2. b Material accounting policies for the year
ended March 31, 2026
The Company has consistently applied the following
accounting policies to aLL periods presented in the
financial statements.
(a) Revenue recognition
Revenue from contracts with customers is
recognized when the services are tendered to
the customer at an amount that refLects the
consideration to which the Company expects to be
entitled in exchange for those services. Payments
from customers for the services rendered are
normally received within 30-60 days.
Sale of services
Revenue from the sale of services is recognized,
when the company satisfies the performance
obLigation by transferring promised service to
the customers, the amount of revenue and costs
associated with the transaction can be measured
reliably and no significant uncertainty exists
regarding the amount of consideration that wiLL be
derived from the saLes of services. Revenue from
the saLe of service is measured at the fair vaLue
of the consideration received or receivabLe, net of
returns and aLLowances and discounts.
Other income
Interest income
Interest income is recognized on time proportion
basis taking into account the amount outstanding
and the applicable interest rate. Interest income
is included under the head ‘Other income’ in the
statement of profit and Loss.
Dividend income
Dividend income is recognized when the right to
receive payment is established, which is generally
when shareholders approve the same. Dividend
income is included under the head ‘Other income’
in the statement of profit and Loss.
Profit/loss on sale of assets/investment
Profit/ Loss on sale of investment is recognised in
profit and Loss account at the time of sale of asset/
investment.
(b) Property, plant and equipment
Property, pLant and equipment are carried at cost of
acquisition, on current cost basis Less accumuLated
depreciation and accumuLated impairment, if
any. Cost comprises purchase price and directLy
attributabLe cost of bringing the asset to its working
condition for the intended use.
An item of property, pLant and equipment 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
(caLcuLated as the difference between the net
disposaL proceeds and the carrying amount of the
asset) is incLuded in the statement of profit and Loss
when the asset is derecognised.
Depreciation is provided for property, pLant and
equipment on a written down vaLue basis so as
to expense the cost Less residuaL vaLue over their
estimated usefuL Lives as prescribed in ScheduLe II
of the Companies Act, 2013. 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 usefuL Life of various cLass of items considered
in the financiaL statements is as under :
(c) Intangible assets
Software acquired or developed are carried
at cost less accumulated amortisation and
impairment losses, if any. Costs associated with
maintaining software programs are recognised as
an expense as incurred. Development costs that
are directly attributable to the design and testing
of customised computer software applications
are recognised as intangible assets under
development or intangible assets when ready for
intended use, when the following criteria are met:
a) it is technically feasible to complete the
software so that it will be available for use,
b) there is an ability to use the software,
c) it can be demonstrated that the software will
generate probable future economic benefits,
d) adequate technical, financial and other
resources to complete the development
and to use the software are available, and
e) the expenditure attributable to the software
during its development can be reliably measured.
(d) Impairment
The carrying amount of property, plant and
equipment, intangible assets and investment
property are reviewed at the end of each reporting
period to assess impairment if any, based on
internal / external factors. An asset is treated as
impaired, when the carrying cost of asset exceeds
its recoverable value, being higher of value in
use and net selling price. An impairment loss is
recognized as an expense in the statement of profit
and loss in the year in which an asset is identified as
impaired. The impairment loss recognized in prior
accounting period is reversed, if there has been an
improvement in recoverable amount.
(e) 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.
(i) Financial assets
Financial assets are recognised when the
Company becomes a party to the contractual
provisions of the instrument.
Financial assets include trade receivables,
advances, security deposits, cash and cash
equivalents.
At initial recognition, all financial assets
except trade receivables are measured at fair
value. Such financial assets are subsequently
classified under following three categories
according to the purpose for which they
are held. Financial assets are subsequently
classified and measured at amortised cost.
The classification is reviewed at the end of
each reporting period.
Financial assets at amortized cost
At the date of initial recognition, financial
assets are held to collect contractual cash
flows of principal and interest on principal
amount outstanding on specified dates. These
financial assets are intended to be held until
maturity. Therefore, they are subsequently
measured at amortized cost by applying the
effective interest rate (EIR) method to the
gross carrying amount of the financial asset.
