HCL INFOSYSTEMS Accounting Policy

1. Corporate information


HCL Infosystems Limited (''''the Company'''') is domiciled and incorporated in India and publicly traded on the National Stock


Exchange (''''NSE'''') and the Bombay Stock Exchange (''''BSE'''') in India. The registered office of the Company is situated at 806,


Siddharth, 96, Nehru Place, New Delhi - 110019.


The Company is primarily engaged in value-added distribution of technology, mobility and consumer electronic products.


The financial statements were approved by the Board of Directors and authorized for issue on May 30, 2017.


2. Significant accounting policies


This note provides a list of the significant accounting policies adopted in the preparation of these financial statements.


These policies have been consistently applied to all the years presented, unless otherwise stated.


2.1 Basis of preparation


(i) Compliance with Ind/AS


The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.


The financial statements up to nine months period ended 31 March 2016 were prepared in accordance with the accounting standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Act. These financial statements are the first financial statements of the Company under Ind AS. Refer note 57 for an explanation of how the transition from Indian GAAP to Ind AS has affected the Company''''s financial position, financial performance and cash flows.


(ii) Historical cost convention


The financial statements have been prepared on a historical cost basis, except for the following which have been measured at fair value:


- Certain Financial assets and liabilities, including derivative financial instruments, which are being measured at fair value


- Defined benefit plans - plan assets measured at fair value


2.2 Exemptions and exceptions availed


The applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous


GAAP to Ind AS are set out below


A. Ind AS optional exemptions


The following exemptions have been availed from other Ind AS as per Appendix D of Ind AS 101.


1. Deemed cost for Property, Plant and Equipment (PPE) and Intangible Assets- The Company has elected to carry items for all of its PPE and intangible assets at the date of transition to Ind AS at their previous GAAP carrying amount, which is considered as deemed cost on transition.


2. Fair value of financial assets and liabilities: The Company has financial receivables and payables that are non-derivative financial instruments. Under previous GAAP, these were carried at transactions cost less allowances for impairment, if any. Under Ind AS, these financial assets and liabilities are required to be initially recognized at fair value and subsequently measured at amortized cost, less allowance for impairment, if any. For transactions entered into on or after the date of transition to Ind AS, the requirement of initial recognition at fair value is applied prospectively.


3. Employee Share Stock Option: The Company has decided to not apply Ind AS 102, Share-based Payments to the employee share stock option that has vested before the date of transition.


B. Ind AS mandatory exceptions


1. Estimates The Company''''s estimates in accordance with Ind AS at the date of transition to Ind AS are consistent with previous GAAP other than the following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP.


- Investment in debt instruments carried at FVPL; and


- Impairment of financial assets based on expected credit loss model.


2.3 Use of estimates


The preparation of Financial Statements in conformity with Generally Accepted Accounting Principles requires the management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses disclosure of contingent liabilities and contingent assets at the date of the Financial Statements and the results of operations during the reporting period. The actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.


2.4 Critical accounting estimates, assumptions and judgments


In the process of applying the Company''''s accounting policies, management has made the following estimates, assumptions and judgments, which have significant effect on the amounts recognized in the financial statement:


(a) Property, plant and equipment


Management engages external adviser or internal technical team to assess the remaining useful lives and residual value of property, plant and equipment. Management believes that the assigned useful lives and residual value are reasonable.


(b) Intangibles


Internal technical or user team assess the remaining useful lives of Intangible assets. Management believes that assigned useful lives are reasonable.


(c) Income taxes


Management judgment is required for the calculation of provision for income taxes and deferred tax assets and liabilities. The Company reviews at each balance sheet date the carrying amount of deferred tax assets. The factors used in estimates may differ from actual outcome which could lead to significant adjustment to the amounts reported in the financial statements.


(d) Contingencies


Management judgment is required for estimating the possible outflow of resources, if any, in respect of contingencies/claim/litigations against the Company as it is not possible to predict the outcome of pending matters with accuracy.


(e) Allowance for uncollected accounts receivable and advances


Trade receivables do not carry any interest and are stated at their amortized cost as reduced by appropriate allowances for estimated irrecoverable amounts. Individual trade receivables are written off when management deems them not to be collectible. Impairment is made on the expected credit losses, which are the present value of the cash shortfall over the expected life of the financial assets.


(f) Liquidated damages


Liquidated damages payable are estimated and recorded as per contractual terms; estimate may vary from actual as levied by customer.


(g) Impairment of investments


Investments in Subsidiaries are reviewed for impairment, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Such circumstances include, though are not limited to, significant or sustained decline in revenues or earnings and material adverse changes in the economic environment.


