1(b) Accounting Policies
1.1 Statement of compliance
These standalone financial statements have
been prepared in accordance with Indian
Accounting Standards (referred to as "Ind AS")
notified under Section 133 of the Companies Act,
2013 ("the Act") read with the Companies (Indian
Accounting Standards) Rules, 2015, as amended,
other relevant provision of the Act and guidelines
issued by the RBI and guidelines issued by the RBI
and paragraph 10 of Master Direction-Reserve
Bank of India (Non-Banking Financial Company-
Scale Based Regulation) Direction, 2023.
1.2 Basis of preparation and presentation
The standalone financial statements of the
Company have been prepared in accordance
with Ind AS notified under Section 133 of the Act
read with the Companies (Indian Accounting
Standards) Rules, 2015, as amended from time
to time. The standalone financial statements
have been prepared under the historical cost
convention, as modified by the application of
fair value measurements required or allowed by
relevant Ind AS at the end of each reporting period.
Historical cost is generally based on the fair
value of the consideration given in exchange for
goods and services. The accounting policies are
applied consistently to all the periods presented
in the standalone financial statements.
The preparation of standalone financial
statements require the use of certain material
accounting estimates and assumptions that
affect the reported amounts of assets, liabilities,
revenues and expenses and the disclosed
amount of contingent liabilities. Areas involving
higher degree of judgement or complexity,
or areas where assumptions are material to
the Company are discussed in Note No. 1.16 -
Material accounting judgements, estimates
and assumptions.
The management believes that the estimates
used in preparation of standalone financial
statements are prudent and reasonable.
Actual results could differ from those estimates
and the differences between the actual results
and the estimates would be recognised in
the periods in which the results are known/
materialised.
The standalone financial statements are
presented in Indian Rupees (INR) and all
values are rounded to the nearest Lakh, except
otherwise indicated.
Comparative information has been restated to
accord with changes in presentations made in
the current year, except where otherwise stated.
1.3 Revenue Recognition
Revenue is recognised to the extent it is probable
that the economic benefits will flow to the
Company, it can be reliably measured and it is
reasonable to expect ultimate collection.
(a) Revenue from Operations:
Revenue from Operations is recognised
in the Statement of Profit and Loss on an
accrual basis as stated herein below:
a) Interest income from financial assets
is recognised by applying the Effective
Interest Rate ('EIR') to the gross carrying
amount of financial assets, other than
credit-impaired assets and those
classified as measured at Fair Value
through Profit or Loss (FVTPL) or Fair Value
through Other Comprehensive Income
(FVTOCI). The basis of computation of
EIR is discussed in Note No. 1.14.3.
Any subsequent changes in the
estimation of the future cash flows
having impact on EIR are recognised in
interest income with the corresponding
adjustment to the carrying amount of
the assets.
b) Interest Income on credit impaired
financial assets is recognised by
applying the effective interest rate to the
net amortised cost (i.e. after considering
impairment loss allowance) of the
financial assets.
c) Income or net gain on fair value
changes for financial assets classified
as measured at FVTPL and FVTOCI is
recognised as discussed in Note No.
1.14.3.
d) Revenue from trading in securities/
intraday transactions is accounted for
on trade date basis.
e) Income from dividend is recognised
when the Company's right to receive
such dividend is established, it is
probable that the economic benefits
associated with the dividend will flow
to the entity, the dividend does not
represent a recovery of part of cost
of the investment and the amount of
dividend can be measured reliably.
(b) Other Income:
All other items of income are accounted for
on accrual basis.
1.4 Leases
a) Arrangements where the Company is the
lessee
The Company assesses whether a contract
contains a lease, at the inception of a
contract. A contract is, or contains, a lease
if the contract conveys the right to control
the use of an identified asset for a period
of time in exchange for consideration. To
assess whether a contract conveys the right
to control the use of an identified asset, the
Company assesses whether: (i) the contract
involves the use of an identified asset (ii)
the Company has substantially all of the
economic benefits from use of the asset
through the period of the lease and (iii) the
Company has the right to direct the use of
the asset.
At the date of commencement of the lease,
the Company recognizes a right-of-use
asset ("ROU") and a corresponding lease
liability for all lease arrangements in which
it is a lessee, except for leases with a term
of twelve months or less (short-term leases)
and low value leases. For these short¬
term and low value leases, the Company
recognizes the lease payments in the
Statement of Profit and Loss as operating
expenses over the term of the lease.
Certain lease arrangements includes the
options to extend or terminate the lease
before the end of the lease term. ROU assets
and lease liabilities includes these options
when it is reasonably certain that they will
be exercised.