The EIR amortization is included as interest
income in the profit or loss. The losses arising
from impairment are recognized in the profit or
loss.
Financial assets at fair value through other
comprehensive income
At the date of initial recognition, financial
assets are held to collect contractual cash
flows of principal and interest on principal
amount outstanding on specified dates, as
well as held for selling. Therefore, they are
subsequently measured at each reporting date
at fair value, with all fair value movements
recognized in other comprehensive income
(OCI). Interest income calculated using
the effective interest rate (EIR) method,
impairment gain or loss and foreign exchange
gain or loss are recognized in the statement of
profit and loss. On derecognition of the asset,
cumulative gain or loss previously recognized
in other comprehensive income is reclassified
from the OCI to statement of profit and loss.
Financial assets at fair value through profit
or loss
At the date of i nitial recognition, financial assets
are held for trading, or which are measured
neither at amortized cost nor at fair value
through OCI. Therefore, they are subsequently
measured at each reporting date at fair value,
with all fair value movements recognized in the
statement of profit and loss.
Trade receivables, advances, security
deposits, cash and cash equivalents etc. are
classified for measurement at amortized
cost while investments may fall under any of
the aforesaid classes. However, in respect of
particular investments in equity instruments
that would otherwise be measured at fair value
through profit or loss, an irrevocable election
at initial recognition may be made to present
subsequent changes in fair value through other
comprehensive income.
Investment in mutual fund
On initial recognition, these are measured at
fair value, and subsequently, carried at fair
value through profit and loss.
Investments in subsidiaries and associates
Investment in subsidiaries are measured at cost
less impairment loss, if any. Where an indication
of impairment exists, the carrying amount of
the investment is assessed and written down
immediately to its recoverable amount. The
recoverable amount is the higher of an asset’s
fair value less costs of disposal and value in use.
On disposal of investments in subsidiaries
and associates, the difference between net
disposal proceeds and the carrying amounts
are recognised in the statement of profit and
loss.
Impairment
The Company assesses at each reporting
date whether a financial asset (or a group of
financial assets) such as investments, trade
receivables, advances and security deposits
held at amortized cost and financial assets
that are measured at fair value through
other comprehensive income are tested for
impairment based on evidence or information
that is available without undue cost or effort.
Expected credit losses are assessed and
loss allowances recognized if the credit
quality of the financial asset has deteriorated
significantly since initial recognition.
De-recognition
Company derecognizes a financial asset when
the contractual rights to the cash flows from
the financial asset expire or it transfers the
rights to receive the contractual cash flows
from the asset.
(ii) Financial liabilities
Recognition and measurement
Financial liabilities are recognised when the
Company becomes a party to the contractual
provisions of the instrument. On initial
recognition, financial liabilities are measured
at fair value and subsequently measured at
amortised cost.
Borrowings, trade payables and other financial
liabilities are initially recognized at the value
of the respective contractual obligations. They
are subsequently measured at amortized cost.
Any discount or premium on redemption /
settlement is recognized in the statement of
profit and loss as finance cost over the life of
the liability using the effective interest method.
Trade and other payables represent liabilities
for goods and services provided to the
Company prior to the end of financial year
which are unpaid. The amounts are unsecured
and are usually paid as per credit period. Trade
and other payables are presented as current
liabilities unless payment is not due within 12
months after the reporting period.
Derecognition
A financial liability is derecognised when
the obligation specified in the contract is
discharged, canceled or expires.
(iii) Offsetting of financial instruments
Financial assets and liabilities are offset and
the net amount is included in the balance sheet
where there is a legally enforceable right to
offset the recognized amounts and there is an
intention to settle on a net basis or realize the
asset and settle the liability simultaneously.
(f) Fair value measurement
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, regardless of whether
that price is directly observable or estimated
using other valuation technique. In estimating the
fair value of an the characteristics of the asset or
liability if market participants would take those
characteristics into account when pricing the asset
or liability at the measurement date.
