2. MATERIAL ACCOUNTING POLICY
INFORMATIONi) Basis of preparation of financial
statements
The financial statements of the Company
have been prepared and presented in
accordance with Indian Accounting
Standards (Ind AS) notified under the
Companies (Indian Accounting Standards)
Rules, 2015 as amended from time to time
and presentation requirements of Division
II of Schedule III to the Companies Act,
2013, (Ind AS compliant Schedule III), as
applicable to the financial statements.
Accounting policies have been
consistently applied except where a newly
issued accounting standard is initially
adopted or a revision to an existing
accounting standard requires a change in
the accounting policy hitherto in use.
The financial statements have been
prepared on an accrual basis as a going
concern and under the historical cost
convention, except for certain financial
assets and financial liabilities that are
measured at fair value and net defined
benefit obligations as required under
relevant Ind AS.
Items included in the financial statements
of the Company are measured using
the currency of the primary economic
environment in which the Company
operates (“the functional currency”). The
financial statements are presented in
Indian National Rupee (‘INR'), which is the
Company's functional and presentation
currency, and all values are rounded to
the nearest millions up to two decimals,
except when otherwise stated.
The financial statements provide
comparative information in respect of
the previous year.
ii) Current versus non-current classification
Based on the time involved between
the acquisition of assets for processing
and their realization in cash and cash
equivalents, the Company has identified
twelve months as its operating cycle for
determining current and non-current
classification of assets and liabilities in
the balance sheet.
iii) Property, plant and equipment
Property, plant and equipment are stated
at cost, net of accumulated depreciation
and accumulated impairment losses,
if any. The cost comprises purchase
price and other directly attributable
cost incurred in bringing the asset to its
working condition for the intended use
and initial estimate of decommissioning,
restoring and similar liabilities. Any trade
discounts and rebates are deducted
in arriving at the purchase price. All
other repair and maintenance costs are
recognised in profit or loss as incurred.
Subsequent costs are capitalized on the
carrying amount or recognised as a separate
asset, as appropriate, only when future
economic benefits associated with the item
are probable to flow to the Company and
cost of the item can be measured reliably.
The gain or loss arising on the disposal or
retirement of an item of property, plant
and equipment is determined as the
difference between the sales proceeds
and the carrying amount of the asset and
is recognised in the statement of profit and
loss on the date of disposal or retirement.
iv) Depreciation on property, plant and
equipment
Depreciation on property, plant and
equipment is calculated on a pro-rata
basis from the date on which the asset
is ready to use, using written down value
method ("WDV") over the useful lives of
the assets estimated by the management,
which are in line with the useful lives
prescribed under Schedule II to the
Companies Act, 2013.
The Company has used the following rates
to provide depreciation on its property,
plant and equipment:
The residual values, useful lives and
methods of depreciation of property,
plant and equipment are reviewed at
each financial year end and adjusted
prospectively, if appropriate.
v) Intangible assets
Intangible assets acquired separately are
measured on initial recognition at cost.
The cost of intangible assets acquired in
a business combination is their fair value
at the date of acquisition. Following initial
recognition, intangible assets are carried
at cost less accumulated amortization.
Internally generated intangible assets,
excluding capitalized development costs,
are not capitalized and expenditure
is reflected in the statement of profit
and loss in the year in which the
expenditure is incurred.
The useful lives of intangible assets are
assessed as either finite or indefinite.
Intangible assets with finite lives are
amortised over the useful economic life
and assessed for impairment whenever
there is an indication that the intangible
asset may be impaired. The amortisation
period and the amortisation method for
an intangible asset with a finite useful life
are reviewed at least at the end of each
reporting period. Changes in the expected
useful life or the expected pattern of
consumption of future economic benefits
embodied in the asset are considered to
modify the amortisation period or method,
as appropriate, and are treated as changes
in accounting estimates. The amortisation
expense on intangible assets with finite
lives is recognised in the statement of profit
and loss unless such expenditure forms
part of carrying value of another asset.
Intangible assets with indefinite
useful lives are not amortised, but are
tested for impairment annually, either
individually or at the cash-generating
unit level. The assessment of indefinite
life is reviewed annually to determine
whether the indefinite life continues to be
supportable. If not, the change in useful
life from indefinite to finite is made on a
prospective basis.
An intangible asset is derecognised upon
disposal (i.e., at the date the recipient
obtains control) or when no future
economic benefits are expected from
its use or disposal. Gains or losses arising
from derecognition of an intangible asset
are measured as the difference between
the net disposal proceeds and the carrying
amount of the asset and are recognised in
the statement of profit and loss when the
asset is derecognised.
Research and development costs
Research costs are expensed as incurred.
Development expenditure incurred on
an individual project is recognised as an
intangible asset when the Company can
demonstrate all the following:
• The technical feasibility of completing
the intangible asset so that it will be
available for use or sale
• Its intention to complete the asset
• Its ability to use or sell the asset
• How the asset will generate future
economic benefits
• The availability of adequate resources
to complete the development and to
use or sell the asset
• The ability to measure reliably the
expenditure attributable to the
intangible asset during development.