Impairment test is performed at entity level. An impairment loss is recognized whenever the carrying amount of Investment exceeds its recoverable amount.


The recoverable amount is the greater of its fair value less costs to sell and value in use. To calculate value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market rates and the risks specific to the asset. The calculation involves use of significant estimates and assumptions which include turnover and gross margin, growth rate and net margin used to calculate projected


future cash flows, discount rate and long term growth rate.


2.5 Current Versus non-current Classification


All assets and liabilities have been classified as current or non-current as per the Company''''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current - non-current classification of assets and liabilities.


2.6 Property, Plant and equipment


Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in the Statement of Profit and Loss on the date of disposal or retirement.


Subsequent costs are capitalized on the carrying amount or recognized as a separate asset, as appropriate, only when future economic benefits associated with the item are probable to flow to the Company and cost of the item can be measured reliably. All other repair and maintenance are charged to profit or loss during the reporting period in which they are incurred.


On transition to Ind AS, the Company has elected to continue with the carrying value of its property, plant and equipment recognized as at 1 July, 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.


Depreciation on Property, Plant and equipment is provided on straight-line basis over the useful lives of assets as determined on the basis of technical estimates which are similar to the useful lives as prescribed under Schedule II to the Companies Act, 2013:-


Assets residual values, depreciation method and useful lives are reviewed at each financial year end considering the physical condition of the assets or whenever there are indicators for review and adjusted residual life prospectively. An asset''''s carrying amount is written down immediately to its recoverable amount if the asset''''s carrying amount is greater than its estimated recoverable amount.


Leasehold land is amortized over a period of lease. Leasehold improvements are amortized on straight line basis over the period of three years or lease period whichever is lower.


Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss within other income.


2.7 Intangible assets


On transition to Ind AS, the Company has opted for the option given under Ind AS 101 to measure all the items of Intangible Assets at their carrying value under previous GAAP (Refer Note 4). Consequently the carrying value under IGAAP has been assumed to be deemed cost of Intangible Assets on the date of transition to Ind AS.


Identifiable intangible assets are recognized when the Company controls the asset, it is probable that future economic benefits attributed to the asset will flow to the Company and the cost of the asset can be reliably measured.


At initial recognition, the separately acquired intangible assets are recognized at cost. The cost of intangible assets that are acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, the intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any.


Amortization is recognized in profit or loss on a straight line basis over the estimated useful lives of intangible assets from the date they are available for use. The amortization period and the amortization method are reviewed at least at each financial year end. If the expected useful life of the asset is significantly different from previous estimates, the amortization period is changed accordingly. Gains or losses arising from the retirement or disposal of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset and recognized as income or expense in the Statement of Profit and Loss.


Software’s


Software’s are capitalized at the amounts paid to acquire the respective license for use and are amortized over the period of license.


Estimated useful life of other acquired intangibles is as follows:


Intangible Assets are amortized at straight line basis as follows:


Software 1-5 years


2.8 Leases As a Lessee


Leases of property, plant and equipment where the Company, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the lease''''s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.


Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the less or) are charged to profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the less or’s expected inflationary cost increases.


As a Less or


Lease income from operating leases where the Company is a lesser is recognized as income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.


Assets given under finance lease are recognized as receivables at an amount equal to the net investment in the lease. Inventories given on finance lease are recognized as deemed sale at fair value. Lease income is recognized over the period of the lease so as to yield a constant rate of return on the net investment in the lease.


2.9 Financial Instruments


A. Financial Instruments - Initial Recognition and Measurement


Financial assets and financial liabilities are recognized in the Company''''s statement of financial position when the Company becomes a party to the contractual provisions of the instrument. The Company determines the classification of its financial assets and liabilities at initial recognition. All financial assets and liabilities are initially recognized at fair value plus directly attributable transaction costs in case of financial assets and liabilities not at fair value through profit or loss. Financial assets and liabilities carried at fair value through profit or loss are initially recognized at fair value, and transaction costs are expensed in the income statement.


B. Financial Assets


1. Subsequent measurement


The subsequent measurement of financial assets depends on their classification as follows:


Debt instrument


a. Financial assets at fair value through profit or loss


Financial assets at fair value through profit or loss include financial assets held for trading and those designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivatives are classified as held for trading unless they are designated as effective hedging instruments. Financial assets are designated upon initial recognition at fair value through profit or loss when the same are managed by the Company on the basis of their fair value and their performance is evaluated on fair value basis in accordance with a risk management or investment strategy of the Company. Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with changes in fair value recognized in other income in the income statement.


b. Financial assets measured at amortized cost


Loans and receivables are non-derivative financial assets that are held for collection of contractual cash flows, where the assets'''' cash flows represent solely payments of principal and interest, are measured at amortized cost. Interest income from these financial assets is included in other income.


c. Fair value through other comprehensive income (FVOCI):


Financial assets are measured at fair value through other comprehensive income (OCI) if these financial assets are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognized in profit and loss. When the financial asset is derecognized , the cumulative gain or loss previously recognized in OCI is reclassified from equity to profit or loss and recognized in other gains/ (losses). Interest income from these financial assets is included in other income using the effective interest rate method.


