Connected world - KPIT Cummins

Sparta Consulting Inc.
Schedules annexed to and forming part of Profi t & Loss
Account for the year ended
Particulars March 31,
2011
USD
March 31,
2011
`
November 12,
2010 to
March 31,
2010
USD
November 12,
2010 to
March 31,
2010
`
SCHEDULE - X SOFTWARE
DEVELOPMENT EXPENSES
Salaries and Bonus 15,279,275 696,633,072 3,378,521 159,964,512
Consultancy Charges 16,647,398 759,010,359 2,681,362 126,955,799
Travel and Overseas Expenses 6,576,341 299,837,297 670,933 31,767,016
Cost of Service Delivery 7,630,948 347,920,378 1,123,020 53,172,168
Total 46,133,962 2,103,401,107 7,853,836 371,859,494
SCHEDULE - XI SELLING AND
MARKETING EXPENSES
Marketing services expenses 2,747,612 125,272,787 1,072,076 50,760,126
Marketing travel expenses 396,153 18,061,937 290,206 13,740,521
Total 3,143,765 143,334,724 1,362,282 64,500,647
SCHEDULE - XII GENERAL AND
ADMINISTRATION EXPENSES
Salaries and Bonus 5,280,742 240,766,617 1,765,149 83,575,371
Staff Welfare 49,762 2,268,799 991 46,943
Foreign Travel Expenses 364,234 16,606,642 42,453 2,010,056
Travelling and Conveyance 604 27,551 2,075 98,238
Recruitment and Training Expenses 51,638 2,354,340 19,856 940,121
Rent 173,487 7,909,861 62,260 2,947,875
Rates and Taxes 1,507 68,700 124 5,862
Communication Expenses 160,812 7,331,946 48,257 2,284,862
Professional and Legal Expenses 68,544 3,125,152 65,584 3,105,227
Printing and Stationery 42,696 1,946,661 8,421 398,715
Repairs to Building 2,571 117,225 2,981 141,160
Repairs to Plant and Machinery (9,633) (439,189) 25,938 1,228,076
Insurance Charges 20,398 929,994 15,729 744,711
Audit Fees (11,440) (521,584) 11,667 552,388
Bad debts Written off 60,188 2,744,178 20,657 978,066
Loss (net) on Sale of Assets - - 361 17,098
Other Miscellaneous Expenses (111,872) (5,100,627) 430,011 20,359,942
Total 6,144,236 280,136,267 2,522,513 119,434,708
SCHEDULE - XIII INTEREST, NET
Finance Charges 622 28,336 2,715 128,530
Sub-Total
Less:
622 28,336 2,715 128,530
Interest Income (83,123) (3,789,851) 1,690 80,009
Total 83,743 3,818,187 1,024 48,520
32
SCHEDULE - XIV NOTES TO ACCOUNTS
1. Going Concern
Sparta Consulting Inc. is a company incorporated in the State of California, USA. The Company is a
wholly owned subsidiary of KPIT Infosystems Inc., USA.
The Company has made a Profi t of USD 2,621,110 (` 119,505,001) in the current fi nancial year.
The accumulated loss till March 2011 of USD 2,552,562 (` 95,940,919) and the Working Capital of
USD 6,229,839 (` 278,162,147) as of that date, have presently been funded by the holding company,
by way of capital contribution.
2. Signifi cant Accounting Policies
a) Basis for preparation of fi nancial statements
The fi nancial statements have been prepared on historical cost convention and 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 an 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.
e) Depreciation
Depreciation on fi xed asset of the Company is provided based on expected useful life of the
assets at the following rates on straight-line method (SLM):
Class of Asset Rate of Depreciation
Lease hold improvement Amortized over period of lease
Offi ce Equipments 33.33% - SLM
Plant and machinery 20% - SLM
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) Conversion into Indian Rupees
The transaction in reporting currency, i.e. USD, have been converted for reporting in Indian
Currency, i.e. INR 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 at the year end is
transferred to the Translation Reserve Account and the said account is being treated as
“Reserve and Surplus”.