Following the initial recognition of the
development expenditure as an asset,
the cost model is applied requiring
the asset to be carried at cost less
any accumulated amortization and
accumulated impairment losses.
Amortization of the asset begins when
development is complete, and the asset
is available for use. It is amortized on
a straight-line basis over the period of
expected future benefit from the related
project. Amortization is recognised in the
statement of profit and loss. During the
period of development, the asset is tested
for impairment annually.
A summary of amortization periods
applied to the Company's intangible
assets is as below:
vi) Leases
The determination of whether an
arrangement is, or contains a lease is based
on the substance of the arrangement at the
inception of the lease. The arrangement
is, or contains, a lease if fulfilment of
the arrangement is dependent on the
use of a specific asset or assets and the
arrangement conveys a right to use the
asset or assets, even if that right is not
explicitly specified in an arrangement.
Company as a lessee
The Company applies a single recognition
and measurement approach for all leases,
except for short-term leases and leases of
low-value assets. The Company recognises
lease liabilities to make lease payments
and right-of-use assets representing the
right to use the underlying assets.
a) Right-of-use assets - The Company
recognises right-of-use assets at
the commencement date of the
lease (i.e., the date the underlying
asset is available for use). Right-of-
use assets are measured at cost, less
any accumulated depreciation and
impairment losses, and adjusted for
any remeasurement of lease liabilities.
The cost of right-of-use assets
includes the amount of lease liabilities
recognised, initial direct costs
incurred, and lease payments made
at or before the commencement date
less any lease incentives received.
Right of use assets are depreciated on
a straight-line basis over the period of
lease term (refer note 30).
If ownership of the leased asset
transfers to the Company at the end
of the lease term or the cost reflects
the exercise of a purchase option,
depreciation is calculated using the
estimated useful life of the asset.
The right-of-use assets are also
subject to impairment. Refer to the
accounting policies in section (viii)
Impairment of non-financial assets.
b) Lease Liabilities - At the
commencement date of the lease, the
Company recognises lease liabilities
measured at the present value of lease
payments to be made over the lease
term. The effective interest rate for the
lease liabilities is 9.25% per annum.
The lease payments include fixed
payments (including in substance
fixed payments) less any lease
incentives receivable, variable lease
payments that depend on an index
or a rate, and amounts expected to be
paid under residual value guarantees.
The lease payments also include the
exercise price of a purchase option
reasonably certain to be exercised
by the Company and payments of
penalties for terminating the lease, if
the lease term reflects the Company
exercising the option to terminate.
In calculating the present value of
lease payments, the Company uses
its incremental borrowing rate at the
lease commencement date because
the interest rate implicit in the lease
is not readily determinable. After the
commencement date, the amount of
lease liabilities is increased to reflect
the accretion of interest and reduced
for the lease payments made. In
addition, the carrying amount of lease
liabilities is remeasured if there is a
modification, a change in the lease
term, a change in the lease payments
(e.g., changes to future payments
resulting from a change in an index
or rate used to determine such
lease payments) or a change in the
assessment of an option to purchase
the underlying asset.
The Company's lease liabilities
are included in financial liabilities
(refer note 30).
c) Short-term leases and leases of low-
value assets - The Company applies
the short-term lease recognition
exemption to its short-term leases
of rent on property and on rent of
computer equipment (i.e., those leases
that have a lease term of 12 months
or less from the commencement
date and do not contain a purchase
option). It also applies the lease of low-
value assets recognition exemption
to leases of office equipment that
are considered to be low value. Lease
payments on short-term leases
and leases of low-value assets are
recognised as expense on a straight¬
line basis over the lease term.
vii) Impairment of non-financial assets
The Company assesses at each reporting
date whether there is an indication that
an asset may be impaired. If any indication
exists, or when annual impairment testing
for an asset is required, the Company
estimates the asset's recoverable amount.
An asset's recoverable amount is the higher
of an asset's or cash-generating unit's
(CGU) fair value less costs of disposal and
its value in use. The recoverable amount is
determined for an individual asset, unless
the asset does not generate cash inflows
that are largely independent of those
from other assets or groups of assets.
Where the carrying amount of an asset or
CGU exceeds its recoverable amount, the
asset is considered impaired and is written
down to its recoverable amount.
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 the risks
specific to the asset. In determining fair
value less costs of disposal, recent market
transactions are taken into account. If
no such transactions can be identified,
an appropriate valuation model is used.
These calculations are corroborated by
valuation multiples, quoted share prices
for publicly traded companies or other
available fair value indicators.
