Saksoft Limited (''''Saksoft''''or''''the Company'''') is an Information technology Company that provides Business Intelligence, Testing & Software Solutions across Industries & Verticals. Saksoft provides end-to-end business solutions that leverage technology and enables its clients to enhance business performance. The Company provides the entire gamut of software solutions including IM Strategy, Consulting, Design, Custom Application development, RaaMS, Bl & DW Services, Systems integration, Implementation, Assurance and Placement services.
Note-1: Significant accounting policies a. Basis of preparation of financial statements
The financial statements are prepared and presented in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis. GAAP comprises accounting standards notified by the Central Government of India , other pronouncements of the Institute of Chartered Accountants of India, provisions of the Companies Act, 2013 and guidelines issued by the Securities and Exchange Board of India (''''SEBI'''').
b. Use of estimates
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period, reported balances of assets and liabilities, and disclosure of contingent liabilities as at the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.
c. Tangible fixed assets. Capital work-in-progress and depreciation/amortization
Fixed assets are carried at cost of acquisition less accumulated depreciation. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.
Depreciation on Computer equipments and Office equipments is provided on the straight line method over the useful life as prescribed in Schedule II of the Companies Act 2013. In respect of other assets, the depreciation is provided over the useful life determined by technical evaluation. The useful lives of those assets are as under:
Individual assets costing Rs,5,000/- or less are depreciated at 100% in the year of purchase.
Capital work-in-progress includes the cost of fixed assets that are not ready for their intended use.
Depreciation on leased assets is charged over the period of lease or the life of the asset whichever is lower.
d. Intangible assets and amortization
Intangible assets comprising intellectual property rights and software costs are amortized over a period of 36 and 60 months respectively from the date of acquisition. Self-generated intellectual property rights / software assets are generally not capitalized.
Finance leases, which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. If there is reasonable certainty that the lessee will obtain ownership by the end of the lease term, the period of expected use is the useful life of the asset; otherwise the asset is depreciated over the lease term or its useful life, whichever is shorter. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged directly against income.
Note-1: Significant accounting policies (contd.)
Leases that do not transfer substantially all the risks and rewards of ownership are classified as operating leases and are recorded as expense on a straight line basis over the lease term.
f. Impairment of assets
The Company assesses at each balance sheet 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. Recoverable amount is the higher of an asset''''s net selling price and value in use. 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 Profit and Loss Account. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exits, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost.
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 long term investments.
Long term investments are stated at cost and any decline other than temporary in the value of investments is charged to profit and loss account.
Current investments are stated at the lower of cost and fair value.
h. Foreign currency transactions
Transactions in foreign currencies are recorded at exchange rates that approximate the rate prevailing on the dates of the transaction. Monetary assets and liabilities denominated in foreign currency are translated at rates of exchange on the balance sheet date. Exchange differences arising on foreign currency transactions are recognized in the profit and loss account.
i. Revenue recognition
Revenue from software services comprises revenue from time and material and fixed price contracts.
Revenue from time-and-material contracts is recognized based on the time / efforts spent and billed to clients.
In case of fixed-price contracts, revenue is recognized based on percentage of completion basis.
Revenue from annual maintenance contracts are recognized proportionately over the period in which services are rendered.
Revenue from sale of software and hardware is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on physical or electronic dispatch of goods.
Dividend income is recognized when the Company''''s right to receive dividend is established.
Interest income is recognized on the time proportionate method, j. Employee benefits Provident Fund
Contributions payable to the recognized provident fund which is a defined contribution scheme are charged to the profit and loss account.
Gratuity liability is a defined benefit obligation and is recorded based on actuarial valuation on projected unit credit method made at the end of the year. The gratuity liability and net periodic gratuity cost is actuarially determined after considering discount rates, expected long term return on plan assets and increase in compensation levels. All actuarial gain/loss are immediately recorded to the profit and loss account and are not deferred. The Company makes contributions to a fund administered and managed by the Saksoft Employees'''' Gratuity Trust to fund the gratuity liability.
As per the employment policy of the Company employees are required to avail their annual leave by the end of the respective calendar year. At the end of the financial year, the Company accounts for the remaining short term compensated absences.
