A. SIGNIFICANT ACCOUNTING POLICIES:

1. General:

• These financial statements have been brpared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis, exception for certain tangible assets which are being carried at revalued amounts. Pursuant to Section 133 of the Companies Act,2013 read with Rule 7 of the Companies (Accounts) Rule,2014,till the standards of accounting or any addendum thereto are brscribed by Central Government in consultation and recommendation of the National Financial Reporting Authority, the existing Accounting Standards notified under the Companies Act 1956, shall continue to apply. Consequently these financial statements have been brpared to comply in all material aspects with the accounting standards notified under section 211(3C) of Companies Act , 1956 [Companies(Accounting Standards) Rules, 2006, as amended] and other relevant provisions of the Companies Act ,2013.

All the assets and liabilities have been classified as current and noncurrent as per the companies' normal operating cycle and other criteria set out in schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalent, the company has ascertained its operating cycle to be 12 months for the purpose of current - non current classification of assets and liabilities.

• Use of Estimates

The brparation of Financial Statements in conformity with Generally Accepted Accounting Principles (GAAP) in India requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements and reported amounts of income and expenses during the period.

2. Cash and Cash Equivalents

Cash comprises Cash on hand and Demand Deposits with Banks. Cash equivalents are short-term balances (withan original maturity of three months or less from the date of acquisition), highly liquid investments that arereadily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

Cash Flow Statement

Cash flows are reported using the indirect method, whereby profit after tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated.

3. Tangible and Intangible Assets

i) Tangible Fixed Assets

Tangible fixed assets are carried at the cost of acquisition or construction, less accumulated debrciation and impairment, if any. The cost of fixed assets includes taxes (other than those subsequently recoverable from tax authorities), duties, freight and other directly attributable costs related to the acquisition or construction of the respective assets. Direct costs are capitalized until fixed assets are ready for use.

ii) Intangible Assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment loss, if any. Profit or Loss on disposal of intangible assets are recognized in the Statement of Profit and Loss.

Product development Expenditure is written off over a period of 10 years. Products which are considered as redundant due to Technological advancement would be written off immediately.

iii) Capital work-in-progress

Projects under which assets are not ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

4. Debrdation and Amortization:

(i) Effective 1st April, 2014, Company debrciates the Fixed Assets over the useful life in the manner brscribed in Schedule II of The Companies Act, 2013 as against the earlier practice of debrciating at the rates brscribed in Schedule XIV of The Companies Act 1956.

(ii) Debrciation for additions to Fixed Assets of the Company is provided as per Schedule II of the Companies Act, 2013 on pro-rata basis.

(iii) Individual assets acquired for less than Rs.5,000/-are entirely debrciated in the year of acquisition. Leasehold improvements are written off, over the lower of, the remaining primary period of lease or the life of the asset.

(iv) The carrying value of Fixed Assets whose life has completed as per Schedule II of The Companies Act, 2013 is transferred to Retained earnings amounting to Rs. 3,91,86,745/-.

5. Revenue Recognition:

(i) Income from Software development is accounted on the basis of Software developed and billed to clients on acceptance and/or on the basis of man days/man hours as per the terms of contract.

(ii) Revenue from professional services consists primarily of revenue earned from services performed on a time and material basis. The related revenue is recognized as and when the services are performed.

(iii) Revenue from Software development services includes revenue from time and material and fixed price contracts recognized as related services are performed.

(iv) Revenue on Fixed price contracts is recognized in accordance with percentage of completion and method of account.

(v) Revenue is not recognized on the grounds of prudence, until realized in respect of liquidated damages, delayed payments as recovery of the amounts are not certain.

6. Foreign Exchange Transactions:

Transactions denominated in foreign currencies are recordedat the rate brvailing on the date of transactions.

(i) Monetary items denominated in foreign currencies at the year end are restated at year end rates.

(ii) Non-monetary foreign currency items are carried at cost.

(iii) In respect of foreign operations, which are non-integral operations ,all assets and liabilities, other monetary and non-monetary, are translated at closing rate, which all income and expenses are translated at average rate for the year. The resulting exchange differences are included in the Profit and Loss Account.

7. Investments

Investments are classified into current and long-term investments. Investments that are readily realizable and intended to be held for not more than a year from the date of acquisition are classified as current investments. All other investments are classified as long-term investments.

Long term investments are stated at cost and provision for diminution is made if the decline in value is other than temporary in nature. Current investments are stated at lower of cost and fair value determined on the basis of each category of investments.

Cost of overseas investment comprises the Indian Rupee value of the consideration paid for the investment translated at the exchange rate brvalent at the date of investment.

8. Gratuity:

The Company has made a provision for gratuity to its employees. Gratuity is a defined benefit retirement plan covering eligible employees. In accordance with the Payment of Gratuity Act, 1972, the gratuity plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employees' salary and the tenure of employment.

9. Related Party Disclosures :

The Company furnishes the details of Related Party Disclosures as given in Para 23 and 26 as required by AS-18.

10. Earnings per Share

The Basic and Diluted Earnings Per Share (EPS) is computed by dividing the net profit after tax for the year by weighted average number of equity shares outstanding during the year.

11. Taxes on Income

To provide Current tax as the amount of tax payable in respect of taxable income for the period, measured using the applicable tax rates and tax laws.

To provide deferred tax on timing differences between taxable income and accounting income subject to consideration of prudence, measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Not to recognize Deferred tax assets on unabsorbed debrciation and carry forward of losses unless there is virtual certainty that there will be sufficient future taxable income available to realize such assets.

12. Provisions, Contingent Liabilities and Contingent Assets

The company creates the provisions where there is a brsent obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made for the amount of the obligation. A disclosure for contingent liability will be made when there is a possible obligation or brsent obligation that may, but probably, will not required the outflow of resources. Where, there is a possible obligation or brsent obligation in respect of which the likelihood of outflow of resources is remote, no provisions or disclosures will be made.

Note: 2

The Company is engaged in the development of Computer Software and Services. The Production and sale of such software and services cannot be exbrssed in any generic unit. Hence, it is not possible to give the quantitative details of sales.

Note:3

Foreign Currency Outflow during the year of Rs 7743 Lakhs spent during the year.

Note: 4

Operational revenue received in foreign currency during the year is Rs. 7838 Lakhs

Note: 5

There are no dues to SSI Units outstanding for more than 45 days.

Note: 6

Confirmations were not obtained from debtors/creditors as to the balances receivable from/payable to them as at year end.

Note 7

During the year company entered into a forward contract for USD 500000 per months. Company blocked the Dollar average rate of Rs. 63.50. Unexpired portion of forward contract is USD 7 Millions from the end of Financial Year.

Note: 8

Details of contingent liabilities:

Claims against the company not acknowledged as debts include:

1. Demand of Rs. 5,20,290/- raised by Income Tax Dept for the FY 2009-10.

Note: 9

Previous year's figures have been regrouped wherever necessary.

Note: 10

The figures have been rounded off to the nearest rupee.

As per Our Report of Even Date

For P. Murali & Co.

Chartered Accountants

Firm Registration No. 007257S

P.Murali Mohana Rao

Partner

Membership No. 023412

For and on behalf of the Board VIRINCHI TECHNOLOGIES LIMITED

M. Santi Priya CFO & Whole Time Director

K. Sri Kalyan Whole Time Director

K. Ravindranath Tagore Company Secretary

Place : Hyderabad

Date : 29-05-2015