The Company bases its impairment
calculation on detailed budgets and
forecast calculations which are prepared
separately for each of the Company's cash¬
generating units to which the individual
assets are allocated. These budgets and
forecast calculations are generally covering
a period of five years. For longer periods,
a long-term growth rate is calculated
and applied to project future cash flows
after the fifth year. To estimate cash flow
projections beyond periods covered
by the most recent budgets/forecasts,
the Company extrapolates cash flow
projections in the budget using a steady
or declining growth rate for subsequent
years. In any case, this growth rate does not
exceed the long-term average growth rate
for the products, industries, or country or
countries in which the Company operates,
or for the market in which the asset is used.
Impairment losses of operations, are
recognised in the statement of profit
and loss, except for properties previously
revaluedwith the revaluation surplus taken
to OCI. For such properties, the impairment
is recognised in OCI up to the amount of
any previous revaluation surplus.
After impairment, depreciation is provided
on the revised carrying amount of the
asset over its remaining useful life.
For assets excluding goodwill, an
assessment is made at each reporting
date as to whether there is any indication
that previously recognised impairment
losses may no longer exist or may have
decreased. If such indication exists, the
Company estimates the asset's or cash¬
generating unit's recoverable amount. A
previously recognised impairment loss is
reversed only if there has been a change
in the assumptions used to determine
the asset's recoverable amount since the
last impairment loss was recognised. The
reversal is limited so that the carrying
amount of the asset does not exceed
its recoverable amount, nor exceed the
carrying amount that would have been
determined, net of depreciation, had no
impairment loss been recognised for
the asset in prior years. Such reversal is
recognised in the statement of profit and
loss unless the asset is carried at a revalued
amount, in which case, the reversal is
treated as a revaluation increase.
Goodwill is tested for impairment annually
and when circumstances indicate that the
carrying value may be impaired.
Impairment is determined for goodwill
by assessing the recoverable amount of
each CGU (or group of CGUs) to which the
goodwill relates. When the recoverable
amount of the CGU is less than its carrying
amount, an impairment loss is recognised.
Impairment losses relating to goodwill
cannot be reversed in future periods.
Intangible assets with indefinite useful
lives are tested for impairment annually
at the CGU level, as appropriate, and when
circumstances indicate that the carrying
value may be impaired.
viii) Financial instruments
A financial instrument is any contract
that gives rise to a financial asset of one
entity and a financial liability or equity
instrument of another entity.
Financial assets
Initial recognition and measurement
Financial assets are classified, at initial
recognition, as subsequently measured at
amortised cost, fair value through other
comprehensive income (OCI), and fair
value through profit or loss.
The classification of financial assets at
initial recognition depends on the financial
asset's contractual cash flow characteristics
and the Company's business model for
managing them. With the exception of
trade receivables that do not contain
a significant financing component or
for which the Company has applied
the practical expedient, the Company
initially measures a financial asset at its
fair value plus, in the case of a financial
asset not at fair value through profit or
loss, transaction costs. Trade receivables
that do not contain a significant financing
component or for which the Company
has applied the practical expedient
are measured at the transaction price
determined under Ind AS 115.
In order for a financial asset to be classified
and measured at amortised cost or fair
value through OCI, it needs to give rise
to cash flows that are ‘solely payments
of principal and interest (SPPI)' on the
principal amount outstanding. This
assessment is referred to as the SPPI test
and is performed at an instrument level.
Financial assets with cash flows that are
not SPPI are classified and measured at fair
value through profit or loss, irrespective of
the business model.
The Company's business model for
managing financial assets refers to how
it manages its financial assets in order to
generate cash flows. The business model
determines whether cash flows will
result from collecting contractual cash
flows, selling the financial assets, or both.
Financial assets classified and measured at
amortised cost are held within a business
model with the objective to hold financial
assets in order to collect contractual cash
flows while financial assets classified
and measured at fair value through OCI
are held within a business model with
the objective of both holding to collect
contractual cash flows and selling.
Subsequent measurement
For purposes of subsequent
measurement, financial assets are
classified in four categories:
• Financial assets at amortized cost
(debt instruments)
• Financial assets at fair value through
other comprehensive income
(FVTOCI) with recycling of cumulative
gains and losses (debt instruments)
• Financial assets at fair value through
profit or loss (FVTPL)
• Financial assets measured at fair
value through other comprehensive
income (FVTOCI) with no recycling
of cumulative gains and losses upon
derecognition (equity instruments)
Financial assets at amortised cost (debt
instruments)
A ‘debt instrument' is measured at the
amortized cost if both the following
conditions are met:
a) The asset is held within a business model
whose objective is to hold assets for
collecting contractual cash flows, and
b) Contractual terms of the asset give
rise on specified dates to cash flows
that are solely payments of principal
and interest (SPPI) on the principal
amount outstanding.
This category is most relevant to the
Company. After initial measurement,
such financial assets are subsequently
measured at amortized cost using the
Effective Interest Rate (“EIR”) method.
