1 Summary of material accounting policies
1.1 Cash and cash equivalents
Cash and cash equivalent comprises cash in hand, demand deposits and time deposits with original maturity of less than
three months held with bank, debit balance in cash credit account and balance in franking machine.
1.2 Revenue recognition
1.2.1 Interest and similar income
Interest income, for all financial instruments measured either at amortised cost or at fair value through other comprehensive
income, is recognised using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash
payments or receipts over the contractual life of the financial instrument to the gross carrying amount of the financial asset.
The calculation takes into account all contractual terms of the financial instrument (for example, prepayment options) and
includes any fees or incremental costs that are directly attributable and are an integral part of the EIR, but not future credit losses.
The Company calculates interest income by applying the EIR to the gross carrying amount of financial assets other than
credit-impaired assets.
1.2.2 Other charges and other interest
1.2.2.1 Overdue interest in respect of loans is recognized upon realisation.
1.2.2.2 Other ancillary charges are recognized upon realisation.
1.2.3 Commission on Insurance Policies
Commission on insurance policies sold is recognised on accrual basis when the Company under its agency code sells the
insurance policies.
1.2.4 Dividend income
Dividend income is recognised when the Company’s right to receive dividend is established by the reporting date.
1.3 Foreign currency
The Company’s financial statements are presented in Indian Rupees (INR) which is also the Company’s functional currency.
Transactions in foreign currencies are initially recorded by the Company at their respective functional currency spot rates at
the date the transaction first qualifies for recognition.
Income and expenses in foreign currencies are initially recorded by the Company at the exchange rates prevailing on the date
of the transaction.
Foreign currency denominated monetary assets and liabilities are translated at the functional currency spot rates of exchange
at the reporting date and exchange gains and losses arising on settlement and restatement are recognized in the statement of
profit and loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange
rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated
using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary
items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e.,
translation differences on items whose fair value gain or loss is recognized in OCI or profit or loss are also recognized in OCI or
profit or loss, respectively).
1.4 Property, plant and equipment (PPE) and Intangible assets
Property, plant and equipment
PPE are stated at cost (including incidental expenses directly attributable to bringing the asset to its working condition for
its intended use) less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for its intended use. Subsequent expenditure related to PPE is
capitalized only when it is probable that future economic benefits associated with these will flow to the Company and the cost
of item can be measured reliably. Other repairs and maintenance costs are expensed off as and when incurred.
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when
no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the
statement of profit and loss when the asset is derecognised.
PPEs not ready for the intended use on the date of the Balance Sheet are disclosed as “capital work-in-progress”.
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible
assets are carried at cost less any accumulated amortisation and accumulated impairment losses.
Intangible assets not ready for the intended use on the date of Balance Sheet are disclosed as “Intangible assets
under development”.
1.5 Depreciation and amortization
Depreciation
Depreciation on tangible assets is provided over the useful life of the asset as per Schedule-II of Companies Act 2013 and
depreciation rates have been worked out by applying written down value method. The Company has used the following useful
lives to provide depreciation on its PPE.
Amortization
Intangible assets are amortized on a straight-line basis over the estimated useful economic life. The Company estimates
the useful life of an intangible asset to be between four to ten years from the date when the asset is available for use.
Life of intangible assets are assessed by the Company on best estimate available at the time of capitalisation and persuasive
evidence wherever required.
1.6 Leases
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease
requires significant judgment. The Company uses significant judgement in assessing the lease term (including anticipated
renewals) and the applicable discount rate.
Measurement of Lease Liability
At the time of initial recognition, the Company measures lease liability as present value of all lease payment discounted using
the Company’s incremental cost of borrowing rate. Subsequently, the lease liability is
(i) Increased by interest on lease liability;
(ii) Reduced by lease payment made;"
Measurement of Right-of-Use asset
At the time of initial recognition, the Company measures 'Right-of-Use assets' as present value of all lease payment discounted
using the Company’s incremental cost of borrowing rate w.r.t said lease contract. Subsequently, 'Right-of-Use assets' is
measured using cost model i.e. at cost less any accumulated depreciation and any accumulated impairment losses adjusted
for any re-measurement of the lease liability specified in Ind AS 116 'Leases'.
Depreciation on 'Right-of-Use assets' is provided on straight line basis over the lease period.
The Company recognises the amount of the re-measurement of lease liability due to modification as an adjustment to the
right-of-use asset and statement of profit and loss depending upon the nature of modification. Where the carrying amount of
the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company
recognises any remaining amount of the re-measurement in statement of profit and loss.
The Company has elected not to apply the requirements of Ind AS 116 Leases to short-term leases of all assets that have a
lease term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated with
these leases are recognised as an expense on a straight-line basis over the lease term.
1.7 Impairment of non-financial assets
The carrying amount of assets is reviewed at each balance sheet date if there is any indication of impairment based on internal/
external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount.
The recoverable amount is the greater of the assets, net selling price and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and risks specific to the asset. In determining net selling price, recent market transactions are
taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life."
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