Investment in Subsidiaries


Investment in Subsidiaries is carried at cost in separate financial statement.


Equity instruments


The Company subsequently measures all equity investments at fair value. Dividends from such investments are recognized in profit or loss as other income when the Company''''s right to receive payments is established.


2. Derecognition


The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expires or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset.


C. Financial Liabilities


1. Subsequent measurement


The subsequent measurement of financial liabilities depends on their classification as follows:


Financial liabilities measured at amortized cost


After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost using the effective interest rate method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral part of the effective interest rate method. The effective interest rate method''''s amortization is included in finance costs in the income statement.


2. Derecognition


A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in the income statement.


D. Offsetting Financial Instruments


Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.


E. Derivative Financial Instruments - Current versus Non- Current Classification


Derivative instruments will be held for a period beyond twelve months after the reporting date, are classified as noncurrent (or separated into current and non-current portions) consistent with the classification of the underlying item. These are classified as current, when the remaining holding period is up to twelve months after the reporting date.


F. Fair Value Measurement


The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.


All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:


Level 1- Quoted (Unadjusted) marked prices in the active markets for identical assets or liabilities


Level 2- Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable


Level 3- Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.


2.10 Income tax


The income tax expense or credit for the period is the tax payable on the current period''''s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.


The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the company operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.


Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.


Deferred tax assets are recognized for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses.


Deferred tax liabilities are not recognized for temporary differences between the carrying amount and tax bases of investments in subsidiaries and interest in joint arrangements where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.


Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.


Current and deferred tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.


2.11 Inventories


Raw materials, stock-in-trade and finished goods are stated at the lower of cost and net realizable value.


Cost of raw materials and stock-in-trade comprises cost of purchases. Cost of finished goods comprises direct materials, direct labor and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Cost of inventories also include all other costs incurred in bringing the inventories to their present location and condition. Cost is determined on the basis of weighted average. Costs of purchased inventory are determined after deducting rebates and discounts. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.


Goods in-transit is valued inclusive of custom duty, where applicable.


2.12 Trade receivables


Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment.


2.13 Cash and cash equivalents


For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.


2.14 Impairment of assets


a. Financial assets


The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortized cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.


For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognized from initial recognition of the receivables.


b. Non-financial assets


(i) Intangible assets and property, plant and equipment


Intangible assets and property, plant and equipment are are reviewed for impairment, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the CGU to which the asset belongs.


If such assets are considered to be impaired, the impairment to be recognized in the Statement of Profit and Loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the statement of profit and loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior years.


c. Investment in Subsidiaries


Investments in Subsidiaries are reviewed for impairment, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Such circumstances include, though are not limited to, significant or sustained decline in revenues or earnings and material adverse changes in the economic environment.


Impairment test is performed at entity level. An impairment loss is recognized whenever the carrying amount of Investment exceeds its recoverable amount.


The recoverable amount is the greater of its fair value less costs to sell and value in use. To calculate value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market rates and the risks specific to the asset.


Fair value less costs to sell is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, less the costs of disposal. Impairment losses, if any are recognized in the statement of profit or loss.


Other impairment losses are only reversed to the extent that the asset''''s carrying amount does not exceed the carrying amount that would have been determined if no impairment loss had previously been recognized .


2.15 Trade and other payables


These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid in accordance with the terms with the vendors. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.


2.16 Borrowings


Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates.


Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss as other gains/(losses).


Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Where there is a breach of a material provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the entity does not classify the liability as current, if the lender agreed, after the reporting period and before the approval of the financial statements for issue, not to demand payment as a consequence of the breach.


2.17 Provisions, contingent liabilities and contingent assets


a) Provisions


Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognized for future operating losses.


Provisions are measured at the present value of management''''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognized as interest expense.


b) Contingencies


Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. Information on contingent liability is disclosed in the Notes to the Financial Statements.


2.18 Foreign currency translation


(i) Functional and presentation currency


Items included in the financial statements of are measured using the currency of the primary economic environment in which the Company operates (''''the functional currency''''). The Company''''s operations are primarily in India. The financial statements are presented in Indian rupee (INR), which is the Company''''s functional and presentation currency.


(ii) Transactions and balances


Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognized in profit or loss.


Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit and loss on a net basis within other income.


Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.


2.19 Revenue recognition


The Company derives revenues primarily from sale of products. Revenue is measured at the fair value of the consideration received or receivable.


The Company recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Company''''s activities as described below. The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.


Sale of Products


Timing of recognition


The Company is engaged into the business of -


- Purchase/ sale and distribution of IT products, including computer hardware and mobile handsets.


Revenue from the sale of products is recognized when the following criteria for the transaction have been met:


- all significant risks and rewards of ownership have transferred to the buyer;


- continuing managerial involvement and effective control usually associated with ownership has been ceased;


- the amount of revenue can be measured reliably; and


- it is probable that the economic benefits associated with the transaction will flow to the Company. Measurement of revenue


Revenue from sales is based on the price specified in the sales contract, net of the estimated volume discounts and returns at the time of sale. For separately identified component from multiple element arrangement, pertaining to the sale of products, the revenues are measured based on fair value allocated to such component within the overall arrangement.


Amounts disclosed as revenue are inclusive of excise duty and net of returns, trade allowances, rebates, value added taxes and amounts collected on behalf of third parties.


Revenue from services


Timing of recognition


Service income includes income from IT infrastructure managed services, break-fix services, office automation maintenance services and managed print services. Revenues relating to time and materials contracts are recognized as the related services are rendered. Revenue in case of fixed price contracts is recognized on percentage of completion basis. Revenue from a period based service contracts is recognized on a pro rata basis over the period in which such services are rendered.


Measurement of Revenue


Revenue are based on the price specified in the sales contract, net of the estimated volume discounts. For separately identified component from multiple element arrangement, pertaining to the sale of services, the revenues are measured based on fair value allocated to such component within the overall arrangement.


Estimates of revenue, costs or extent of progress towards completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the circumstances that give rise to the revision become known by management.


Interest income


Interest income from loans and receivables (debt instruments) is recognized using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.


2.20 Employee benefits


Defined benefit plans


Gratuity


The liability recognized in the balance sheet is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.


The present value is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.


The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.


Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.


Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service cost.


Provident Fund


In respect of certain employees, Provident Fund contributions are made to a multi-employer Trust administered by the Company. The Company''''s liability is actuarially determined (using the Projected Unit Credit method) at the end of the year and any shortfall in the fund size maintained by the Trust set up by the Company is additionally provided for. Actuarial losses/gains are recognized in the Statement of Profit and Loss in the year in which they arise.


Defined contribution plans


Contributions to the employees'''' state insurance fund, administered by the prescribed government authorities, are made in accordance with the Employees'''' State Insurance Act, 1948 and are recognized as an expense on an accrual basis.


Company''''s contribution towards Superannuation Fund is accounted for on accrual basis.


The Company makes defined contributions to a Superannuation Trust established for the purpose. The Company has no further obligation beyond the monthly contributions.


Other Benefits Compensated Absences


Accumulated compensated absences, which are expected to be availed or encased within 12 months from the end of the year end are treated as short term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as a result of the unused entitlement as at the year end.


Accumulated compensated absences, which are expected to be availed or encased beyond 12 months from the end of the year end are treated as other long term employee benefits. The Company''''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/ gains are recognized in the Statement of Profit and Loss in the year in which they arise.


Long Term Employee Benefits


Employee benefits, which are expected to be availed or encased beyond 12 months from the end of the year are treated as other long term employee benefits. The Company''''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year.


Employee Options


The fair value of options granted is recognized as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted:


- including any market performance conditions


- excluding the impact of any service and non-market performance vesting conditions, and


- including the impact of any non-vesting conditions


The total expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognizes the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.


2.21 Borrowing costs


General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.


Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.


Other borrowing costs are expensed in the period in which they are incurred.


2.22 Earnings per Share


(i) Basic earnings per share


Basic earnings per share is calculated by dividing:


- the profit attributable to owners of the Company


- by the weighted average number of equity shares outstanding during the financial year


(ii) Diluted earnings per share


Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:


- the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and


2.23 Exceptional Items


Items which are material either because of their size or their nature, and which are non-recurring, are highlighted through separate disclosure. The separate reporting of exceptional items helps provide a better picture of the Company''''s underlying performance.

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
“2019 © COPYRIGHT DYNAMIC EQUITIES PVT. LTD.”

Disclaimer: There is no guarantee of profits or no exceptions from losses. The investment advice provided are solely the personal views of the research team. You are advised to rely on your own judgment while making investment / Trading decisions. Past performance is not an indicator of future returns. Investment is subject to market risks. You should read and understand the Risk Disclosure Documents before trading/Investing.

Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at compliance@dynamiclevels.com

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