1 Corporate information
Airan Limited is a public company incorporated under provisions of Companies Act, 1956. The Company is a leading
provider of consulting, technologyoutsourcing and next generation digital services & software,enabling clients to
execute strategies for their digital transformation .Strategic objective of the company is to build a suitable organisation
that remains relevant to the agenda of clients, while creating growth opportunities for employees and generating
profitable returns for investors. The Company's strategy is to be a navigator for our clients as they ideate on,plan and
execute their journey to a digital future.
1(a) Statement of Compliance
These standalone financial statements comply with the Indian Accounting Standards (referred to as "Ind AS") as
prescribed under section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules as
amended from time to time.
2 Basis of preparation of financial statements
2.1 Basis of Preparation and presentation
The Seperate Financial Statements (also called Standalone Financial Statements) have been prepared under historical
cost convention basis except for certain financial assets and financial liabilities which have been measured at fair
value.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
Company's presentation and functional currency is Indian Rupees (Rs) and all values are rounded to the nearest Rupees
in Lakhs
2.2 Use of estimates
The preparation of the Company's Ind AS financial statements requires management to make informed judgements,
reasonable assumptions and estimates that affect the amounts reported in the financial statements and notes thereto.
Uncertainty about these could result in outcomes that require a material adjustment to the carrying amount of assets or
liabilities affected in the future periods. These assumptions and estimates are reviewed periodically based on the most
recently available information. Revisions to accounting estimates are recognized prospectively in the Statement of Profit
& Loss in the period in which the estimates are revised and in any future periods affected.
In the assessment of the Company, the most significant effects of use of judgments and/or estimates on the amounts
recognized in the financial statements relate to the following areas:
• Useful lives of property, plant & equipment: The Company reviews the useful life of property, plant and equipment at
the end of each reporting period. This reassessment may result in change in depreciation expense in future
periods.(Refer note 5)
• Provision for income tax and deferred tax assets (Note 16 and Note 19): The Company uses estimates and judgements
based on the relevant rulings in the areas of allocation of revenue, costs, allowances and disallowances which is
exercised while determining the provision for income tax. A deferred tax asset is recognised to the extent that it is
probable that future taxable profit will be available against which the deductible temporary differences and tax losses
can be utilised. Accordingly, the Company exercises its judgement to reassess the carrying amount of deferred tax assets
at the end of each reporting period.
• Employee benefits (Note 3.13) : The accounting of employee benefit plans in the nature of defined benefit requires the
Company to use assumptions. These assumptions have been explained under employee benefits note.
3 Material accounting policies
3.1 Current and Non-current classification
The Company presents assets and liabilities in the Balance Sheet based on Current/ Non-Current classification.
An asset is treated as Current when it is -
- Expected to be realised or intended to be sold or consumed in normal operating cycle;
- Held primarily for the purpose of trading;
- Expected to be realised within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve
months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle;
- It is held primarily for the purpose of trading;
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting
period.
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
3.2 Property, plant and equipment
Recognition and measurement
a) The cost of an item of property, plant and equipment is recognized as an asset only if it is probable that future
economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably.
b) Property, plant and equipment are stated at cost net of accumulated depreciation and accumulated impairment
loss, if any.
c) The initial cost of an asset comprises its purchase price or construction cost (including import duties and non¬
refundable taxes) after deducting trade discounts and rebates, any costs directly attributable to bringing the asset
into the location and condition necessary for it to be capable of operating in the manner intended by management,
the initial estimate of any decommissioning obligation (if any) and the applicable borrowing cost till the asset is
ready for its intended use.
d) Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the
expenditure will flow to the Company.
e) Any gain or loss on disposal of an item of property, plant and equipmentis recognized in profit or loss.
f) Spare parts which meet the definition of property plant and equipment are capitalized as property, plant and
equipment. In other cases, the spare parts are inventorised on procurement and charged to Statement of Profit &
Loss on issue/consumption.
Capital work-in-progress:
Projects under which property, plant and equipment are not yet ready for their intended use are carried at cost,
comprising direct cost, related incidental expenses and attributable interest.
3.3 Intangible assets:
Intangible assets acquired separately are measured at cost of acquisition. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and impairment losses, if any.
3.4 Depreciation
Depreciation is provided for property, plant and equipment on a written down value so as to expense the cost less
residual value over their estimated useful lives based on a technical evaluation. The estimated useful lives and residual
values are reviewed at the end of each reporting period, with the effect of any change in estimate accounted for on a
prospective basis.
The estimated useful lives are as mentioned below:
Type of Asset Useful Lives
Buildings 60 Years
Office Equipments 5 Years
Furniture & Fixtures 10 Years
Vehicles 8 Years
Computer Equipments 3 Years
Depreciation on assets acquired / disposed off during the year is provided on pro-rata basis with reference to the date of
addition/disposal.
Intangible assets are amortized over their respective estimated useful life which reflects the manner in which the
economic benefit is expected to be generated. The estimated useful life of amortizable intangibles is reviewed at the end
of each reporting period and change in estimates if any are accounted for on a prospective basis.
Softwares having specific estimated life of 3 Years / 5 Years are depreciated over a period of their useful life considering
the straight line method of depreciation.
3.5 Cash flow Statement
Cash flows from operating activities are reported using the indirect method, whereby profit/(loss) and 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.
3.6 Transaction in Foreign Currency
Foreign currency transactions are recorded at the exchange rate prevailing on the date of such transaction. Foreign
currency monetary assets and liabilities are reported using the closing rate. Gains and losses arising on account of
difference in foreign exchange rates on settlement/translation of monetary assets and liabilities on the closing date are
recognized in the Statement of Profit and Loss.
