Annual Report 2016-17

Notes forming part of consolidated onancial statements (Contd.)

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(i) Income from software services

Revenue from time and material engagements is recognized on time proportion basis as and when the services are

rendered in accordance with the terms of the contracts with customers.

In case of oxed price contracts, revenue is recognized based on the milestones achieved as specioed in the

contracts, on proportionate completion basis.

Revenue from royalty is recognized in accordance with the terms of the relevant agreements.

Revenue from maintenance contracts and subscription is recognized on a pro-rata basis over the period of the

contract.

Revenue from licensing of software and sale of products is recognized upon delivery.

Unbilled revenue represents revenue recognized in relation to work done until the balance sheet date for which

billing has not taken place.

Unearned revenue represents the billing in respect of contracts for which the revenue is not recognized.

The Group collects service tax and value added taxes (VAT) on behalf of the government and, therefore, these are

not economic beneots powing to the Group. Hence, they are excluded from revenue.

(ii) Interest

Interest income is recognized on a time proportion basis taking into account the carrying amount and the effective

interest rate. Interest income is included under the head ‘Other income’ in the statement of proot and loss.

(iii) Dividend

Dividend income is recognized when the Group’s right to receive dividend is established. Dividend income is

included under the head ‘Other income’ in the statement of proot and loss.

(l) Foreign currency translation

Foreign currency transactions and balances

Initial recognition

Foreign currency transactions are recorded in the respective functional currencies of the entities in the Group, by

applying to the foreign currency amount the exchange rate between the functional currency of each individual

entity and the foreign currency at the date of the transaction.

Conversion

Foreign currency monetary items are reported using the exchange rate prevailing at the reporting date. Non-

monetary items, which are measured in terms of historical cost denominated in a foreign currency are reported

using the exchange rate at the date of the transaction. Non-monetary items which are carried at fair value or other

similar valuation denominated in a foreign currency are reported using the exchange rates at the date when the

values were determined.

Exchange differences

Exchange differences arising on conversion / settlement of foreign currency monetary items and on foreign

currency liabilities relating to Property, Plant and Equipment acquisition are recognized as income or expenses in

the year in which they arise.

Translation of foreign operations

The Group presents the onancial statements in INR which is the functional currency of the parent company.

The assets and liabilities of a foreign operation are translated into the reporting currency (INR) at the exchange

rate prevailing at the reporting date. Their statement of proot and loss are translated at exchange rates prevailing

at the dates of transactions or weighted average rates, where such rates approximate the exchange rate at the date

of transaction. The exchange differences arising on translation are accumulated in the foreign currency translation

reserve under other comprehensive income. On disposal of a foreign operation, the accumulated foreign currency

translation reserve relating to that foreign operation is recognized in the statement of proot and loss.