Amortized cost is calculated by taking
into account any discount or premium
on acquisition and fees or costs that
are an integral part of the EIR. The EIR
amortization is included in finance
income in the statement of profit and
loss. The losses arising from impairment
are recognised in the statement of profit
and loss. This category generally applies
to trade and other receivables. For more
information on receivables, refer note 10.
Financial assets at fair value through
profit or loss
Financial assets at fair value through
profit or loss are carried in the balance
sheet at fair value with net changes in
fair value recognised in the statement of
profit and loss.
This category includes derivative instruments
and listed equity investments which the
Company had not irrevocably elected to
classify at fair value through OCI. Dividends
on listed equity investments are recognised
in the statement of profit and loss when the
right of payment has been established.
Investment in subsidiary
Investments in subsidiary are carried at
cost less allowance for impairment, if any.
The Company reviews its carrying value
of investments in subsidiaries annually, or
more frequently when there is indication
for impairment. If the recoverable
amount is less than its carrying amount,
the impairment loss is accounted for.
Determining whether the investments
is subsidiaries is impaired requires an
estimate in the value in use of investments.
The Management carries out impairment
assessment for each investment by
comparing the carrying value of each
investment with the net worth of each
company based on audited financials
and comparing the performance of the
investee companies with projections used
for valuations, in particular those relating
to the cash flows, sales growth rate, pre¬
tax discount rate and growth rates used
and approved business plans.
De-recognition
A financial asset (or, where applicable, a
part of a financial asset or part of a group
of similar financial assets) is primarily
derecognised (i.e. removed from the
Company's balance sheet) when:
• The rights to receive cash flows from
the asset have expired, or
• The Company has transferred its
rights to receive cash flows from the
asset or has assumed an obligation
to pay the received cash flows in full
without material delay to a third party
under a ‘pass-through' arrangement;
and either (a) the Company has
transferred substantially all the risks
and rewards of the asset, or (b) the
Company has neither transferred nor
retained substantially all the risks
and rewards of the asset, but has
transferred control of the asset.
When the Company has transferred
its rights to receive cash flows from an
asset or has entered into a pass-through
arrangement, it evaluates if and to what
extent it has retained the risks and
rewards of ownership. When it has neither
transferred nor retained substantially
all of the risks and rewards of the asset,
nor transferred control of the asset, the
Company continues to recognise the
transferred asset to the extent of the
Company's continuing involvement. In
that case, the Company also recognises an
associated liability. The transferred asset
and the associated liability are measured
on a basis that reflects the rights and
obligations that the Company has retained.
Continuing involvement that takes the
form of a guarantee over the transferred
asset is measured at the lower of
the original carrying amount of the
asset and the maximum amount of
consideration that the company could be
required to repay.
Impairment of financial assets
Further disclosures relating to impairment
of financial assets are also provided in the
following notes:
• Disclosure for significant accounting
judgements, estimates and
assumptions - refer note 2(xxiii)
• Trade receivables and contract assets
- refer note 10 and refer note 20.
In accordance with Ind AS 109, the Company
applies expected credit loss (ECL) model
for measurement and recognition of
impairment loss on the following financial
assets and credit risk exposure:
a) Financial assets that are debt
instruments, and are measured
at amortized cost e.g., loans, debt
securities, deposits, trade receivables
and bank balance.
The Company follows ‘simplified
approach' for recognition of impairment
loss allowance on trade receivables.
The application of simplified approach
does not require the Company to track
changes in credit risk. Rather, it recognises
impairment loss allowance based on
lifetime ECLs at each reporting date, right
from its initial recognition.
For recognition of impairment loss on
other financial assets and risk exposure,
the Company determines that whether
there has been a significant increase in
the credit risk since initial recognition. If
credit risk has not increased significantly,
12-month expected credit loss (ECL) is used
to provide for impairment loss. However,
if credit risk has increased significantly,
lifetime ECL is used. If, in a subsequent
period, credit quality of the instrument
improves such that there is no longer a
significant increase in credit risk since
initial recognition, then the entity reverts
to recognising impairment loss allowance
based on 12-month ECL.
Lifetime ECL are the expected credit
losses resulting from all possible default
events over the expected life of a financial
instrument. The 12-month ECL is a portion
of the lifetime ECL which results from
default events that are possible within 12
months after the reporting date.
ECL is the difference between all
contractual cash flows that are due to the
Company in accordance with the contract
and all the cash flows that the entity
expects to receive (i.e., all cash shortfalls),
discounted at the original EIR.
The Company uses a provision matrix to
determine impairment loss allowance
on portfolio of its trade receivables. The
provision matrix is based on its historically
observed default rates over the expected
life of the trade receivables and is
adjusted for forward-looking estimates.
At every reporting date, the historical
observed default rates are updated
and changes in the forward-looking
estimates are analyzed.
ECL impairment loss allowance (or
reversal) recognised during the year is
recognised as income/ expense in the
statement of profit and loss. This amount
is reflected under the head other expenses
in the statement of profit and loss. For the
financial assets measured as at amortized
cost, ECL is presented as an allowance, i.e.,
as an integral part of the measurement
of those assets in the balance sheet.