Fair values for measurement and/ or disclosure
purposes are categorized into Level 1, 2, or 3 based
on the degree to which the inputs to the fair value
measurements are observable and the significance
of the inputs to the fair value measurement in its
entirety, which are described as follows:
Level 1 - This includes financial instruments
measured using quoted prices.
Level 2 - The fair value of financial instruments that
are not traded in an active market is determined
using valuation techniques which maximize
the use of observable market data and rely as
little as possible on entity-specific estimates.
If all significant inputs required to fair value an
instrument are observable, the instrument is
included in level 2. Inputs other than quoted prices
included within level 1 that are observable for the
asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
Level 3 - If one or more of the significant inputs is
not based on observable market data, instrument
is included in level 3.
(g) Leases
Where the Company is the lessee
The Company recognises a right-of-use asset and
a corresponding liability at the date at which the
leased asset is available for use by the Company.
Lease payments are apportioned between finance
charges and reduction of the lease liability so
as to achieve a constant rate of interest on
the remaining balance of the liability. Finance
charges are recognised in finance costs in the
statement of profit and loss, unless they are
directly attributable to qualifying assets, in which
case they are capitalised in accordance with
the Company’s general policy on the borrowing
costs. Contingent rentals are recognised as
expenses in the periods in which they are incurred.
A leased asset is depreciated over the useful life
of the asset. However, if there is no reasonable
certainty that the Company will obtain ownership
by the end of the lease term, the asset is
depreciated over the shorter of the estimated
useful life of the asset and the lease term.
Operating lease payments are recognised as an
expense in the statement of profit and loss on a
straight-line basis over the lease term, unless the
payment to lessor is structured to increase in line
with expected general inflation and compensate
for the lessor’s expected inflation cost increases.
Right-of-use assets are generally depreciated over
the shorter of the asset’s useful life and the lease
term on a straight-line basis. If the Company is
reasonably certain to exercise a purchase option,
the right-of-use asset is depreciated over the
underlying asset’s useful life.
Payments associated with short-term leases of
equipment and all leases of low-value assets are
recognised on a straight-line basis as an expense
in profit or loss. Short-term leases are leases with a
lease term of 12 months or less.
(h) Employee benefits
1) Short-term obligations
Expense in respect of other short term benefit
is recognized on the basis of amount paid or
payable for the period during which services
are rendered by the employee.
2) Post-employment obligations
The Company’s defined benefit plans comprise
gratuity and provident fund, where the
Company’s obligation is to provide the agreed
benefit to the qualifying employees and the
actuarial risk and investment risk if any, fall in
substance, on the Company.
i. Provident fund
The Company makes contributions to
statutory provident fund in accordance
with the Employees Provident Fund and
Miscellaneous Provisions Act, 1952,
which is a defined contribution plan. The
Company’s contributions paid/payable
under the scheme is recognized as an
expense in the statement of profit and loss
during the period in which the employee
renders the related service.
ii. Gratuity
The net liability or asset recognised in
the balance sheet in respect of gratuity
(defined benefit plans) is the present value
of the defined benefit obligation at the end
of the reporting period less the fair value of
plan assets. The defined benefit obligation
is calculated annually by actuaries using
the projected unit credit method.
The present value of the defined benefit
obligation is determined by discounting
the estimated future cash outflows by
reference to market yields at the end
of the reporting period on government
bonds that have terms approximating
to the terms of the related obligation.
The net interest cost is calculated by
applying the discount rate to the net
balance of the defined benefit obligation
and the fair value of plan assets. This cost
is included in employee benefit expense in
the statement of profit and loss.
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.
iii. Defined benefit plans
The cost of the defined benefit plan and
other post-employment benefits and
the present value of such obligation are
determined using actuarial valuations.
An actuarial valuation involves making
various assumptions that may differ
from actual developments in future.