3.7 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.
3.7.1 Cash and cash equivalents
Cash comprises cash on hand and demand / short term deposits with banks. Cash equivalents are short-term balances
(with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily
convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
3.7.2 Investments
Investments in liquid funds and equity shares are primarily held for Company's temporary cash requirements and can
be readily convertible in cash. These investments are initially recorded at fair value and classified as fair value through
profit or loss.
The Company measures investment in subsidiaries at cost less provision for impairment, if any.
3.7.3 Trade receivables
Trade receivables are amounts due from customers for sale of services in the ordinary course of business. Trade
receivables are initially recognized at its transaction price and are classified as current assets as it is expected to be
realised in the normal operating cycle of the business.
3.7.4 Borrowings
Borrowings are initially recorded at fair value and subsequently measured at amortized costs using effective interest
method. Transaction costs are charged to statement of profit and loss as financial expenses over the term of borrowing as
part of effective Interest Expense.
3.7.5 Trade payables
Trade payables are amounts due to vendors for purchase of goods and services in the ordinary course of business and are
classified as current liabilities as it is expected to be settled in the normal operating cycle of the business.
3.7.6 Other financial assets and liabilities
Other non-derivative financial instruments are initially recognized at fair value and subsequently measured at
amortized costs using the effective interest method.
3.7.7 De-recognition of financial assets and liabilities
The Company derecognizes a financial asset when the contractual right to the cash flows from the asset expires or it
transfers the rights to receive the contractual cash flows on the financial asset in a transaction which substantially tranfer
all the risk and rewards of ownership of the financial asset are transferred.
The Company derecognizes a financial liability when its contractual obligations are discharged, cancelled or expired;
the difference between the carrying amount of derecognized financial liability and the consideration paid is recognized
as profit or loss.
3.8 Leases - Company as a lessee
The Company, as a lessee, recognises a right-of-use asset and a lease liability for its leasing arrangements, if the contract
conveys the right to control the use of an identified asset. The contract conveys the right to control the use of an identified
asset, if it involves the use of an identified asset and the Company has substantially all of the economic benefits from use
of the asset and has right to direct the use of the identified asset. The cost of the right-of-use asset shall comprise of the
amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the
commencement date plus any initial direct costs incurred. The right-of-use assets is subsequently measured at cost less
any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease
liability. The right-of-use assets is depreciated using the straight-line method from the commencement date over the
shorter of lease term or useful life of right-of-use asset.
The Company measures the lease liability at the present value of the lease payments that are not paid at the
commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that
rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing
rate.For short-term and low value leases, the Company recognises the lease payments as an operating expense on a
straight-line basis over the lease term.
3.9 Impairment of assets
Financial assets
At each balance sheet date, the Company assesses whether a financial asset is to be impaired. The Company measures
the loss allowance for financial assets at an amount equal to lifetime expected credit losses if the credit risk on that
financial asset has increased significantly since initial recognition. For Trade Receivables, Lease Receivables and
Contract Assets, the Company applies "Simplified Approach" which require expected lifetime losses to be recognised
from initial recognition of those assets. For financial assets measured at amortised cost other than those to which
simplified approach is followed, if the credit risk on a financial asset has not increased significantly since initial
recognition, the Company measures the loss allowance for financial assets at an amount equal to 12-month expected
credit losses. The Company uses both forward-looking and historical information to determine whether a significant
increase in credit risk has occurred.
Non-financial assets
Tangible and Intangible assets
Property, plant and equipment and intangible assets with finite life are evaluated for recoverability whenever there is
any indication that their carrying amounts may not be recoverable. If any such indication exists, the recoverable amount
(i.e. higher of the fair value less cost of disposal and the value-in-use) is determined on an individual asset basis unless
the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the
recoverable amount is determined for the cash generating unit (CGU) to which the asset belongs. If the recoverable
amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is
reduced to its recoverable amount. An impairment loss is recognized in the statement of profit and loss to such extent.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a CGU) is increased to the revised
estimate of its recoverable amount, such that the increase in the carrying amount does not exceed the carrying amount
that would have been determined had no impairment loss been recognised for the asset (or CGU) in prior years. A
reversal of an impairment loss is recognised immediately in statement of profit and loss.
3.10 Revenue Recognition
The Company derives revenues primarily from consulting, technology, outsourcing, next-generation services and
software. Contracts with customers are either on a time, unit of work, fixed-price or on a fixed-timeframe basis.
Revenues from customer contracts are considered for recognition and measurement when the contract has been
approved in writing by the parties to the contract, the parties to the contract are committed to perform their respective
obligations under the contract, and the contract is legally enforceable. Revenue is recognized upon transfer of control of
promised services ("performance obligations") to customers in an amount that reflects the consideration the Company
is entitled to receive in exchange for these services ("transaction price").
The Company assesses the services promised in a contract and identifies distinct performance obligations in the
contract. The Company allocates the transaction price to each distinct performance obligation based on the relative
standalone selling price. The price that is regularly charged for a service when sold separately is the best evidence of its
relative standalone selling price.
Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, service
level credits, performance bonuses, price concessions and incentives, if any, as specified in the contract with the
customer.
Revenue also excludes taxes collected from customers.
3.11 Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets
that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of these
assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in statement of profit and loss in the period in which they are incurred. There
was no such case necessitating capitalization of borrowing costs during the year.
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