The allowance reduces the net carrying
amount. Until the asset meets write-off
criteria, the Company does not reduce
impairment allowance from the gross
carrying amount. For further disclosure-
refer note 36 of the financial statements.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial
recognition, as financial liabilities at fair
value through profit or loss, loans and
borrowings or payables, as appropriate.
All financial liabilities are recognised
initially at fair value and, in the case of
loans and borrowings and payables, net of
directly attributable transaction costs.
The Company's financial liabilities include
borrowings, trade and other payables.
Subsequent measurement
The measurement of financial liabilities
depends on their classification, as
described below:
Financial liabilities at fair value through
profit or loss
Financial liabilities at fair value through
profit or loss include financial liabilities
held for trading and financial liabilities
designated upon initial recognition as at
fair value through profit or loss.
Financial liabilities are classified as held for
trading if they are incurred for the purpose
of repurchasing in the near term. This
category also includes derivative financial
instruments entered into by the Company
that are not designated as hedging
instruments in hedge relationships
as defined by Ind AS 109. Separated
embedded derivatives are also classified as
held for trading unless they are designated
as effective hedging instruments.
Gains or losses on liabilities held for trading
are recognised in the profit or loss.
Financial liabilities designated upon initial
recognition at fair value through profit or
loss are designated a
such at the initial date of recognition, and
only if the criteria in Ind AS 109 are satisfied.
For liabilities designated as FVTPL, fair
value gains/ losses attributable to changes
in own credit risk are recognised in OCI.
These gains/ losses are not subsequently
transferred to P&L. However, the Company
may transfer the cumulative gain or loss
within equity. All other changes in fair
value of such liability are recognised in the
statement of profit and loss. The Company
has not designated any financial liability
as at fair value through profit or loss.
Financial liabilities at amortised cost
(Loans and borrowings)
After initial recognition, interest-bearing
loans and borrowings are subsequently
measured at amortized cost using the EIR
method. Gains and losses are recognised
in profit or loss when the liabilities are
de-recognised as well as through the EIR
amortization process.
Amortized cost is calculated by taking
into account any discount or premium
on acquisition and fees or costs that
are an integral part of the EIR. The EIR
amortization is included as finance costs
in the statement of profit and loss.
This category generally applies to
borrowings.
De-recognition
Afinancial liability is de-recognised when the
obligation under the liability is discharged
or cancelled or expires. When an existing
financial liability is replaced by another
from the same lender on substantially
different terms, or the terms of an existing
liability are substantially modified, such
an exchange or modification is treated as
the derecognition of the original liability
and the recognition of a new liability.
The difference in the respective carrying
amounts is recognised in the statement of
profit and loss.
Reclassification of financial assets
The Company determines classification
of financial assets and liabilities on initial
recognition. After initial recognition, no
reclassification is made for financial assets
which are equity instruments and financial
liabilities. For financial assets which
are debt instruments, a reclassification
is made only if there is a change in
the business model for managing
those assets. Changes to the business
model are expected to be infrequent.
The Company's senior management
determines change in the business model
as a result of external or internal changes
which are significant to the Company's
operations. Such changes are evident to
external parties. A change in the business
model occurs when the Company either
begins or ceases to perform an activity
that is significant to its operations. If the
Company reclassifies financial assets, it
applies the reclassification prospectively
from the reclassification date which is
the first day of the immediately next
reporting period following the change in
business model. The Company does not
restate any previously recognised gains,
losses (including impairment gains or
losses) or interest.
Offsetting of financial instruments
Financial assets and financial liabilities
are offset and the net amount is
reported in the balance sheet if there
is a currently enforceable legal right to
offset the recognised amounts and there
is an intention to settle on a net basis, to
realize the assets and settle the liabilities
simultaneously.
ix) Fair value measurement
The Company measures financial
instruments at fair value at each
balance sheet date.
Fair value is the price that would be
received to sell an asset or paid to transfer
a liability in an orderly transaction between
market participants at the measurement
date. The fair value measurement is based
on the presumption that the transaction
to sell the asset or transfer the liability
takes place either:
• In the principal market for the asset
or liability, or
• In the absence of a principal market,
in the most advantageous market for
the asset or liability.
The principal or the most advantageous
market must be accessible by the Company.
The fair value of an asset or a liability is
measured using the assumptions that
market participants would use when
pricing the asset or liability, assuming
that market participants act in their
economic best interest.
A fair value measurement of a non¬
financial asset takes into account a market
participant's ability to generate economic
benefits by using the asset in its highest
and best use or by selling it to another
market participant that would use the
asset in its highest and best use.
The Company uses valuation techniques
that are appropriate in the circumstances
and for which sufficient data are available
to measure fair value, maximizing the
use of relevant observable inputs and
minimizing the use of unobservable inputs.