These includes the determination of the
discount rate, future salary increases,
mortality rates and attrition rate. Due to
the complexities involved in the valuation
and its long-term nature, a defined benefit
obligation is highly sensitive to changes in
these assumptions. ALL assumptions are
reviewed at each reporting date.
iv. Share-based payments
Equity-settled share-based payments to
empLoyees are measured at the fair vaLue
of the empLoyee stock options at the grant
date. The fair vaLue of the share options
is estimated using the Black- SchoLes
option pricing modeL, taking into account
the terms and conditions upon which
the share options were granted. The fair
vaLue determined at the grant date of the
equity-settLed share-based payments is
amortised 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 reporting period, the
Company revises its estimate of the
number of equity instruments expected
to vest. The impact of the revision of the
originaL estimates, if any, is recognised
in the statement of profit and Loss such
that the cumuLative expense refLects the
revised estimate, with a corresponding
adjustment to the empLoyee stock option
outstanding in equity.
v. Compensated absences
Liability in respect of compensated
absences becoming due or expected
to be avaiLed within one year from the
baLance sheet date is recognised on the
basis of discounted vaLue of estimated
amount required to be paid or estimated
vaLue of benefit expected to be avaiLed
by the empLoyees. LiabiLity in respect of
compensated absences becoming due or
expected to be avaiLed more than one year
after the baLance sheet date is estimated
on the basis of an actuariaL vaLuation
performed by an independent actuary
using the projected unit credit method.
ActuariaL gains and Losses arising from
past experience and changes in actuariaL
assumptions are charged to statement of
profit and Loss in the year in which such
gains or Losses are determined.
(i) Income tax
Income tax expense is the tax payable on the
current period’s taxabLe income based on the
appLicabLe income tax rate adjusted by changes
in deferred tax assets and LiabiLities attributabLe to
temporary differences and to unused tax Losses, if
any.
Current tax
The current income tax charge is caLcuLated on
the basis of the tax Laws enacted or substantiveLy
enacted at the end of the reporting period.
Management periodically evaluates positions taken
in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation
and considers whether it is probable that a taxation
authority will accept an uncertain tax treatment. It
establishes provisions where appropriate on the
basis of amounts expected to be paid to the tax
authorities.
Current tax assets and liabilities are offset only if,
the Company:
i) has a legally enforceable right to set off the
recognized amounts; and
ii) intends either to settle on a net basis, or
to realize the asset and settle the liability
simultaneously.
Deferred tax
Deferred income tax is provided in full,
using the liability method, on temporary
differences arising between the tax
bases of assets and liabilities and their carrying
amounts in the financial statements. Deferred
income tax is determined using tax rates (and laws)
that have been enacted or substantially enacted by
the end of the reporting period and are expected to
apply when the related deferred income tax asset
is realized or the deferred income tax liability is
settled.
Deferred tax is not recognized for:
i) temporary differences on the initial recognition
of assets or liabilities in a transaction that is
not a business combination and that affects
neither accounting nor taxable profit or loss;
and
ii) temporary differences related to investments
in subsidiaries, associates and joint
arrangements to the extent that the Company
is able to control the timing of the reversal of
the temporary differences and it is probable
that they will not reverse in the foreseeable
future.
A deferred income tax asset is recognized to
the extent that it is probable that future taxable
profits will be available against which deductible
temporary differences and tax losses can be
utilized. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that
it is no longer probable that the related tax benefit
will be realized; such reductions are reversed when
the probability of future taxable profits improves.
Unrecognized deferred tax assets are reassessed
at each reporting date and recognized to the extent
that it has become probable that future taxable
profits will be available against which they can be
used.
Deferred tax is measured at the tax rates that are
expected to be applied to temporary differences
when they reverse, using tax rates enacted or
substantively enacted at the reporting date. The
measurement of deferred tax reflects the tax
consequences that would follow from the manner
in which the company expects, at the reporting
date, to recover or settle the carrying amount of its
assets and liabilities.
Deferred tax assets and liabilities are offset only if:
i) The entity has a legally enforceable right to
set off current tax assets against current tax
liabilities; and
ii) The deferred tax assets and the deferred tax
liabilities relate to income taxes levied by the
same taxation authority on the same taxable
entity.
(j) Cash & cash equivalents
Cash and cash equivalents includes cash on hand
and balances with banks that are readily convertible
to known amounts of cash and other short term,
highly liquid investments with original maturities of
three months or less that are readily convertible to
known amounts of cash and which are subject to
an insignificant risk of changes in value.
|