SUMMARY OF MATERIAL ACCOUNTING POLICIES AND OTHER EXPLANATORY INFORMATION
2.01 Basis of preparation and presentation of financial statements
These standalone financial statements have been prepared in accordance with Indian Accounting Standards ("Ind AS") notified
under Section 133 of the Companies Act 2013 ("the Act"), read with the Companies (Indian Accounting Standards) Rules, 2015 as
amended.
The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) under the historical cost
convention on the accrual basis except for certain financial instruments which are measured at fair values, and on the basis of
accounting principle of a going concern in accordance with generally accepted accounting principles (GAAP). 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 are presented in Lakhs or
decimal thereof unless otherwise specified.
The financial statements have been presented in accordance with Schedule III-Division III General Instructions for Preparation of
financial statements of a Non-Banking Financial Company (NBFC) that is required to comply with Ind AS.
2.02 Functional and presentation currency
Items included in the financial statements of Company are measured using the currency of the primary economic environment in
which the Company operates (“the functional currency”). Indian rupee is the functional currency of the Company. All amounts are
rounded to two decimal places to the nearest lakh, unless otherwise stated.
2.03 Use of estimates, judgements and assumptions
The preparation of financial statements in conformity of Ind AS requires management to make judgments, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, the disclosures of
contingent assets and contingent liabilities at the date of financial statements, income and expenses during the year. Actual results
may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimates are revised and in future periods which are affected.
Application of accounting policies that require critical accounting estimates, judgements and assumptions having the most
significant effect on the amounts recognised in the financial statements are:
- Valuation of financial instruments
- Measurement of defined employee benefit obligation
- Useful life of property, plant and equipment
- Useful life of investment property
- Provisions
2.04 Fair value measurement and hierarchy
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, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised 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 I - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 11 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly
observable.
Level III -Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognized 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.
The Company's Management determines the policies and procedures for both recurring fair value measurement, such as derivative
instruments and unquoted financial assets measured at fair value, and for non-recurring measurement, such as assets held for
distribution in discontinued operations.
At each reporting date, the Management analyses the movements in the values of assets and liabilities which are required to be
remeasured or re-assessed as per the Company's accounting policies. For this analysis, the Management verifies the major inputs
applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.
The Management also compares the change in the fair value of each asset and liability with relevant external sources to determine
whether the change is reasonable.
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.
2.05 Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits 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 fair value of the consideration
received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on
behalf of the government.
Ind AS 115 "Revenue from contracts with Customers" provides a control-based revenue recognition model and provides a five step
application approach to be followed for revenue recognition.
a) Identify the contract(s) with a customer;
b) Identify the performance obligations;
c) Determine the transaction price;
d) Allocate the transaction price to the performance obligations;
e) Recognise revenue when or as an entity satisfies performance obligation.
Merchant banking fees
Revenue from merchant banking fees includes arranger fees, advisory fees, lead manager fees are recognized when the Company
satisfies performance obligation. Lead manager fees are recognised over a point of time. The Company measures its progress
towards satisfaction of performance obligation based on output method i.e. milestone basis. Revenue from arranger services and
advisory services are recognised point in time.
Brokerage
Revenue from brokerage is recognised point in time.
Interest Income
Under Ind AS 109, Interest income is recognised by applying the Effective Interest Rate (EIR) to the gross carrying amount of
financial assets other than credit-impaired assets and financial assets classified as measured at fair value through Profit and loss
(FVTPL).
The EIR in case of a financial asset is computed
a. As the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross
carrying amount of a financial asset.
b. By considering all the contractual terms of the financial instruments in estimating the cash flows
c. Including all fees received between parties to the contract that are an integral part of the effective interest rate, transaction costs,
and all other premium or discounts.
Any subsequent changes in the estimation of the future cash flows is recognised in interest income with the corresponding
adjustment to the carrying amount of the assets.