All assets and liabilities for which fair value
is measured or disclosed in the financial
statements are categorized within the fair
value hierarchy, described as follows, based
on the lowest level input that is significant
to the fair value measurement as a whole:
• Level 1 - Quoted (unadjusted)
market prices in active markets for
identical assets or liabilities.
• Level 2 - Valuation techniques for
which the lowest level input
that is significant to the fair
value measurement is directly or
indirectly observable.
• Level 3 - Valuation techniques
for which the lowest level input
that is significant to the fair value
measurement is unobservable.
For assets and liabilities that are
recognised in the financial statements on a
recurring basis, the Company determines
whether transfers have occurred between
levels in the hierarchy by re-assessing
categorization (based on the lowest level
input that is significant to the fair value
measurement as a whole) at the end of
each reporting period.
For assets and liabilities that are
recognised in the financial statements on a
recurring basis, the Company determines
whether transfers have occurred between
levels in the hierarchy by re-assessing
categorisation (based on the lowest level
input that is significant to the fair value
measurement as a whole) at the end of
each reporting period.
External valuers are involved for valuation
of significant assets, such as properties and
unquoted financial assets, and significant
liabilities, such as contingent consideration.
Involvement of external valuers is decided
upon annually by the Valuation Committee
after discussion with and approval by the
Company’s Audit Committee. Selection
criteria include market knowledge,
reputation, independence and whether
professional standards are maintained.
Valuers are normally rotated every three
years. The Valuation Committee decides,
after discussions with the Company’s
external valuers, which valuation techniques
and inputs to use for each case.
At each reporting date, the management
analyses the movements in the values of
assets and liabilities which are required
to be re-measured or re-assessed as per
the Company's accounting policies. For
this analysis, the management or its
expert verifies the major inputs applied
in the latest valuation by agreeing the
information in the valuation computation
to contracts and other relevant documents.
For the purpose of fair value disclosures,
the Company has determined classes of
assets and liabilities on the basis of the
nature, characteristics and risks of the
asset or liability and the level of the fair
value hierarchy as explained above.
This note summarises accounting policy
for fair value. Other fair value related
disclosures are given in the relevant notes.
• Quantitative disclosures of fair value
measurement hierarchy (refer note 35)
• Investment in unquoted equity
shares (refer note 5)
• Financial instruments (including
those carried at amortised cost)
(refer note 34)
• Disclosure for significant accounting
judgments, estimates and
assumptions (refer note 2(xxiii)
x) Revenue from contracts with customers
Revenue is recognised to the extent that it
is probable that the economic benefit will
flow to the Company and the revenue can
be reliably measured, regardless of when
the payment is being made. Revenue
is measured at the transaction price
received or receivable, taking into account
contractually defined terms of payment
and excluding taxes or duties collected on
behalf of the government.
The specific recognition criteria
discussed below must also be met before
revenue is recognised:
Consumer platform
Revenue from rendering of advertisement
services is recognised on accrual basis as
and when services are rendered based on
the terms of the contract including right
to use the platform and right to access the
platform as and when the obligation as
per the contract are fulfilled. The Company
collects taxes on behalf of the government
and, therefore, it is not an economic
benefit flowing to the Company. Hence,
it is excluded from revenue. In respect
of consumer platform, the revenue is
recognised as and when advertisements
are delivered by the Company. The
performance obligation is satisfied at a
point in time and payment is generally
due within 30 to 90 days of completion of
services and acceptance of the customer.
In some contracts, short-term advances
are required before the advertisement
services are provided. As the duration of
the contracts for consumer is less than
one year, the Company has opted for
practical expedient and decided not to
disclose the amount of the remaining
performance obligations.
Other Operating Revenue
Other operating revenue is derived from
the allocation of salary and operational
cost charged to the associated entity for
the work performed. The transaction is at
arm's length which is on usual commercial
terms. The amount charged includes cost
plus margin based on the transfer pricing
study carried at the year end. The revenue
is recognised on accrual basis.
Contract balances
• Contract assets - A contract asset is
the right to consideration in exchange
for goods or services transferred to the
customer. If the Company performs
by transferring goods or services to a
customer before the customer pays
consideration or before payment is
due, a contract asset is recognised
for the earned consideration that is
conditional. Contract assets are subject
to impairment assessment. Refer to
accounting policies on impairment of
financial assets in section viii) Financial
instruments - initial recognition and
subsequent measurement.
• Trade receivables - A receivable
represents the Company's right to
an amount of consideration that is
unconditional (i.e., only the passage
of time is required before payment
of the consideration is due). Refer
to accounting policies of financial
assets in clause viii) Financial
instruments - initial recognition and
subsequent measurement.
• Contract liabilities- A contract liability
is the obligation to transfer goods or
services to a customer for which the
Company has received consideration
(or an amount of consideration is
due) from the customer. If a customer
pays consideration before the
Company transfers goods or services
to the customer, a contract liability
is recognised when the payment
is made, or the payment is due
(whichever is earlier). Contract liabilities
are recognised as revenue when the
Company performs under the contract.
