or losses arising from de recognition of an intangible asset
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 when the asset is derecognized. Any
gain or loss on disposal of an item of Intangible Assets is
recognized in statement of profit and loss.
1.10 Inventories
Stock-in-trade, stores and spares are accounted for at cost and all
other costs incurred in bringing the inventory to their present
location and condition, determined on weighted average basis or
net realizable value, whichever is less Net realizable 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.
The company dealing in business of Bandwidth & Software
services and does not have any Inventory.
1.11 Cash and cash equivalents
Cash and cash equivalents in the Balance Sheet comprise cash at
bank and cash in hand and short-term deposits with banks that are
readily convertible into cash which are subject to insignificant risk
of changes in value and are held for the purpose of meeting short¬
term cash commitments.
1.12 Statement of Cash Flows (Cash Flow Statement)
Cash flows are reported using the indirect method, whereby net
profit before tax is adjusted for the effects of transactions of a 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.
1.13 Employee benefits
1. Provident Fund: Employees of the Company receive benefits
under the provident fund, a defined benefit plan. The employee and
employer each make monthly contributions to the plan. A portion of
the contribution is made to the provident fund trust managed by the
Company or Government administered provident fund. The liability
is actuarially determined (using the projected unit credit method) at
the end of the year. The contributions are charged to the statement
of profit and loss in the year when employee renders the related
service. There are no other obligations other than the contribution
payable to the respective authorities.
2. Gratuity:
The Company provides for gratuity, a defined benefit retirement
plan (“the Gratuity Plan”) covering eligible employees. The Gratuity
Plan provides a lump-sum payment to vested employees at
retirement, death, incapacitation or termination of employment, of
an amount based on the respective employee's salary and the
tenure of employment with the Company. Liabilities with regard to
the Gratuity Plan are determined by actuarial valuation, performed
by an independent actuary, at each Balance Sheet date using the
projected unit credit method.
3. Compensated Absences:
The Company has a policy on compensated absences which are
both accumulating and non-accumulating in nature. The expected
cost of accumulating compensated absences is determined by
Estimation Basis.
4. The actuarial valuation is done at the end of the year. Actuarial
gains/losses are immediately taken to statement of profit and loss
and are not deferred.
1.14 Investments in Subsidiaries and Associates
The company's investment in its Subsidiaries and Associates are
carried at cost.
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