Aurionpro Solutions Limited (''''Aurionpro'''' or ''''the Company'''') was incorporated on 31 October 1997 as a private limited company under the Companies Act, 1956. The Company was converted into public limited company with effect from 9 March 2005. The Company is engaged in the business of providing solutions in corporate banking, treasury, fraud prevention and risk management, internet banking, governance and compliance. The Company is a leading provider of intellectual property led Information Technology solutions for the banking and financial service insurance segments.
The Company also provides self-service technologies which enable financial institutions, utilities, telecom and government organizations to migrate, automate and manage customer facing business process to self-service channels.
2. Significant accounting policies
2.1 Basis of preparation of financial statements
The financial statements have been prepared and presented under the historical cost convention, on the accrual basis of accounting, in accordance with the accounting principles generally accepted in India (''''Indian GAAP'''') and comply with the Accounting Standards prescribed under Section 133 of the Companies Act, 2013 (''''the Act'''') read with Rule 7 of the Companies (Accounts) Rules, 2014 and other relevant provisions of the Act, to the extent notified and applicable. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. The financial statements are presented in Indian Rupees rounded off to the nearest lakhs up to two decimals except per share data and where mentioned otherwise.
2.2 Use of estimates
The preparation of financial statements in conformity with Indian GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosures of contingent liabilities at the end of reporting period. Management believes that the estimates made in the preparation of the financial statements are prudent and reasonable. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.
2.3 Current / Non-current classification
Any asset or liability is classified as current if it satisfies any of the following conditions:
I. it is expected to be realized or settled or is intended for sale or consumption in the company''''s normal operating cycle;
ii. It is expected to be realized or settled within twelve months from the reposting date;
Iii. in the case of an asset,
- It is held primary for the purpose of being traded; or
- It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date
iv. In the case of a liability, the Company does not have an unconditional right to defer settlement of the liability for at least twelve months from the reporting date.
All other assets and liabilities are classified as non-current.
For the purpose of current /non-current classification of assets and liabilities, the Company has ascertained its normal operating cycle as twelve months. This is based on the nature of services and the time between the acquisition of assets or inventories for processing and their realization in cash and cash equivalents.
2.4 Revenue recognition
Revenue from software development and consulting services is recognized either on time and material basis or fixed price basis, as the case may be. Revenue on time and material contracts is recognized as and when the related services are performed. Revenue on fixed price contracts is recognized on the percentage of completion method under which the sales value of performance, including earnings thereon, is recognized on the basis of cost incurred in respect of each contract as a proportion of total cost expected to be incurred.
Revenue from sale of licenses of software products and other products/equipments is recognized on transfer of title to the customer. Maintenance revenue in respect of software products and other products/equipments is recognized on pro rata basis over the period of the underlying maintenance agreement. Revenue is net of excise duty, taxes, rebates and discounts.
Revenue from leasing income is recognized on pro-rata basis over the period of the contract.
Unbilled receivables represent costs incurred and revenues recognized on contracts to be billed in subsequent periods as per the terms of the contract.
Income received in advance represents contractual billings/money received in excess of revenue recognized as per the terms of the contract.
Dividend income is recognized when the Company''''s right to receive payment is established.
Interest income is recognized on a time proportion basis taking into account the amount outstanding and the interest rate applicable.
2.5 Fixed assets and depreciation/amortization
Tangible fixed assets
Tangible fixed assets are carried at cost of acquisition or construction less accumulated depreciation and/or accumulated impairment loss, if any. The cost of fixed assets comprises of its purchase price, including import duties and other non-refundable taxes or levies and any 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.
Subsequent expenditures related to an item of tangible fixed asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.
Advances paid/expenditure incurred on acquisition/ construction of fixed assets which are not ready for their intended use at each balance sheet date are disclosed under loans and advances on capital account or capital work-in progress respectively.
Profit or loss on disposal of tangible assets is recognized in the Statement of Profit and Loss. Tangible fixed assets retired from active use and held for disposal are stated at the lower of their net book value and net realizable value and are disclosed separately under ''''Other current assets''''. Any expected loss is recognized immediately in the Statement of Profit and Loss.