Interest
For all debt instruments measured
at amortized cost, interest income is
recorded using the effective interest rate
(EIR). EIR is the rate that exactly discounts
the estimated future cash payments
or receipts over the expected life of the
financial instrument or a shorter period,
where appropriate, to the gross carrying
amount of the financial asset or to the
amortized cost of a financial liability. When
calculating the effective interest rate, the
Company estimates the expected cash
flows by considering all the contractual
terms of the financial instrument but
does not consider the expected credit
losses. Interest income is included in other
income in the statement of profit and loss.
xi) Foreign currencies
Functional and presentational currency
The Company's financial statements are
presented in Indian Rupees (INR) which
is also the Company's functional currency.
Functional currency is the currency of
the primary economic environment in
which an entity operates and is normally
the currency in which the entity primarily
generates and expends cash.
Transactions and balances
Transactions in foreign currencies are
initially recorded at their respective
functional currency spot rates at the
date the transaction first qualifies for
recognition. However, for practical
reasons, the Company uses average rate if
the average approximates the actual rate
at the date of the transaction.
Monetary assets and liabilities
denominated in foreign currencies are
translated at the functional currency spot
rates of exchange at the reporting date.
Exchange differences arising on
settlement or translation of monetary
items are recognised in 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 recognised in OCI or
profit or loss are also recognised in OCI or
profit or loss, respectively).
In determining the spot exchange rate
to use on initial recognition of the related
asset, expense or income (or part of it)
on the derecognition of a non-monetary
asset or non-monetary liability relating
to advance consideration, the date of
the transaction is the date on which the
Company initially recognises the non¬
monetary asset or non-monetary liability
arising from the advance consideration.
If there are multiple payments or receipts
in advance, the Company determines
the transaction date for each payment or
receipt of advance consideration.
xii) Retirement and other employee
benefits
Retirement benefit in the form of
provident fund is a defined contribution
scheme. The Company has no obligation,
other than the contribution payable to the
provident fund. The Company recognises
contribution payable to the provident
fund scheme as an expenditure in the
statement of profit and loss, when an
employee renders the related service. If
the contribution payable to the scheme
for service received before the balance
sheet date exceeds the contribution
already paid, the deficit payable to the
scheme is recognised as a liability after
deducting the contribution already paid.
If the contribution already paid exceeds
the contribution due for services received
before the balance sheet date, then excess
is recognised as an asset to the extent
that the pre-payment will lead to, for
example, a reduction in future payment
or a cash refund.
The Company operates an unfunded
defined benefit gratuity plan for its
employees. The cost of providing benefits
under this plan is determined on the basis
of actuarial valuation at each year-end,
using the projected unit credit method
and charged to statement of profit and
loss. Remeasurements, comprising of
actuarial gains and losses, are recognised
immediately in the balance sheet with a
corresponding debit or credit to retained
earnings through OCI in the period in
which they occur. Remeasurements are
not reclassified to Statement of profit and
loss in subsequent periods.
Net interest is calculated by applying the
discount rate to the net defined benefit
liability or asset. The Company recognises
the following changes in the net defined
benefit obligation as an expense in the
statement of profit and loss:
• Service costs comprising current
service costs, past-service costs, gains
and losses on curtailments and non¬
routine settlements; and
• Net interest expense or income
Accumulated leave, which is expected to
be utilized within the next 12 months, is
treated as short-term employee benefit.
The Company measures the expected
cost of such absences as the additional
amount that it expects to pay as a result
of the unused entitlement that has
accumulated at the reporting date.
The Company treats accumulated leave
expected to be carried forward beyond
twelve months, as long-term employee
benefit for measurement purposes.
Such long-term compensated absences
are provided for based on the actuarial
valuation using the projected unit
credit method at the year-end. Actuarial
gains/losses are immediately taken to
the statement of profit and loss and
are not deferred.
xiii) Taxes
Current income tax
Current income-tax assets and liabilities
is measured at the amount expected
to be recovered from or paid to the tax
authorities in accordance with the Income-
tax Act, 1961 enacted in India. The tax rates
and tax laws used to compute the amount
are those that are enacted or substantively
enacted, at the reporting date.
Current income tax relating to items
recognised outside statement of
profit and loss is recognised outside
statement of profit and loss (either
in other comprehensive income or
in equity). Management periodically
evaluates positions taken in the tax
returns with respect to situations in which
applicable tax regulations are subject to
interpretation and establishes provisions
where appropriate.
Deferred tax
Deferred tax is provided using the liability
method on temporary differences
between the tax bases of assets and
liabilities and their carrying amounts
for financial reporting purposes at the
reporting date.
