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KPIT Infosystems GmbH
Schedules annexed to and forming part of Profi t and Loss
Account for the year ended
Pursuant to Section 212 of the Companies Act, 1956
March 31, 2011 March 31, 2010
EUR ` EUR `
SCHEDULE – XI SOFTWARE
DEVELOPMENT EXPENSES
Salaries and Bonus 80,579 4,863,029 67,556 4,513,329
Consultancy charges - - - -
Visa Expenses 8,871 535,358 17,003 1,135,932
Cost of Service Delivery 7,982,178 481,731,072 6,534,183 436,543,322
Total 8,071,629 487,129,458 6,618,742 442,192,583
SCHEDULE – XII SELLING AND
MARKETING EXPENSES
Marketing Services Expenses 41,398 2,498,426 237,128 15,842,322
Marketing Travel Expenses 54,403 3,283,237 70,132 4,685,456
Total 95,801 5,781,664 307,260 20,527,778
SCHEDULE – XIII GENERAL AND
ADMINISTRATION EXPENSES
Salaries and Bonus 516,791 31,188,782 721,632 48,211,632
Contribution to provident and other
funds
- - - -
Staff Welfare 2,378 143,505 2,786 186,158
Foreign travel expenses - - - -
Travelling and conveyance - - - -
Recruitment and Training Expenses 2,689 162,290 1,832 122,398
Rent, Rates and Taxes 81,089 4,893,785 68,852 4,599,975
Communication Expenses 22,855 1,379,315 33,387 2,230,590
Professional and Legal Expenses 101,903 6,149,951 15,944 1,065,229
Printing and Stationery 2,677 161,582 2,102 140,462
Repairs to Others 1,054 63,602 4,198 280,437
Donations 1,120 67,569 1,260 84,180
Power and fuel 295 17,803 62 4,148
Insurance Charges 1,308 78,956 2,573 171,886
Foreign Exchange Valuation - - (51) (3,424)
Loss on sale of fi xed assets - - (118) (7,854)
Bad debts wrtitten off - - - -
Provision for bad and doubtful debts - - - -
Offi ce Expenses 12,552 757,516 6,422 429,050
Total 746,711 45,064,657 860,883 57,514,865
SCHEDULE – XIV INTEREST, NET
Financial charges 7,773 469,100 7,846 524,154
Lease rent 2,390 144,214 4,969 331,972
Less:
10,162 613,314 12,815 856,126
Interest income 1,208 72,903 1,752 117,079
Total 8,954 540,410 11,062 739,046
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1. Introduction
KPIT Infosystems GmbH, Germany is a wholly owned subsidiary of KPIT Infosystems Limited, UK.
The Company has made a Profi t of ` 16,357,967 /- (EUR 271,048) in the current fi nancial year. The
accumulated losses till March 2011 of ` 22,449,563 (EUR 372,234).
During the year KPIT Infosystems Ltd., UK has invested further capital of Euro 2,400,000.
2. Signifi cant Accounting Policies
a) Basis for preparation of fi nancial statements
The fi nancial statements have been prepared on historical cost convention on accrual basis, in
accordance with Generally Accepted Accounting Principles (GAAP) as applicable in India and
the provisions of the Companies Act, 1956. The accounting standards issued by the Institute
of Chartered Accountants of India have been complied with to the extent applicable to the
Company.
All income and expenditure having a material bearing on the fi nancial statements are
recognised on the accrual basis.
b) Revenue recognition
Revenue from software development and services on time and material basis is recognized
based on software development, services rendered and billed to clients as per the contractual
obligations. In case of fi xed price contracts, revenue is recognized based on the milestone/s
achieved as agreed upon in the contract on proportionate completion basis.
c) Expenditure
Expenses are accounted on an accrual basis and provisions are made for all known losses and
liabilities.
d) Fixed Assets
Fixed assets are stated at the cost of acquisition, less accumulated depreciation. Direct costs
are capitalized till the assets are ready to put to use. Fixed assets taken on lease are written off
over the lease period.
e) Depreciation
Depreciation on fi xed asset of the Company is provided on expected useful life of the assets at
the following rates:
Class of Asset Rate of Depreciation
Computer Hardware 20% - SLM
Plant and Machinery 33.33% - SLM
Furniture, fi ttings and equipments 15% - RBM
f) Impairment of Assets
Management periodically assesses using, external and internal sources, whether there is
an indication that an asset may be impaired. Impairment occurs where the carrying value
exceeds the present value of future cash fl ows expected to arise from the continuing use of
the asset and its eventual disposal. The impairment loss to be expensed is determined as the
excess of the carrying amount over the higher of the asset’s net sales price or present value as
determined above.
During the year under consideration, there was no indication, either internal or external as to
the impairment of any of the assets.
g) Foreign Currency Transactions
The transactions with respect to the income and expenditure in foreign currency are recorded
at a monthly average exchange rate, which is near to the actual rate. The exchange differences
arising either on settlement or on translation of foreign currency transactions are recognized in
the profi t and loss account in the year in which they arise.
h) Conversion into Indian Rupees
The transactions, which are in local currency Euro, have been converted for reporting in Indian
Currency on the following basis.
• For the purpose of preparation of the accounts during the year, all income and expense
items are converted at the average rate of exchange applicable for the year. All assets and
liabilities are translated at the closing rate as on the balance sheet date except for fi xed
assets which are converted at the exchange rate prevailing at the time of acquisition of
these assets.
• The share capital is carried forward at the rate of exchange prevailing on the transaction
date. The resulting exchange difference on account of translation of account balances at
the year end is transferred to the Translation Reserve Account and the said account is
being treated as “Reserve and Surplus”.
i) Provisions, Contingent Liabilities and Contingent Assets
As per Accounting Standard 29, ‘Provisions, Contingent Liabilities and Contingent Assets’,
the Company recognizes provisions only when it has a present obligation as a result of a past
event, it is probable that an outfl ow of resources embodying economic benefi ts will be required
to settle the obligation and when a reliable estimate of the amount of the obligation can be
made.
No Provisions is recognized for –
A. Any possible obligation that arises from past events and the existence of which will be
confi rmed only by the occurrence or non-occurrence of one or more uncertain future events
not wholly within the control of the Company; or
B. Any present obligation that arises from past events but is not recognized because-
1. It is not probable that an outfl ow of resources embodying economic benefi ts will be
required to settle the obligation; or
2. A reliable estimate of the amount of obligation cannot be made.