This note provides a list of the significant accounting policies adopted in the preparation of
these financial statements. These policies have been consistently applied to all the years
presented, unless otherwise stated.
> Basis of Preparation
(i) Statement of Compliance with Ind AS
These financials statements accounts have been prepared in accordance with Ind
AS and disclosures thereon comply with requirements of Ind AS, stipulations
contained in Schedule- III (revised) as applicable under Section 133 of the
Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules 2014,
Companies (Indian Accounting Standards) Rules 2015 as amended from time to
time, Micro, Small & Medium Enterprise Development Act, 2006, other
pronouncements of Institute of Chartered Accountants of India, provisions of the
Companies Act and Rules and guidelines issued by Securities Board Exchange of
India as applicable.
Assets and liabilities have been classified as current or non-current as per the
Company's normal operating cycle and other criteria set out in revised Schedule -
III to the Companies Act, 2013 and Para 60 and 64 of Ind AS 1 "Presentation of
financial statements".
Accounting Policies have been consistently applied except where a newly issued
Indian Accounting Standards is initially adopted or a revision to the existing zsuch
standards requires a change in the accounting policy hitherto in use.
(ii) Historical cost convention
The financial statements are prepared on accrual basis of accounting under
historical cost convention, except for the following:
> Certain financial assets and liabilities measured at fair value;
(iii) Use of estimates and judgments
The presentation of the financial statements are in conformity with the Ind AS
which requires the management to make estimates, judgments and assumptions
that affect the reported amounts of assets and liabilities, revenues and expenses
and disclosure of contingent liabilities. Such estimates and assumptions are based
on management's evaluation of relevant facts and circumstances as on the date of
financial statements. The actual outcome may differ from these estimates.
Estimates and underlying assumptions are reviewed Oon an ongoing basis.
Revisions to the accounting estimates are recognised in the period in which the
estimates are revised and in any future periods affected.
This note provides an overview of the areas that involved a higher degree of
judgments or complexity, and of items which are more likely to be materially
adjusted due to estimates and assumptions turning out to be different than those
originally assessed. Detailed information about each of these estimates and
judgments is included in relevant notes together with information about the basis
of calculation for each affected line item in the financial statements.
Information about assumptions and estimation uncertainties that have a significant
risk of resulting in a material adjustment within the next financial year are included
in the following notes:
• Useful lives of property, plant and equipment and intangible assets
• Recognition and measurement of other provisions
• Current/deferred tax expense
• Contingent liabilities and assets
• Expected credit loss for receivables
• Fair valuation of unlisted securities
• Measurement of defined benefit obligation
a) Property, Plant and Equipment
Property plant and equipment are stated at their cost of acquisition / construction less
depreciation and impairment, if any. The cost comprises of the purchase price and any
attributable cost for bringing the asset to its working condition for its intended use; like
freight, duties, taxes and other incidental expenses, net of CENVAT or Goods and service
tax (GST) credit.
The Company capitalizes the assets all the cost directly attributable and ascertainable to
asset. It also includes borrowings attributable to acquisition of such assets.
Component accounting of assets: If significant parts of an item of property, plant and
equipment have different useful lives, then they are accounted for as separate items (major
components) of property, plant and equipment. The Company has identified, reviewed,
tested and determined the componentisation of the significant assets.
Any item of property, plant and equipment and any significant part initially recognized 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 (calculated as the
difference between the net disposal proceeds and the carrying amount of the asset) is
charged to revenue in the income statement when the asset is derecognised.
The costand related accumulated depreciation are eliminated from the financial statements
upon sale or retirement of the asset.
b) Intangible Assets
There is no intangible assets currently available with the Company.
c) Depreciation and Amortisation, Estimated Useful Lives and Residual Values
Depreciation on tangible assets is provided on straight line method over the useful life of
the asset estimated by the management. Depreciation for assets purchased / sold during a
period is proportionately charged. Intangible assets are amortised over their respective
individual estimate useful life on a straight line basis, commencing from the date the asset
is available to the company for its intended use. Cost of mobile phones, are expensed off
in the year of purchase.
Based on management estimate, residual value of 5% is considered for respective tangible
assets.
Component accounting of assets: If significant parts of an item of property, plant and
equipment have different useful lives, then they are accounted for as separate items (major
components) of property, plant and equipment and accordingly depreciated at the useful
lives specified as below.
The residual values, useful lives and methods of depreciation of property, plant and
equipment (PPE) are reviewed.
The management estimates the useful life of other fixed assets as follows:-
d) 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 Asset
Initial Recognition
A financial asset or a financial liability is recognised in the balance sheet only when, the
Company becomes party to the contractual provisions of the instrument.