The right-of-use assets are initially
recognised at cost, which comprises the
initial amount of the lease liability i.e. the
present value of the future lease payments,
adjusted for any lease payments made at or
prior to the commencement date of the lease
plus any initial direct costs less any lease
incentives. They are subsequently measured
at cost less accumulated depreciation and
impairment losses. Right-of-use assets are
depreciated from the commencement date
on a straight-line basis over the shorter of the
lease term and useful life of the underlying
asset. The lease payments are discounted
using the interest rate implicit in the lease
or if not readily determinable using the
incremental borrowing rates. Lease liabilities
are remeasured with a corresponding
adjustment to the related right of use asset
if the Company change its assessment
whether it will exercise an extension or a
termination option.
b) Arrangements where the Company is the
lessor
Leases for which the Company is a lessor is
classified as a finance or operating lease.
Whenever the terms of the lease transfer
substantially all the risks and rewards of
ownership to the lessee, the contract is
classified as a finance lease. All other leases
are classified as operating leases.
For operating leases, rental income is
recognised in the Statement of Profit
and Loss.
1.5 Borrowing Costs
Borrowing costs consist of interest and other
costs that an entity incurs in connection with the
borrowing of funds including interest expense
calculated using the effective interest method.
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 those assets, until such time
as the assets are substantially ready for their
intended use or sale.
Other income earned on the temporary
investment of specific borrowings pending their
expenditure on qualifying assets is deducted from
the borrowing costs eligible for capitalization.
I nterest expense includes origination costs that
are initially recognised as part of the carrying
value of the financial liability and amortized over
the expected life using the EIR. It also include
expenses related to borrowing which are not
part of effective interest as not directly related to
loan origination.
1.6 Employee Benefits
1.6.1 Retirement benefit costs and other employee
benefits
(a) Defined Contribution Plans:
Contributions to Provident Fund, Pension
Fund and Employee State Insurance are
considered as defined contribution plans
and are recognised as expenditure when an
employee renders related services.
(b) Defined Benefit Plans:
Gratuity Liability is a defined benefit plan.
The cost of providing benefits is determined
based on actuarial valuation carried out by
an independent actuary using the projected
unit credit method.
Re-measurement, comprising actuarial
gains and losses, the effect of the changes to
the asset ceiling (if applicable) and the return
on plan assets (excluding net interest), is
reflected in the balance sheet with a charge
or credit recognised in other comprehensive
income in the period in which they occur.
Re-measurement recognised in other
comprehensive income is reflected under
retained earnings and is not reclassified to
the Statement of Profit and Loss.
(c) Short-term and other long-term
employee benefits:
A liability is recognised for benefits accruing
to employees in respect of wages and
salaries, annual leave and sick leave in the
period in which related service is rendered.
Liabilities recognised in respect of short¬
term employee benefits are measured at
the undiscounted amount of the benefits
expected to be paid in exchange for the
related service.
1.7 Taxation
I ncome tax expense represents the sum of the
tax currently payable and deferred tax.
Current tax
Current tax is determined at the amount of tax
payable in respect of taxable profit for the year
as per the Income-tax Act, 1961. Taxable profit
differs from 'profit before tax' as reported in the
Statement of Profit and Loss because of items of
income or expense that are taxable or deductible
in other years and items that are never taxable
or deductible. The current tax is calculated using
tax rates that have been enacted or substantially
enacted at the reporting period.
MAT credit is recognised as an asset only when
and to the extent there is convincing evidence
that the Company will pay normal income tax
during the specified period. In the year in which
the MAT credit becomes eligible to be recognised
as an asset, the said asset is created by way of
a credit to the Statement of Profit and Loss and
shown as MAT credit entitlement. The Company
reviews the same at each balance sheet date
and writes down the carrying amount of MAT
credit entitlement to the extent there is no
longer convincing evidence to the effect that the
Company will pay normal income tax during the
specified period.
Deferred tax
The Company's deferred tax is calculated using
tax rate that are substantively enacted by the
end of the reporting period.
Deferred tax is recognised on temporary
differences between the carrying amounts of
assets and liabilities in the standalone financial
statements and the corresponding tax bases
used in the computation of taxable profit.
Deferred tax liabilities are generally recognised
for all taxable temporary differences.
Deferred tax assets are generally recognised for
all deductible temporary differences, unused
tax credits and unused tax losses being carried
forward, to the extent that it is probable that
taxable profits will be available in future against
which these can be utilised. Such deferred tax
assets and liabilities are not recognised if the
temporary difference arises from the initial
recognition (other than in business combination)
of assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting
profit. In addition, deferred tax liabilities are not
recognised if the temporary difference arises
from the initial recognition of goodwill.