Net gain on Fair value changes
Any differences between the fair values of financial assets classified as fair value through the profit or loss held by Company on the
balance sheet date is recognised as an unrealised gain / loss. In cases there is a net gain in the aggregate, the same is recognised in
"Net gains on fair value changes" under revenue from operations and if there is a net loss the same is disclosed under "Expenses" in
the statement of Profit and Loss.
Similarly, any realised gain or loss on sale of financial instruments measured at FVTPL and debt instruments measured at Fair value
through Other Comprehensive Income ("FVTOCI") is recognised in net gain\loss on fair value changes.
However, net gain / loss on derecognition of financial instruments classified as amortised is presented separately under the
respective head in the Statement of Profit and Loss.
Dividend Income
Dividend income is recognised
a. When the right to receive the payment is established.
b. it is probable that the economic benefits associated with the dividend will flow to the entity and
c. the amount of the dividend can be measured reliably
Rental Income
Rental income arising from operating leases on investment properties is accounted for on a straight-line basis over the lease terms
and is included in revenue in the statement of profit or loss due to its operating nature.
2.06 Taxes
The tax expense for the period comprises of current tax and deferred tax. Tax is recognised in the Statement of Profit and Loss
except to the extent it relates to items recognised in the other comprehensive income or equity. In which case, the tax is also
recognised in other comprehensive income or equity.
Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities,
based on tax rates and laws that are enacted or substantively enacted at the Balance sheet date.
Current income taxes are recognized in profit or loss except to the extent that the tax relates to items recognized outside profit or
loss, either in other comprehensive income or directly in equity. Management periodically evaluates position taken in the tax returns
with respect to situations in which applicable tax regulations are subjected to interpretation and establishes provisions, where
appropriate.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled
or the asset realised , based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting
period. The carrying amount of Deferred tax liabilities and assets are reviewed at the end of each reporting period.
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 utilised. 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 deferred tax liabilities are offset, if a legally enforceable right exist to set-off current tax assets and current
tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
2.07 Property, plant and equipment
Property, plant and equipment are stated at cost, net of recoverable taxes, trade discount and rebates less accumulated
depreciation and impairment loss, if any. Such cost includes purchase price, borrowing costs, and any cost directly attributable to
bringing the asset to its working condition for its intended use, net charges on foreign exchange contracts and adjustments arising
from exchange rate variations attributable to the assets.
Subsequent Cost
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably.
Depreciation
Depreciation on PPE is provided using the straight-line method at the rates specified in Schedule II to the Act. Depreciation is
calculated on a pro-rata basis from the date of installation till the date the assets are sold or disposed.
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.
Derecognition
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 derecognition of the asset is included in
the income statement when the asset is derecognised.
2.08 Investment property
Property that is held for long term rental yield or for capital appreciation or both , and that is not occupied by the Company, is
classified as Investment property. Investors properties measured initially at cost including related transactions cost and where
applicable borrowing cost. Subsequent expenditure is capitalised to the assets carrying amount only when it is probable that future
economic benefits associated with the expenditure will flow to the entity and the cost of the item can be measured reliably. All other
repairs and maintenance costs are expensed when incurred. When part of an investment property is incurred the carrying amount of
replaced part is derecognised.
Investment properties other than land are depreciated as per the estimated useful life of assets prescribed by the Schedule II to the
Companies Act, 2013 i.e. 60 years for office premises.
2.09 Intangible assets
Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortisation and
impairment loss, if any. The cost comprises purchase price, borrowing costs, and any cost directly attributable to bringing the asset
to its working condition for the intended use and net charges on foreign exchange contracts and adjustments arising from exchange
rate variations attributable to the intangible assets.
Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it
relates. All other expenditure, including expenditure on internally generated goodwill and brands, are recognized in profit or loss as
incurred.
Derecognition of assets
An item of intangible asset and any significant part initially recognized is derecognized upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the income
statement when the asset is derecognized.
Intangible assets comprising of Software are amortised on a straight line basis over its estimated useful life or maximum 5 years,
whichever is shorter.
2.10 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial
period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are
expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection
with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the
borrowing costs.
|