Initial Measurement
At initial recognition, the Company measures a financial asset or financial liability at its fair
value plus or minus, in the case of a financial asset or financial liability not at fair value
through profit or loss, transaction costs that are directly attributable to the acquisition or
issue of the financial asset or financial liability.
Subsequent measurement
For purpose of subsequent measurement, financial assets are classified as under:
• Financial assets measured at amortised cost;
• Financial assets measured at fair value through profit or loss (FVTPL); and
• Financial assets measured at fair value through other comprehensive income
FVTOCI).
The Company classifies its financial assets in the above mentioned categories based on:
• The Company's business model for managing the financial assets, and
• The contractual cash flows characteristics of the financial asset.
A financial assets is measured at amortised cost if both of the following conditions are met:
• The financial asset is held within a business model whose objective is to hold financial
assets in order to collect contractual cash flows and
• The contractual terms of the financial assets give rise on specified dates to cash
flows that are solely payments of principal and interest (SPPI) on the principal
amount outstanding.
Financial assets are subsequently measured at amortised cost using the effective interest
rate (EIR) method. Amortised 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
amortisation is included in finance income in the profit or loss The losses arising from
impairment are recognised in the profit or loss.
A financial asset is measured at fair value through other comprehensive income if
both of the following conditions are met:
• The financial asset is held within a business model whose objective is achieved by
both collecting the contractual cash flows and selling financial assets and
• The assets contractual cash flows represent SPPI.
A financial asset is measured at fair value through profit or loss unless it is measured
at amortised cost or at fair value through other comprehensive income. In addition,
the Company may elect to designate a financial asset, which otherwise meets
amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if
doing so reduces or eliminates a measurement or recognition inconsistency (referred to as
'accounting mismatch').
A financial asset is measured at fair value through profit or loss unless it is measured at
amortised cost or at fair value through other comprehensive income. In addition, the
Company may elect to designate a financial asset, which otherwise meets amortized cost
or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces
or eliminates a measurement or recognition inconsistency (referred to as 'accounting
mismatch').
Equity In vestments
All investments in scope of Ind AS 109 are measured at fair value. Equity instruments which
are held for trading are classified as at FVTPL. For all other equity instruments, the Company
may make an irrevocable election to present in other comprehensive income subsequent
changes in the fair value. The Company makes such election on an instrument by¬
instrument basis. The classification is made on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value
changes on the instrument, excluding dividends, are recognized in the OCI. There is no
recycling of the amounts from OCI to P&L, even on sale of investment. However, the
Company may transfer the cumulative gain or loss within equity. Equity instruments
included within the FVTPL category are measured at fair value with all changes recognized
in the P&L.
Derecognition
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:
1. The contractual rights to the cash flows from the financial asset have expired, or
2. 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
i. The Company has transferred substantially all the risks and rewards of the
asset, or
ii. The Company has neither transferred nor retained substantially, this 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 recognizes 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
The Company assesses impairment based on expected credit loss (ECL) model to the
following:
• Financial assets measured at amortised cost
• Financial assets measured at fair value through other comprehensive income.
Expected credit losses are measured through a loss allowance at an amount equal to:
• The 12-months expected credit losses (expected credit losses that result from those
default events on the financial instrument that are possible within 12 months after
the reporting date); or
• Full time expected credit losses (expected credit losses that result from all possible
default events over the life of the financial instrument).
The Company follows 'simplified approach' for recognition of impairment loss allowance on
trade receivables or contract revenue receivables. Under the simplified approach, the
Company is not required 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.
The Company uses a provision matrix to determine impairment loss allowance on the
portfolio of trade receivables. The provision matrix is based on its historically observed
default rates over the expected life of the trade receivable 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 analysed.
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 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 Company 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 impairment loss allowance (or reversal) recognized during the period is recognized as
income/ expense in the statement of profit and loss. This amount is reflected under the
head 'other expenses' in the statement of Profit &Loss. The balance sheet presentation for
various financial instruments is described below:
• Financial assets measured as at amortised cost and contractual revenue receivables
- 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.
• Loan commitments and financial guarantee contracts - ECL is presented as a
provision in the balance sheet, i.e. as a liability.
• Financial assets measured at FVTOCI - Since financial assets are already reflected at
fair value, impairment allowance is not further reduced from its value. Rather, ECL
amount is presented as accumulated impairment amount in the OCI.
For assessing increase in credit risk and impairment loss, the Company combines financial
instruments on the basis of shared credit risk characteristic with the objective of facilitating
an analysis that is designed to enable significant increases credit risk to be identified on a
timely basis.
The Company does not have any purchased or originated credit-impaired (POCI) financial
assets, i.e., financial assets which are credit impaired on purchase/origination.
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, payables, or as derivatives designated as
hedging instruments in an effective hedge, as appropriate.
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