SUMMARY OF MATERIAL ACCOUNTING POLICIES
2.2 REVENUE RECOGNITION
Revenue (other than for those items to which Ind AS 109,
Financial Instruments, are applicable) is measured at
the transaction price, which includes but is not limited
to estimating variable consideration, adjusting the
consideration for the effects of the time value of money, and
measuring non-cash consideration as applicable. Ind AS 115,
Revenue from Contracts with Customers, outlines a single
comprehensive model of accounting for revenue arising
from contracts with customers. Revenue from contracts
with customers is recognised when control of the goods or
services are transferred to the customer at an amount that
reflects the consideration to which the Company expects
to be entitled in exchange for those goods or services. The
Company has generally concluded that it is the principal in
its revenue arrangements, except for the agency services
below, because it typically controls the goods or services
before transferring them to the customer.
The Company recognises revenue from contracts with
customers based on a five step model as set out in Ind AS 115:
Step 1: Identify contract(s) with a customer: A contract is
defined as an agreement between two or more parties that
creates enforceable rights and obligations and sets out the
criteria for every contract that must be met.
Step 2: Identify performance obligations in the contract:
A performance obligation is a promise in a contract with a
customer to transfer a good or service to the customer.
Step 3: Determine the transaction price: The transaction
price is the amount of consideration to which the Company
expects to be entitled in exchange for transferring promised
goods or services to a customer, excluding amounts collected
on behalf of third parties.
Step 4: Allocate the transaction price to the performance
obligations in the contract: For a contract that has more
than one performance obligation, the Company allocates
the transaction price to each performance obligation in an
amount that depicts the amount of consideration to which
the Company expects to be entitled in exchange for satisfying
each performance obligation.
Step 5: Recognise revenue when (or as) the Company satisfies
a performance obligation.
Specific policies for the Company's different sources of
revenue are explained below:
(i) Revenue from contract with customer is recognised
at the point in time when performance obligation is
satisfied. Income from broking activities is accounted
for on the trade date of transactions.
(ii) Dividend income is recognised when the right to receive
the dividend is established, it is probable that the
economic benefits associated with the dividend will
flow to the entity and the amount of the dividend can
be measured reliably.
(iii) Depository services income are accounted as follows:
Revenue from depository services on account of annual
maintenance charges is accounted for over the period
of the performance obligation.
Revenue from depository services on account of
transaction charges is recognised at the point in time
when the performance obligation is satisfied.
(iv) Interest income on a financial asset at amortised cost
is recognised on a time proportion basis, taking into
account the amount outstanding and the effective
interest rate ('EIR'). The EIR is the rate that exactly
discounts estimated future cash flows of the financial
assets through the expected life of the financial
asset, or where appropriate, a shorter period, to the
net carrying amount of the financial instrument. The
internal rate of return on financial assets, after netting
off the fees received and cost incurred, approximates
the effective interest rate method of return for the
financial asset. The future cash flows are estimated,
taking into account all the contractual terms of
the instrument.
The interest income is calculated by applying the EIR
to the gross carrying amount of non-credit impaired
financial assets (i.e. at the amortised cost of the
financial asset before adjusting for any expected
credit loss allowance). For credit-impaired financial
assets the interest income is calculated by applying
the EIR to the amortised cost of the credit-impaired
financial assets (i.e. the gross carrying amount less the
allowance for ECLs).
(v) Delayed payment charges (interest on late payments)
are accounted for at the point in time of default.
(vi) In respect of other heads of income, it is accounted for
to the extent it is probable that the economic benefits
will flow, and the revenue can be reliably measured,
regardless of when the payment is being made. An entity
shall recognise a refund liability if the entity receives
consideration from a customer and expects to refund
some or all of that consideration to the customer.
(vii) 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 investments in
mutual funds.
2.3 PROPERTY, PLANT AND EQUIPMENT
(i) Recognition and measurement
Property, plant and equipment are stated at cost less
accumulated depreciation and impairment, if any.
The cost of property, plant and equipment comprise
purchase price and any attributable cost of bringing
the asset to its working condition for its intended use.
Advances paid towards the acquisition of property,
plant and equipment outstanding at each balance
sheet date is classified as capital advances under
other non-financial assets and the cost of assets not
put to use before such date is disclosed under 'Capital
work-in-progress'.