Deferred tax liabilities are recognised for
all taxable temporary differences, except:
• When the deferred tax liability arises
from the initial recognition of goodwill
or an asset or liability in a transaction
that is not a business combination
and, at the time of the transaction,
affects neither the accounting profit
nor taxable profit or loss.
Deferred tax assets are recognised for
all deductible temporary differences,
the carry forward of unused tax credits
and any unused tax losses. Deferred tax
assets are recognised to the extent that
it is probable that taxable profit will be
available against which the deductible
temporary differences, and the carry
forward of unused tax credits and unused
tax losses can be utilized, except:
• When the deferred tax asset relating to
the deductible temporary difference
arises from the initial recognition of
an asset or liability in a transaction
that is not a business combination
and, at the time of the transaction,
affects neither the accounting profit
nor taxable profit or loss.
• In respect of taxable temporary
differences associated with
investments in subsidiaries, associates
and interests in joint ventures,
when the timing of the reversal of
the temporary differences can be
controlled and it is probable that the
temporary differences will not reverse
in the foreseeable future.
Deferred tax assets are recognised for
all deductible temporary differences,
the carry forward of unused tax credits
and any unused tax losses. Deferred tax
assets are recognised to the extent that
it is probable that taxable profit will be
available against which the deductible
temporary differences, and the carry
forward of unused tax credits and unused
tax losses can be utilized.
The carrying amount of deferred tax
assets is reviewed at each reporting date
and reduced to the extent that it is no
longer probable that sufficient taxable
profit will be available to allow all or part of
the deferred tax asset to be utilized.
The unrecognised deferred tax assets are
re-assessed at each reporting date and
are recognised to the extent that it has
become probable that future taxable
profits will allow the deferred tax asset
to be recovered.
Deferred tax assets and liabilities are
measured at the tax rates that are
expected to apply in the year when the
asset is realized or the liability is settled,
based on tax rates and tax laws that have
been enacted or substantively enacted at
the reporting date.
Deferred tax relating to items recognised
outside statement of profit and loss is
recognised outside statement of profit
and loss (either in other comprehensive
income or in equity). Deferred tax items
are recognised in correlation to the
underlying transaction either in OCI or
directly in equity.
Deferred tax assets and deferred tax
liabilities are offset if a legally enforceable
right exists to set off current tax assets
against current tax liabilities and the
deferred taxes relate to the same taxable
entity and the same taxation authority.
xiv) Non-current assets held for sale and
discontinued operations
The Company classifies non-current
assets and disposal groups as held for sale
if their carrying amounts will be recovered
principally through a sale rather than
through continuing use.
Non-current assets and disposal groups
classified as held for sale are measured
at the lower of their carrying amount
and fair value less costs to sell. Costs to
sell are the incremental costs directly
attributable to the disposal of an asset
(disposal group), excluding finance costs
and income tax expense.
The criteria for held for sale classification
is regarded as met only when the sale is
highly probable, and the asset or disposal
group is available for immediate sale in
its present condition. Actions required
to complete the sale/ distribution should
indicate that it is unlikely that significant
changes to the sale will be made or that
the decision to sell will be withdrawn.
Management must be committed to the
sale and the sale expected within one year
from the date of classification.
For these purposes, sale transactions
include exchanges of non-current assets
for other non-current assets when the
exchange has commercial substance.
The criteria for held for sale classification
is regarded met only when the assets or
disposal group is available for immediate
sale in its present condition, subject only
to terms that are usual and customary for
sales of such assets (or disposal groups), its
sale is highly probable; and it will genuinely
be sold, not abandoned. The Company
treats sale of the asset or disposal group
to be highly probable when:
• The appropriate level of management
is committed to a plan to sell the asset
(or disposal group),
• An active programme to locate a
buyer and complete the plan has
been initiated (if applicable),
• The asset (or disposal group) is being
actively marketed for sale at a price
that is reasonable in relation to its
current fair value,
• The sale is expected to qualify for
recognition as a completed sale
within one year from the date of
classification, and
• Actions required to complete the
plan indicate that it is unlikely
that significant changes to the
plan will be made or that the plan
will be withdrawn.
Property, plant and equipment and
intangible are not depreciated, or
amortised assets once classified
as held for sale.
Assets and liabilities classified as held for
sale are presented separately from other
items in the balance sheet.
Discontinued operations are excluded
from the results of continuing operations
and are presented as a single amount as
profit or loss after tax from discontinued
operations in the statement of
profit and loss.
All notes to the standalone financial
statements mainly include amounts
for continuing operations, unless
otherwise mentioned.
xv) Cash and cash equivalent
Cash and cash equivalent in the balance
sheet comprise cash at banks and on
hand and short-term deposits with an
original maturity of three months or less,
which are subject to an insignificant risk of
changes in value.
For the purpose of the statement of cash
flows, cash and cash equivalents consist of
cash and short-term deposits, as defined
above, net of outstanding bank overdrafts
as they are considered an integral part of
the Company's cash management.
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