Income-tax expense comprises of current tax (i.e. amount of tax for the period determined in accordance with the income-tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period). The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet 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 recognized only if there is a virtual certainty of realization of such assets.
Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonably/ virtually certain (as the case may be) to be realized. Current tax and deferred tax assets and liabilities are offset to the extent to which the Company has a legally enforceable right to set off and they relate to taxes on income levied by the same governing taxation laws.
I. Earnings per share
Basic earnings per share (''''EPS'''') amounts are computed by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all measurable dilutive potential equity shares.
The shares issued to the Saksoft Employees Welfare Trust have been considered as outstanding for basic EPS purposes, to the extent the options have been exercised by the employees. For diluted EPS purpose, the shares, which are not yet eligible for exercise, have also been considered as outstanding to the extent these shares are dilutive.
m. Employees stock option schemes
The Company uses the intrinsic value method of accounting for its employee share based compensation plan and other share based arrangements. Under this method compensation expense is recorded over the vesting period of the option, if the fair market value of the underlying stock on the date of the grant exceeds the exercise price.
n. Provisions, Contingent liabilities and Contingent assets
A provision is recognized when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimate.
A disclosure for contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation ora present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
Contingent assets are neither recognized nor disclosed in the financial statements.
h. Employee Stock option plans (''''ESOPO ESOP 2006 Plan
The ESOP 2006 Plan was introduced by the Company in 2006 under which the Company grants options from time to time to employees of the Company and its subsidiaries. This Plan was approved by the Board of Directors in January 2006 and by the shareholders in February 2006. The Plan complies with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and is administered by the Saksoft Employees Welfare Trust (''''the Trust) through the Nomination and Remuneration committee. The Trust purchased the shares of the Company using the proceeds of loans obtained from the Company and administers the allotment of shares to employees and other related matters. The eligible employees exercise the options under the terms of the Plan at an exercise price, which equals the fair value on the date of the grant, until which the shares are held by the Trust.
The Company had allotted 582,460 equity shares of Rs,10 each to the Trust to give effect to the ESOP Plan. As at the balance sheet date, the employees have exercised 40,000 options under this Plan and accordingly, 542,460 equity shares of Rs,10 each represent shares held by the Trust. During the year no options have been granted under this plan.
h. Employee Stock option plans (''''ESOP'''') (contd.)
ESOP 2009 Plan
The ESOP 2009 Plan was introduced by the Company with the consent of the shareholders in 2009 under which the Company grants options from time to time to employees of the Company and its subsidiaries. Further the scheme was amended at the AGM held on 26th September 2014 to increase the exercise period from 5 to 10 years .This Plan complies with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014
The plan considers an aggregate of 1,000,000 options to be granted and exercised in accordance with the ESOP 2009 plan as approved by the Nomination and Remuneration Committee. The outstanding options available for exercise under the ESOP 2009 as on 31st March 2016 is 515,000 options.
During the year the Board of Directors have allotted 30,000 equity shares consequent to the exercise of options by certain eligible employees of the Company who were granted options on 3rd December 2010 at grant price of Rs,44.25 per option and 5,000 shares consequent to the exercise of options by certain eligible employees of the Company who were granted options on 26th September
2014 at grant price of Rs,138.70 per option under ESOP 2009 plan. Subsequent to the exercise, the listing and trading approval was obtained from National Stock Exchange on 1st February 2016 for 5,000 shares and 15th February 2016 for 30,000 shares. The paid up share capital of the Company after allotment of 35,000 equity shares stands at 10,395,000 Equity Shares as of 31st March 2016 Apart from the above allotment, during the year the Nomination and Remuneration Committee has granted to eligible employees of Saksoft Limited & Subsidiaries, 300,000 options on 25th May 2015 at a grant price of Rs,151.70/-.
The details of the ESOP 2009 Plan are
j. Dues to Micro and small enterprises
The Company has initiated the process of obtaining confirmation from suppliers who have registered under the Micro, Small and Medium Enterprises Development Act, 2006. Based on the information available with the company there is no amount outstanding as on 31.03.2016. There are no overdue principle amounts and therefore no interest is paid or payable.
k. Prior year figures have been regrouped, wherever necessary, to conform to the current year''''s classification.