(ii) Subsequent expenditure
Subsequent expenditure relating to property, plant
and equipment is capitalised only when it is probable
that future economic benefit associated with these will
flow with the Company and the cost of the item can be
measured reliably.
(iii) Depreciation, estimated useful lives and residual
value
Depreciation is calculated on a straight-line basis
over the estimated useful lives of the property, plant
and equipments to write down assets to their residual
values in the manner prescribed in Schedule II of the
Companies Act, 2013. The estimated lives used are
noted in the table below:
The residual values, useful lives and methods of
depreciation of property, plant and equipment
are reviewed at the end of each financial year and
adjusted prospectively, if appropriate. Changes in the
expected useful life are accounted for by modifying the
depreciation period or methodology, as appropriate,
and treated as change in accounting estimates.
The carrying amount of an item of property, plant and
equipment is derecognised upon disposal or when no
future economic benefits are expected from its use or
disposal. The gain or loss arising from the derecognition
of an item of property, plant and equipment is
measured as the difference between the net disposal
proceeds and the carrying amount of the item, and
it is recognised in the Statement of Profit and Loss.
The date of disposal of an item of property, plant and
equipment is the date when the recipient gains control
of the item, in accordance with the requirements for
determining when a performance obligation is satisfied
under Ind AS 115.
2.4 CAPITAL WORK IN PROGRESS
Capital work-in-progress is stated at cost, net of accumulated
impairment loss, if any.
2.5 INTANGIBLE ASSETS
An intangible asset is recognised only when its cost can be
measured reliably, and it is probable that the expected future
economic benefits that are attributable to it will flow to the
Company. Software and system development expenditure
are capitalised at cost of acquisition, including cost
attributable to preparing the asset for use. These intangible
assets are subsequently measured at cost less accumulated
amortisation and any accumulated impairment losses. The
useful life of these intangible assets is estimated at 5 years
with zero residual value. Any annual expenses for support and
maintenance of such software are charged to the statement
of profit and loss.
The residual values, useful lives and methods of amortisation
are reviewed at the end of each financial year and adjusted
prospectively, if appropriate. Changes in the expected useful
life are accounted for by modifying the amortisation period
or methodology, as appropriate, and treated as changes in
accounting estimates.
2.6 FINANCIAL INSTRUMENTS
(i) Date of recognition
Financial assets and financial liabilities are recognised
in the Company's Standalone Balance sheet, when the
Company becomes a party to the contractual provisions
of the instrument.
(ii) 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 are measured at transaction price
determined under Ind AS 115 since it do not contain a
significant financing component and the Company has
applied the practical expedient as well.
Financial assets and liabilities, with the exception of
loans, debt securities, deposits and borrowings are
initially recognised on the trade date, i.e., the date
that the Company becomes a party to the contractual
provisions of the instrument. Recognised financial
instruments are initially measured at fair value.
Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial
liabilities are added to or deducted from the fair
value of the financial assets or financial liabilities, as
appropriate, on initial recognition. Transaction costs
directly attributable to the acquisition of financial
assets or financial liabilities at fair value through profit
or loss are recognised immediately in profit or loss.
(iii) Classification and subsequent measurement
(A) Financial assets
Based on the business model, the contractual
characteristics of the financial assets, the Company
classifies and measures financial assets in the
following categories:
• Amortised cost
• Fair value through other comprehensive income
('FVOCI')
• Fair value through profit or loss ('FVTPL')
(a) Financial assets carried at amortised cost
A financial assets is measured at amortised cost
if it meets both of the following conditions and is
not designated as at FVTPL:
• the asset is held within a business model
whose objective is to hold assets to collect
contractual cash flows ('asset held to collect
contractual cash flows'); and
• the contractual terms of the financial asset
give rise on specified dates to cash flows that
are solely payments of principal and interest
('SPPI') on the principal amount outstanding."
After initial measurement and based on the
assessment of the business model as asset held
to collect contractual cash flows and SPPI, such
financial assets are subsequently measured
at amortised cost using effective interest rate
('EIR') method. Interest income and impairment
expenses are recognised in profit or loss. Interest
income from these financial assets is included in
finance income using the EIR method. Any gain
and loss on derecognition is also recognised in
profit or loss.