Intangible fixed assets
Intangible assets comprises of goodwill on amalgamation in the nature of merger and computer software acquired separately and are recognized when the asset is identifiable, is within the control of the Company, it is probable that the future economic benefits that are attributable to the asset will flow to the Company and cost of the asset can be reliably measured. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment loss, if any. Profit and loss on disposal of intangible assets is recognized in the Statement of Profit and Loss.
Depreciation and amortization
Depreciation on tangible fixed assets, except Computers, Plant and machinery and Leasehold improvements is provided using the Straight Line Method based on the useful lives of the assets as estimated by the management and is charged to the Statement of Profit and Loss as per the requirement of Schedule II of the Act.
The residual value useful life and method of depreciation of an asset is reviewed at each financial year end and adjusted prospectively.
For class of assets categorized under "Computers", based on internal assessment and independent technical evaluation carried out by external values, the management believes that useful life of 6 years best represents the period over which management expects to use these assets. Hence, the useful life of Computers is different from the useful life as prescribed under Part ''''C'''' of Schedule II of the Act.
For class of assets categorized under "Plant and machinery", the management on internal assessment believes that useful life of 5 years best represent the period over which management expects to use these assets. Hence, the useful life of Plant and machinery is different from the useful life as prescribed under Part ''''C'''' of Schedule II of the Act.
Leasehold improvements are amortized over the period of lease term or useful life, whichever is lower.
Individual assets costing up to Rupees five thousand are depreciated in full in the period of purchase.
Intangible assets are amortized on a Straight Line basis over the estimated useful economic life.
Goodwill on merger is amortized over a period of 5 years or estimated useful life, whichever is shorter.
Software is amortized over a period of 5 years or over license period, whichever is lower.
2.6 Impairment of assets
The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. The recoverable amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Statement of Profit and Loss. If at the Balance Sheet date, there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost.
Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the assets and from its disposal at the end of its useful life.
Inventories include traded goods and are valued at lower of cost or net realizable value. Cost of inventories comprises all costs of purchase and other costs incurred in bringing the inventory to their present location and condition. Cost is determined on the first-in, first-out (FIFO) basis. The comparison of cost and net realizable value is made on item by item basis.
Lease payments under operating lease are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term.
Assets given by the Company under operating lease are included in fixed assets. Lease income from operating leases is recognized in the Statement of Profit and Loss on a straight line basis over the lease term unless another systematic basis is more representative of the time pattern in which benefit derived from the leased asset is diminished. Costs, including depreciation, incurred in earning the lease income are recognized as expenses. Initial direct costs incurred specifically for an operating lease are deferred and recognized in the Statement of Profit and Loss over the lease term in proportion to the recognition of lease income.
Assets given out on finance lease are shown as amounts recoverable from the lessee. The rentals received on such leases are apportioned between the finance charge / (income) and principal amount using the implicit rate of return. The finance charge / (income) is recognized as income, and principal received is reduced from the amount receivable. All initial direct costs incurred are included in the cost of the asset.
Investments are classified into current and long-term investments. Investments that are readily realizable and intended to be held for not more than a year from the date of acquisition are classified as current investments. All other investments are classified as long-term investments. However, that part of long-term investments which are expected to be realized within twelve months from Balance Sheet date is also presented under "Current investments" as "Current portion of long-term investments" in consonance with the current/noncurrent classification scheme of Schedule III of the Act.
Current investments are carried at the lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investments. Any reduction in the carrying amount and any reversals of such reductions are charged to the Statement of Profit and Loss.
Long-term investments (including current portion thereof) are carried at cost. A provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.
On disposal of an investment, the difference between its carrying amount and net disposal proceeds is recognized in the Statement of Profit and Loss.
Income-tax expense comprises of current income -tax and deferred tax charge or credit.
Provision for current income-tax is recognized in accordance with the provisions of Income-tax Act, 1961 and is made annually based on the tax liability computed after taking credit for tax allowances and exemptions.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to timing differences that result from differences between the profits offered for income taxes and the profits as per the financial statements. Deferred tax assets and liabilities and the corresponding deferred tax credit or charge are measured using the tax rates and the tax laws that have been enacted or substantively enacted at the Balance Sheet date. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period that includes the enactment date. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in the future; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realization of such assets. Deferred tax assets are reviewed as at each Balance Sheet date to reassess realization. The Company has operations in Special Economic Zones (SEZ). Income from SEZ is eligible for 100% deduction for the first five years, 50% deduction for next five years and 50% deduction for another five years, subject to fulfilling certain conditions. In this regard, the Company recognizes deferred taxes in respect of those originating timing differences which reverse after the tax holiday period resulting in tax consequences.