The carrying amount of deferred tax assets is
reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to
allow all or part of the asset to be recovered.
Current and deferred tax for the year
Current and deferred tax are recognised in the
Statement of Profit and Loss, except when they
relate to items that are recognised in other
comprehensive income or directly in equity, in
which case, the current and deferred tax are also
recognised in other comprehensive income or
directly in equity respectively.
1.8 Property, Plant and Equipment
Property, plant and equipment shown
in the balance sheet consists of assets
used in the provision of services or for
administrative purposes.
Initial and subsequent recognition
Property, plant and equipment are initially
recognised at cost together with borrowing cost
capitalized for qualifying assets. Cost comprises
the purchase price and any directly attributable
cost of bringing the asset to the location and its
working condition for its intended use. Changes
in the expected useful life are accounted
for by changing the amortisation period or
methodology, as appropriate, and treated as
changes in accounting estimates.
Subsequent to initial recognition, property,
plant and equipment are measured at cost less
accumulated depreciation and accumulated
impairment, if any.
Subsequent costs are included in the asset's
carrying amount or recognised as a separate
asset, as appropriate, only when it is probable
that the future economic benefits associated
with the item will flow to the Company and the
cost of the item can be measured reliably. The
carrying amount of any component accounted
for as a separate asset is de-recognised when
replaced. All other repairs and maintenance are
charged to the Statement of Profit and Loss during
the reporting period in which they are incurred.
De-recognition
An item of property, plant and equipment is de¬
recognised upon disposal or when no future
economic benefits are expected to arise from
the continued use of the asset. Any gain or loss
arising on the disposal or retirement of an item
of property, plant and equipment is determined
as the difference between the net disposal
proceeds and the carrying amount of the asset
and is recognised in the Statement of Profit and
Loss. The date of disposal of an item of property,
plant and equipment is the date the recipient
obtains control of that item in accordance
with the requirements for determining when a
performance obligation is satisfied in Ind AS 115.
Depreciation
Depreciation commences when the assets are
ready for their intended use. It is recognised
to write down the cost of the property, plant
and equipment to their residual values over
their useful lives, using the straight-line basis.
The estimated useful lives, residual values
and depreciation method are reviewed at the
end of each reporting period, with the effect of
any changes in estimate accounted for on a
prospective basis.
The Company has adopted the useful life as
specified in Schedule II to the Act.
Depreciation on right-of-use asset is charged to
Statement of Profit and Loss on straight line basis
over the life of the asset.
Depreciation on assets purchased/sold during
the period is recognised on a pro-rata basis.
1.9 Investment Property
Properties, held to earn rentals and/or capital
appreciation are classified as investment
property and measured and reported at cost,
including transaction costs.
Depreciation is recognised using straight
line method so as to write off the cost of the
investment property less their residual values
over their useful lives specified in Schedule II to
the Act. The estimated useful life, residual values
and depreciation method are reviewed at the
end of each reporting period and the effect of
any change in the estimates accounted for on
prospective basis.
An investment property is de-recognised upon
disposal or when the investment property
is permanently withdrawn from use and no
future economic benefits are expected from
the disposal. Any gain or loss arising on de¬
recognition of property (calculated as difference
between net disposal proceeds and the carrying
amount of the asset) is recognised in the
Statement of Profit and Loss in the period in which
the property is de-recognised.
1.10 Impairment of Non-Financial Assets
At the end of each reporting period, the Company
reviews the carrying amounts of its assets to
determine whether there is any indication that
those assets have suffered an impairment loss.
If any such indication exists, the recoverable
amount of the asset is estimated in order to
determine the extent of the impairment loss,
if any. When it is not possible to estimate the
recoverable amount of an individual asset, the
Company estimates the recoverable amount
of the cash-generating unit to which the
asset belongs.
Recoverable amount is the higher of fair value less
costs of disposal and value in use. In assessing
value in use, the estimated future cash flows are
discounted to their present value using a pre¬
tax discount rate that reflects current market
assessments of the time value of money and the
risks specific to the asset for which the estimates
of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash¬
generating unit) is estimated to be less than its
carrying amount, the carrying amount of the
asset (or cash-generating unit) is reduced to
its recoverable amount. An impairment loss is
recognised immediately in the Statement of
Profit and Loss.
When an impairment loss subsequently reverses,
the carrying amount of the asset (or a cash¬
generating unit) is increased to the revised
estimate of its recoverable amount, but so
that the increased carrying amount does not
exceed the carrying amount that would have
been determined had no impairment loss been
recognised for the asset (or cash generating
unit) in prior years. A reversal of an impairment
loss is recognised immediately in the Statement
of Profit and Loss.
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