The EIR method is a method of calculating the
amortised cost of a financial instrument and of
allocating interest over the relevant period. The
EIR is the rate that exactly discounts estimated
future cash flows (including all fees paid or received
that form an integral part of the EIR, transaction
costs and other premiums or discounts) through
the expected life of the instrument, or, where
appropriate, a shorter period, to the net carrying
amount on initial recognition.
(b) Financial assets at fair value through other
comprehensive income
Financial assets that are held within a business
model whose objective is both to collect the
contractual cash flows and to sell the assets,
('contractual cash flows of assets collected
through hold and sell model') and contractual cash
flows that are SPPI, are subsequently measured
at FVOCI. Movements in the carrying amount of
such financial assets are recognised in Other
Comprehensive Income ('OCI'), except interest /
dividend income which is recognised in profit and
loss. Amounts recorded in OCI are subsequently
transferred to the statement of profit and loss
in case of debt instruments however, in case of
equity instruments it will be directly transferred
to reserves. Equity instruments at FVOCI are not
subject to an impairment assessment.
(c) Financial assets at fair value through profit
and loss
Financial assets which do not meet the criteria for
categorisation as at amortised cost or as FVOCI
or either designated, are measured at FVTPL.
Subsequent changes in fair value are recognised in
profit or loss. The Company records investments
in equity instruments and mutual funds at FVTPL.
(B) Financial liabilities and equity instrument
Debt and equity instruments issued by the Company
are classified as either financial liabilities or as equity
in accordance with the substance of the contractual
arrangements and the definitions of a financial liability
and an equity instrument.
(a) Equity instrument
An equity instrument is any contract that evidences
a residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments
issued by the Company is recognised at the
proceeds received, net of directly attributable
transaction costs.
(b) Financial liabilities
Financial liabilities are measured at amortised
cost. The carrying amounts are initially recognised
at fair value and subsequently determined based
on the EIR method. Interest expense is recognised
in statement of profit and loss. Any gain or loss
on de-recognition of financial liabilities is also
recognised in statement of profit and loss. The
Company does not have any financial liability
which are measured at FVTPL.
(iv) Reclassification
Financial assets are not reclassified subsequent to
their initial recognition, apart from the exceptional
circumstances in which the Company acquires,
disposes of, or terminates a business line or in the
period the Company changes its business model for
managing financial assets. Financial liabilities are
not reclassified.
(v) Derecognition
(A) Financial assets
A financial asset (or, where applicable, a part of a
financial asset or part of a group of similar financial
assets) is derecognised when:
• The contractual rights to receive cash flows from
the financial asset have expired, or
• The Company has transferred its rights to receive
cash flows from the asset and the Company has
transferred substantially all the risks and rewards
of the asset, or the Company has neither transferred
nor retained substantially all the risks and rewards of
the asset, but has transferred control of the asset.
If the Company neither transfers nor retains
substantially all of the risks and rewards of ownership
and continues to control the transferred asset, the
Company recognises its retained interest in the asset
and an associated liability for the amount it may have
to pay.
On derecognition of a financial asset, the difference
between the carrying amount of the asset (or the
carrying amount allocated to the portion of the asset
derecognised) and the sum of (i) the consideration
received (including any new asset obtained less any
new liability assumed) and (ii) any cumulative gain or
loss that had been recognised in OCI is recognised
in statement of profit and loss (except for equity
instruments measured at FVOCI).
(B) Financial liabilities
A financial liability is derecognised when the obligation
under the liability is discharged, cancelled or expires.
Where 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 a derecognition of the
original liability and the recognition of a new liability. In
this case, a new financial liability based on the modified
terms is recognised at the fair value. The difference
between the carrying value of the original financial
liability and the new financial liability with modified
terms is recognised in statement of profit and loss.
(vi) Impairment of financial assets
A) Trade receivables
The Company applies the Ind AS 109 simplified
approach for measuring expected credit losses which
uses a lifetime expected loss allowance (ECL) for all
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.
To measure the expected credit losses, trade
receivables have been grouped based on shared
credit risk characteristics and the days past due. The
expected loss rates are based on average of historical
loss rate adjusted to reflect current and available
forward-looking information affecting the ability of the
customers to settle the receivables. The Company has
also computed expected credit loss due to significant
delay in collection.
B) Other financial assets:
For recognition of impairment loss on 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 ECL is used to
provide for impairment loss. However, if credit risk
has increased significantly, lifetime ECL is used. If
in subsequent years, 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.