Timing differences which originate and reverse within the tax holiday period do not result in tax consequence and, therefore, no deferred taxes are recognized in respect of the same.
Minimum alternate tax
Minimum alternate tax (''''MAT'''') under the provisions of Income-tax Act, 1961 is recognized as current tax in the Statement of Profit and Loss. The credit available under the Act in respect of MAT paid 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 period for which the MAT credit can be carried forward for set-off against the normal tax liability. MAT credit recognized as an asset is reviewed at each Balance Sheet date and written-down to the extent the aforesaid convincing evidence no longer exists.
2.11 Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rate prevailing on the date of transactions. Net exchange gain or loss resulting in respect of foreign exchange transactions settled during the year is recognized in the Statement of Profit and Loss.
Monetary assets and liabilities in foreign currency which are outstanding as at the year-end, are translated at the year-end at the closing exchange rate and the resultant exchange differences are recognized in the Statement of Profit and Loss. Non-monetary foreign currency items are carried at cost.
2.12 Foreign currency translation
The financial statements are reported in Indian Rupees. The translation of the local currency of each integral foreign entity into Indian Rupees is performed in respect of assets and liabilities other than fixed assets, using the exchange rate in effect at the Balance Sheet date and for revenue and expense items other than the depreciation costs, using average exchange rate during the reporting period. Fixed assets of integral foreign operations are translated at exchange rates on the date of the transaction and depreciation on fixed assets is translated at exchange rates used for translation of the underlying fixed assets. The resultant exchange differences are recognized in the Statement of Profit and Loss.
2.13 Employee benefits Short-term employee benefits
Employee benefits payable wholly within twelve months of availing employee service are classified as short-term employee benefits. This benefit includes salaries and wages, bonus and ex- gratia. The undiscounted amount of short-term employee benefits to be paid in exchange of employees services are recognized in the period in which the employee renders the related service.
Post employee benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays specified contributions to a separate entity and has no obligation to pay any further amounts. The Company makes specified monthly contributions towards Provident Fund and Employees State Insurance Corporation (''''ESIC''''). The Company''''s contribution is recognized as an expense in the Statement of Profit and Loss during the period in which employee renders the related service.
Defined benefit plan
The Company''''s gratuity benefit scheme is a defined benefit plan. The Company''''s net obligation in respect of a defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted.
The present value of the obligation under such defined benefit plan 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 present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the Balance Sheet date.
When the calculation results in a benefit to the Company, the recognized asset is limited to the net total of any unrecognized actuarial losses and past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan.
Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss.
Other long-term employment benefits
Compensated absences including leave encashment, which are not expected to occur within twelve months after the end of the period in which the employee renders the related services, are recognized as a liability at the present value of the defined benefit obligation at the Balance Sheet date as determined by independent actuary based on Projected Unit Credit Method. The discount rates used for determining the present value of the obligation under other long-term employment benefits plan, are based on the market yields on Government securities as at the Balance Sheet date. Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss.
2.14 Employee''''s Stock Options Plan
In respect of stock options granted pursuant to the Company''''s Employee Stock Option Scheme (''''ESOS''''), the intrinsic value of the options (excess of market price of the share over the exercise price of the option) is treated as discount and accounted as employee compensation cost over the vesting period in accordance with the Securities and Exchange Board of India (''''SEBI'''') (Share Based Employee Benefits) Regulations, 2014 and the Guidance note on Employee Share Based Payments issued by the Institute of Chartered Accountants of India, as amended from time to time.
2.15 Earnings per share (EPS)
Basic EPS is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the reporting year.
Diluted EPS is computed by dividing the net profit attributable to the equity shareholders for the year using the weighted average number of equity and dilutive equity equivalent shares outstanding during the year, except where the results would be anti-dilutive.
2.16 Provisions and contingent liabilities
The Company creates a provision where there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of
the amount of the obligation. A disclosure for a contingent liability is made when there is a possible or a present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent assets are not recognized in the financial statements.
2.17 Proposed dividend
Dividend recommended by the Board of Directors is provided for in the accounts, pending approval at the Annual General Meeting.