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• Annual Report 2018-19
Shaping the future of software driven business
Under modified retrospective approach, the lessee records the lease liability as the present value of the remaining lease
payments, discounted at the incremental borrowing rate and the right of use asset either as:
• Its carrying amount as if the standard had been applied since the commencement date, but discounted at lessee’s
incremental borrowing rate at the date of initial application or
• An amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments related to that
lease recognized under Ind AS 17 immediately before the date of initial application.
Certain practical expedients are available under both the methods.
On completion of evaluation of the effect of adoption of Ind AS 116, the Company is proposing to use the ‘Modified
Retrospective Approach’ for transitioning to Ind AS 116, and take the cumulative adjustment to retained earnings, on
the date of initial application (April 1, 2019). Accordingly, comparatives for the year ended March 31, 2019 will not be
retrospectively adjusted. The Company has elected certain available practical expedients on transition.
The effect of adoption as on transition date would majorly result in an increase in Right of use asset approximately by
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343.51 million and an increase in lease liability approximately by
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481.30 million.
(h) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable taking into account the amount of any
trade discounts and volume rebates allowed by the Company. Revenue is recognized to the extent it is probable that the
economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition
criteria must also be met before revenue is recognized:
(i) Income from software services and products
Effective April 1, 2018, the Company adopted Ind AS 115 “Revenue from Contracts with Customers” using the cumulative
catch-up transition method, applied to contracts that were not completed as of April 1, 2018. In accordance with the
cumulative catch-up transition method, the previous period’s/ year’s amounts have not been retrospectively adjusted. The
following is a summary of new and/or revised significant accounting policies related to revenue recognition. The effect on
adoption of Ind AS 115 was insignificant.
The company derives revenues primarily from IT services comprising of software development and related services and
from the licensing of software products.
Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects
the consideration expected to receive in exchange for those products or services.
Arrangements with customers for software related services are either on a time-and-material or a fixed-price basis.
Revenue on time-and-material contracts are recognized as and when the related services are performed. Revenue from
fixed-price contracts, where the performance obligations are satisfied over time and where there is no uncertainty as to
measurement or collectability of consideration, is recognized as per the percentage-of-completion method. When there
is uncertainty as to measurement or ultimate collectability, revenue recognition is postponed until such uncertainty is
resolved.
Revenue from licenses where the customer obtains a “right to use” the licenses is recognized at the time the license is
made available to the customer. Revenue from licenses where the customer obtains a “right to access” is recognized over
the access period.
The company has applied the principles under Ind AS 115 to account for revenues from these performance obligations.
When support services are provided in conjunction with the licensing arrangement and the license and the support services
have been identified as two separate performance obligations, the transaction price for such contracts are allocated to
each performance obligation of the contract based on their relative standalone selling prices Maintenance revenue is
recognized proportionately over the period in which the services are rendered.
Revenue from revenue share is recognized in accordance with the terms of the relevant agreements.
The company accounts for volume discounts and pricing incentives to customers as a reduction of revenue based on the
proportionate allocation of the discounts amount to each of the underlying performance obligation that corresponds to
the progress by the customer towards earning the discount. Also, when the level of discount varies with increases in levels
of revenue transactions, the Company recognizes the liability based on its estimate of the customer’s future purchases.
Notes forming part of financial statements (Contd.)