Life time ECLs 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 year end.
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 shortfalls), discounted at the
original EIR. When estimating the cash flows, an entity
is required to consider all contractual terms of the
financial instrument (including prepayment, extension
etc.) over the expected life of the financial instrument.
However, in rare cases when the expected life of the
financial instrument cannot be estimated reliably, then
the entity is required to use the remaining contractual
term of the financial instrument.
ECL impairment loss allowance (or reversal) recognised
during the year is recognised as income/expense in
the statement of profit and loss. In balance sheet ECL
for financial assets measured at amortised cost 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.
2.7 CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash at banks and on
hand, demand deposits with banks, other short-term highly
liquid investments with original maturities of up to three
months that are readily convertible to known amounts of
cash and which are subject to an insignificant risk of changes
in value. For the purpose of the statement of cash flows,
cash and cash equivalents, and short-term deposits are
considered integral part of the Company's cash management.
Outstanding bank overdrafts are not considered as an
integral part of the Company's cash management.
2.8 IMPAIRMENT OF NON-FINANCIAL ASSETS
The Company assesses at each balance sheet date whether
there is any indication that an asset may be impaired. An asset
is impaired when the carrying amount of the asset exceeds
its recoverable amount. An impairment loss is charged to the
Statement of Profit and Loss in the year in which an asset
is identified as impaired. An impairment loss is reversed to
the extent that the asset's carrying amount does not exceed
the carrying amount that would have been determined if no
impairment loss had previously been recognised.
An asset's recoverable amount is the higher of an asset's
or cash-generating unit's (CGU) net selling price 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 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.
2.9 RETIREMENT AND OTHER EMPLOYEE BENEFITS
(i) Provident fund
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 expense,
when an employee renders the related service.
(ii) Gratuity
Every employee is entitled to a benefit equivalent to
15 days salary last drawn for each completed year of
service in line with The Payment of Gratuity Act, 1972.
The same is payable at the time of separation from
the Company or retirement, whichever is earlier. The
benefit vest after five years of continuous service.
The Company's gratuity scheme is a defined benefit
plan. The company's net obligation in respect of the
gratuity benefit scheme is calculated by estimating
the amount of future benefit that the employees have
earned in return for their service in the current and
prior period. Such benefit is discounted to determine
its present value, and the fair value of any plan assets,
if any, is deducted.
The present value of the obligation under such benefit
plan is determined based on actuarial valuation using
the Projected Unit credit Method which recognises
each period of services as giving rise to additional unit
of employee benefit entitlement and measures each
unit separately to build up the final obligation.
The obligation is measured at present values of
estimated future cash flows with a maximum ceiling
of H 2.00 million. The discounted rates used for
determining the present value are based on the market
yields on Government Securities as at the balance
sheet date.
Remeasurement gains and losses arising from
experience adjustments and changes in actuarial
assumptions are recognised in the period in which they
occur, directly in other comprehensive income. They
are included in retained earnings in the statement of
changes in equity and in the balance sheet.
Past service costs are recognised in profit or loss on
the earlier of:
• The date of the plan amendment or curtailment, and
• The date that the Company recognises related
restructuring costs.
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.
(iii) Compensated absences
The employees of the Company are entitled to
compensated absences as per the policy of the
Company. The Company recognises the charge to the
Statement of profit and loss and corresponding liability
on account of such non-vesting accumulated leave
entitlement based on a valuation by an independent
actuary. The cost of providing compensated absences
are determined using the projected unit credit method.
Remeasurements as a result of experience adjustments
and changes in actuarial assumptions are recognised in
statement of Profit and Loss.
(iv) Share based payments
Equity-settled share-based payments to employees
that are granted are measured by reference to the
fair value of the equity instruments at the grant date.
The fair value determined at the grant date of the
equity-settled share-based payments is expensed on
a straight-line basis over the vesting period, based on
the Company's estimate of equity instruments that
will eventually vest, with a corresponding increase in
equity. At the end of each period, the entity revises its
estimates of the number of options that are expected
to vest based on the vesting conditions. It recognises
the impact of the revision to original estimates, if any,
in statement of profit and loss, with a corresponding
adjustment to equity.
In respect of options granted to the employees of the
subsidiary companies, the amount equal to the expense
for the grant date fair value of the award is recognised
as a debit to investment in subsidiary as a capital
contribution and a credit to equity.
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